401(k) and SSDI

401(k) and SSDI

If I Receive SSDI, Can I Withdraw from My 401(k)?

If you are a Social Security Disability (SSDI) benefits recipient, will your monthly payments be affected if you withdraw money from your 401(k)?

The answer is most likely no. Your Social Security retirement benefits are determined by the amount of money you earned while you were working. During those years, you paid money into the retirement system through Social Security taxes. That means those Social Security taxes have already been taken out of the money in your 401(k) (though 401(k) plans are protected from state and federal taxes).

Therefore, withdrawing funds from your 401(k) will not reduce the amount of money you receive each month in SSDI benefits. However, it is important to note you might have to pay more in taxes because the money withdrawn will be counted as taxable income when you file your tax returns with the Internal Revenue Service (IRS). There is a 10% penalty from the IRS if you withdraw from your 401(k) before you reach the age of  59½, though there are sometimes exceptions made for disabilities.

So, in short, withdrawing from your 401(k) won’t impact your SSDI. However, it is best to do so with caution, as such withdrawals are considered taxable income and may increase the amount you are required to pay to the IRS.

If you have additional questions about Social Security Disability benefits, feel free to call us anytime. We have an experienced team of West Virginia Social Security Disability attorneys, and one of our representatives will be happy to answer your questions. Or if you’d prefer to contact us online, please fill out this form and we will respond to you shortly.

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Jan Dils, Attorneys at Law

Jan Dils, Attorneys at Law