Q. Scott, I love your advice column and your answers to difficult questions. Mine is fairly simple, but I have received conflicting answers.

I am a retired single man turning 62  this month. I will receive my first early SS check in January 2005. I want to and plan to withdraw about $20,000 from my IRA in January. I realize it will be taxed as ordinary income.

My question is will it count toward the taxation of my SS benefits since it came from an IRA? I called the SS office and a lady told me that since it was not "earned income," it would not trigger the taxation of my benefits. But after talking to a respected friend and reading your column of 10-28 in the Houston Chronicle, I am not so sure.

Thank you in advance for your reply.

Sam D. Lewis


A. If you retire early--- before full retirement age--- there is a limit on how much you can earn without causing your Social Security benefits to be reduced.   For 2004 that amount is $11,640. That is what the Social Security office worker was referencing. This limitation is different from the possible taxation of Social Security benefits. Your benefits can be taxed anytime your income from a variety of sources exceeds certain amounts.

A single person, for instance, can have a "modified adjusted gross income" of $25,000 before the taxation of Social Security benefits is triggered. If your Social Security benefit total $12,000 a year, $6,000 must be included in the income calculation. Add $20,000 from your IRA and you will trigger taxation of a small portion of your benefits. As your income rises, more of your Social Security benefits will be subject to taxation. A maximum of 85 percent of benefits can be taxed.

For joint returns the modified adjusted gross income figure is $32,000.