If a taxpayer has a defined-contribution qualified plan such as a 403b plan, that has no effect on eligibility for Social Security benefits. Taxpayers can receive Social Security benefits and 403b distributions simultaneously.
Distributions from the 403b are taxed, and may cause some of the SS benefits to be taxed. But the amount of the Social Security benefit itself has no connection to the 403b distributions.
There are defined contribution plans offered by some public school systems that are coordinated with Social Security. This was addressed in another answer.
The employee may participate in both the defined contribution plan as well as the 403b plan.
2007-12-15 07:53:13
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answer #1
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answered by ninasgramma 7
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A 403(b) is not a pension. It is the same as a 401(k) plan, the difference being a 401(k) is done at a for-profit employer and a 403(b) is done at a not-for-profit employer like teachers, police, hospital workers, etc. I collect Social Security Disability and when I reach retirement age I will also begin to withdraw money from my 403(b) plan. Your mother's friends may be confusing her 403(b) plan, which is her money by the way, with her actual pension. Many people collect Social Security and a public employee pension if they have paid into both. My father-in-law did so for years until his death. He worked as a public employee for 30 years and then retired with his pension. When he got bored with retirement, he got a job and began paying into Social Security, while still collecting his pension. After he had his 40 quarters in Social Security, he started collecting his Social Security benefit. The best thing to do is to call a Certified Financial Planner and ask. You can do it for free if you listen to the personal financial shows on the radio. They generally take questions from callers and this sounds like one that they could answer pretty quickly.
2007-12-15 07:19:30
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answer #2
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answered by Jeanne R 7
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From Social Security's website, which is one of the best on the web:
If I receive a government pension, how will this affect my Social Security benefits?
Answer
If you worked in a job that was not covered under Social Security, e.g., some Federal, State, or local government employment, the pension you get based on that work may reduce your Social Security benefits. Your benefit can be reduced under one of two provisions.
The first, called "government pension offset," applies only if you receive a government pension and are eligible for Social Security benefits as a spouse or widow(er). Under this provision, your Social Security benefit may be reduced by two-thirds of the amount of your government pension. There are several exceptions to this rule. For more information, see our GPO page or the GPO calculator.
The other provision, called the "windfall elimination provision," affects how your Social Security retirement or disability benefits are figured if you also receive a pension from work not covered by Social Security. The formula used to figure your benefit amount is modified, giving you a lower Social Security benefit.
Social Security benefits are based on a worker's average monthly earnings adjusted for inflation. When we figure your benefits, we separate your average earnings into three amounts and multiply the figures using three factors. For example, for a worker who turns 62 in 2008, the first $711 of average monthly earnings is multiplied by 90 percent; the next $3,577 is multiplied by 32 percent; the remainder by 15 percent. For more information, see our Online WEP Calculator.
Under the windfall elimination provision, we figure your benefit under a modified formula in which the 90 percent factor is reduced to 40 percent. There are exceptions to this rule. For example, the 90 percent factor is not reduced if you have 30 or more years of "substantial" earnings in a job where you paid Social Security taxes. If you have 21 to 29 years of substantial earnings, the 90 percent factor is reduced to somewhere between 45 and 85 percent.
For more information, you should read the Social Security fact sheets "Government Pension Offset" (Publication No. 05-10007) and "The Windfall Elimination Provision" (Publication No. 05-10045).
You can research more at:
http://www.ssa.gov/
Under the drop down menu "Choose a Topic" go to "Government Pension Rules"
There is a Government Pension Offest (GPO) calculator at:
http://www.socialsecurity.gov/retire2/gpo-calc.htm
Jim Kirby, CPA
2007-12-15 13:37:06
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answer #3
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answered by Jim Kirby, CPA/PFS, CFP, CFS 3
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If you are a teacher or other worker whose salary is not subject to Social Security withholding, you can collect benefits on other side earnings but if you have less than 20 years of "substantial earnings" you are subject to the Windfall Elimination Provision. With this hit, the amount payable based on the first tier of average indexed monthly earnings will be reduced from 90% to 40%.
2007-12-15 07:04:21
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answer #4
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answered by Anonymous
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yes you can receive both if you worked outside the school system before or after the school job. You dont pay social security while your a school employee so it would not be as much as someone who paid social security for there whole life time
2007-12-15 07:04:02
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answer #5
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answered by chris 3
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