Does 401k Withdrawal Affect Social Security Disability?

Individuals are eligible to obtain Social Security Disability Insurance Benefits (SSDI) if they suffer a long-term or permanent condition that prevents them from working in any capacity. This condition may be any qualifying injury or illness that keeps them from working.

Individuals pursuing SSDI benefits may also be enrolled in an employer-sponsored 401(k) retirement plan. Employees typically contribute money to these plans, pre-tax, out of their bi-weekly earnings. In some situations, employers have matching programs where they match an employee’s bi-weekly contributions up to a certain maximum amount. The money in a person’s 401(k) plan is typically invested over the course of many years and serves as a nest egg when it comes time for the employee to retire.

During retirement, the government can tax 401(k) disbursements as income. Moreover, if an employee takes a disbursement before reaching the required retirement age, they may incur a 10 percent early-withdrawal penalty.

In some instances, however, a 401(k)-plan participant may need to seek early disbursement of their retirement plan benefits due to their permanent disability. Even if the participant is under the required age for 401(k) distributions, which is 59.5 years old, the distribution is not subject to the 10 percent additional tax. However, the plan participant must still report the distribution as income on their taxes.

Taking regular distributions from a retirement account will not affect your benefits under the SSDI program so long as you have worked for a sufficient period of time to qualify for these benefits – and you cannot obtain sufficient income from your work over and above a certain threshold amount.

A knowledgeable California SSDI benefits attorney can meet with you to discuss your specific situation, including your eligibility for benefits. If you are eligible, your lawyer can file the necessary application on your behalf and pursue the benefits you need.

Applying for SSDI Benefits

To obtain SSDI benefits, you must meet certain minimum qualifications. First, a long-term or permanent injury or illness must prevent you from engaging in a substantial gainful activity (SGA), meaning that, as a result of your medical condition, you cannot work at any job or in any capacity.

Proving Your Benefits Eligibility 

When it comes to proving your eligibility for SSDI benefits, you need to have a knowledgeable and willing healthcare provider on board in your case. Moreover, the provider must be willing to state on the record, and to a reasonable degree of medical probability, that your medical condition prevents you from partaking in an SGA.

If your benefits application lacks sufficient medical documentation, it will most likely be denied. In that instance, your lawyer can help you file an administrative appeal and supply the necessary supplemental medical documentation. Once you exhaust your administrative appeal remedies, you can file an appeal in the federal court system if necessary.

Call an SSDI Benefits Attorney in California Today

If you are pursuing SSDI benefits, it is essential that you have a knowledgeable OC SSDI benefits attorney on board in your case. Your lawyer can assist you throughout the application-filing process and work to recover the benefits you deserve for your long-term disability.