Tuesday, June 21, 2011

Early retiree writes to me that Social Security classified his stock option exercise as "wages" for Annual Earnings Test

A reader on Ohio emailed to me a story where he exercised a stock option from a New York State employer after layoff or severance and possibly early retirement buyout from the employer, a common occurrence. Later, he filed for early Social Security benefits and was told that the monies from the stock option exercise would be treated as “wages” and caused him to have benefits reduced by the Annual Earnings Test.

I am quite surprised by this. I would have thought that income from stock options (essentially investment) from previous employment did not count as wages.

Comments anyone?

Picture: Family farm near Oberlin, OH, around 1946. 

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