Am 65 and was recently separated from state employer with severance package. I paid into social security for 35 years. Started social security and state pension benefits effective Sept 2020. Have a PLOP (Partial lump sum payment) being paid in Dec 2020. Will this PLOP ($40K) affect my social security benefits for 2020 and 2021?
Hi,
I assume that what you're asking is whether or not your PLOP payment will count as earnings for Social Security's earnings test. If your PLOP payment is essentially severance pay, then it would probably count as earned income for purposes of the Social Security earnings test. However, severance pay is generally considered to have been earned on the last day of a person's employment for the employer paying the severance pay. So, it shouldn't affect your ability to collect Social Security benefits for any months after your employment ended.
I would need more details to be able to give you a definite answer, though, so you should probably discuss this issue with Social Security. Also, it's likely that even if your PLOP payment can be disregarded for purposes of the earnings test, Social Security will need you to submit documentation about the payment.
Best, Jerry