I was "retired" by my company in March, 2016, at age 65. I had planned on starting social security in May, 2017, at my FRA of 66. I have no earned income from employment since March, 2016, although have had distribution from an IRA. In February, 2017, I received a check from my previous employer for a bonus based off my time with the company in 2016. They withheld Federal, State, and Social Security taxes from the check. Since I am no longer employed by this company, will this amount from my previous employer received in 2017 count toward the Earnings Test for 2017? And thanks for the column and book!

Hi,

Bonuses paid after the end of an employment relationship are generally counted for earnings test purposes (https://www.ssa.gov/planners/retire/whileworking2.html) effective with the date the employment relationship ended. So, it sounds like your bonus could be excluded from the 2017 earnings test.

You don't say when or if you've applied for Social Security benefits, so I don't know if this issue is material. If you don't start drawing benefits prior to full retirement age, the earnings test won't apply to you. If it is material, however, you would need to explain the circumstances of your bonus to Social Security in order to have them exclude the bonus from your 2017 earnings. Otherwise, they will assume that the bonus was earned in the year in which it was paid.

Best, Jerry