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Answers are provided by Robert S. Kaufman
Working Outside Of United States After Retirement
(Posted January 12, 2006)
Question 564: If I retire early and I am employed or self-employed in Mexico, would my Railroad Retirement benefits be suspended in any month that I work more than 45 hours for an employer who does not withhold U.S. Social Security tax?
If I work for an employer who withholds U.S. Social Security tax, I understand that I would have to return $.50 per $1.00 in earnings over $12,480. Does it make a difference if I work on commission vs. being salaried?
Answer: There are different rules when you work in a foreign country after retirement. In any event, they only affect Tier 1. You would continue to receive Tier 2 and a Supplemental Annuity regardless of the amount you earn or the number of hours you work each month.
These rules apply if U.S/ Social Security tax is not withheld from the earnings (the most common situation in foreign employment).
Tier 1 benefits are withheld for each month a beneficiary younger than full retirement age works more than 45 hours outside the U.S. in employment or self-employment not subject to U.S. Social Security taxes. It does not matter how much was earned or how many hours were worked each day.
A person is considered to be working on any day he or she:
* Works as an employee or self-employed person;
* Has an agreement to work even if he or she does not actually work because of sickness, vacation, etc.; or
* Is the owner or part owner of a trade or business even if he or she does not actually work in the trade or business or receive any income from it.
Generally, if a retired worker?s benefits are withheld because of his or her work, no benefits can be paid to anyone else receiving benefits on his or her record for those months. However, the work of others receiving benefits on the worker?s record affects only their own benefits.
Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice
to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the
law to the particular facts of this and similar situations.
The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness
or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.)
that occur after the date on which a particular Q&A is posted.
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