There seem to be different 457 plans. Mine was through a local government job and I put pre-tax earnings into it.
I am turning 62 in a few months and plan to begin taking SS retirement payments. I have a stay at home wife and 2 kids under 18.
I know that I have to pay income tax on any 457 withdrawals but does my or my spouse or children's benefit get reduced if I take 40,000 out in one year?
2 calls to Social Security yielded 2 opposing answers.
One SS worker said 1 dollar would be taken back for every 2 dollars of 457 payout I take.
The other SS phone answer guy said the payout doesn't count as wages, though I would have to pay income tax on my SS benefits.
How can I find out with complete certainty which is correct?
Who would know for sure?
457 payout will not reduce Social Security retirement benefits
I would say the second answer is correct. Nonwork sources of income, such as 401(k) and 457 distributions do not count as wages for the earnings test (reduced benefits due to wages).
However, 457 distributions will be taxable income. If you file a joint return, and you and your spouse have a combined income that is between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your Social Security benefits. If combined income is more than $44,000, up to 85 percent of your Social Security benefits may be taxable.
http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/277/
http://www.ssa.gov/planners/taxes.htm