Can I Receive a Pension When Receiving EI?

Save

There are various types of pensions available from the government and the private sector that offer payments during retirement or periods of disability. For many of these, there is no restriction on your ability to receive earned income, or EI, while receiving pension payments. However, there are some that do. Your eligibility to continue working will depend on the reasons you are receiving the pension and the terms of the specific pension plan.

SSI Disability Pension

  • The Social Security Administration (SSA) provides a pension to individuals who suffer from a permanent disability and are unable to work. Since you are unable to work, the SSA will not allow you to have other earned income during periods you receive pension payments and claim you suffer from the disability. In the event you do earn income in addition to the disability pension, it's possible that the SSA will revoke your pension and impose other penalties on you.

SSI Retirement Pension

  • A majority of taxpayers who work in the United States will eventually collect a pension from Social Security upon reaching retirement age. The SSA doesn't preclude you from earning income after you retire or while collecting Social Security benefits. However, if you earn too much income from providing services as an employee, independent contractor or sole proprietor, there may be some undesirable tax consequences. This is because the IRS allows you to receive your Social Security tax-free if your other sources of income aren't significant. As of 2011, the IRS will include a portion of your Social Security in taxable income if the sum of half your annual benefits plus your other income exceeds the "base amount," which for single taxpayers is equal to $25,000.

Employment Pensions

  • Many private and public employers provide employees with a retirement pension once they reach retirement age. Generally, the retirement pension you receive is a result of your age and length of service with the employer. As a result, once you satisfy a pension plan's requirements to begin receiving payments, there is no restriction on your ability to earn additional income by working for another employer or operating a business. Moreover, these pension payments are fully taxable by the IRS regardless of whether you continue working or not. Therefore, you will not lose any tax benefit if you choose to earn income while collecting a pension.

Military Retirement Pension

  • Similar to private employer pensions, the retirement pension you receive for your service in the military doesn't restrict your ability to continue working for a different employer. The military retirement pension scheme provides guaranteed pension payments to retirees based on the number of years they enlist in a branch of the armed forces. Moreover, the IRS will require you to report the entire pension as taxable income. Therefore, if you earn other income while receiving the pension, there are no adverse tax consequences, other than having to report the additional income on your tax return.

References

Promoted By Zergnet

Comments

Related Searches

M
Is DIY in your DNA? Become part of our maker community.
Submit Your Work!