Do IRA Withdrawals Affect Disability Benefits?

Any Social Security benefits you receive before full retirement age can decrease when your income goes up. However, the Social Security Administration (SSA) doesn’t count money in your IRA as part of your income. Instead, income includes only earned and unearned income designated by the SSA. As long as you meet the other criteria for receiving disability benefits, you won’t see a change in your benefit amount – even if you’re withdrawing from your IRA regularly.

What Are the SSDI Limits?

If you’re collecting Social Security Disability Insurance (SSDI), your IRA withdrawals won’t have any impact on your SSDI payments. SSDI is based on work history credits and disability. SSDI may be taxable at year-end if income from all sources, including IRA withdrawals, exceeds ​$25,000​ for individuals and ​$32,000​ for married couples. Roth IRAs are the exception since those withdrawals are not taxable.

Your eligibility for SSDI relies on the severity of your medical condition (it must be expected to last at least a year or result in death) and whether you have worked long enough while paying Social Security taxes. However, if you are able to work while receiving SSDI and you are earning more than ​$1,310​ (the amount is ​$2,110​ if you are blind) a month, your benefit will be reduced or eliminated. The SSA has strict guidelines regarding the definitions around 'disability' and 'substantial gainful activity.'

What Are the Limits for SSI?

Supplemental Security Income (SSI), Social Security’s other program for those over ​65​ and people with disabilities, works a little differently than SSDI. Because your eligibility for SSI is based on both income and resources, an IRA withdrawal may count as a resource and may subsequently reduce your SSI benefit. SSI is not taxable for any reason.

To be eligible for SSI, you must meet Social Security’s definition of disabled, your income may be no more than ​$1,673​ a month if that amount is entirely from wages and you may have no more than ​$2,000​ worth of resources. The earned monthly income limit for couples is ​$2,467​ with allowable assets up to ​$3,000​.

How to Report Your Earnings

The way SSA calculates income disregards the first ​$20​ of most income types, the first ​$60​ of irregular unearned income, and half of earned income over ​$65​ each month or ​$30​ of irregular earned income. Many other types of income are not at all included toward limits. Therefore, it is theoretically possible to earn over ​$794​ monthly, but still be within the designated limit. However, any changes to income or assets may impact benefits amount or eligibility.

Whenever there is a change in your financial situation, you must report this change to the SSA. This rule includes any changes in your spouse’s or other family members’ income and resources, as well. You may call ​800-772-1213​ to report the change, or visit your local Social Security office to do it in person. If you don’t report a change, you may have to pay back any benefits you collected after the change went into effect.

What Affects Your Disability Benefits?

The SSA doesn’t just count your wages as income. It also counts gift money, unemployment benefits, annuities, pensions, settlements, inheritances and rental pay as part of your income when determining your eligibility for disability. Also, it takes into account your resources, which includes cash, bank accounts and U.S. stocks and bonds. Even if you don’t think it will affect your benefits, you must still report all financial changes to the Social Security Administration.