From 24/7 Wall St. · Gerelyn Terzo · · 1m
Ernst & Young Bonus Timing Triggers Social Security Rule
63-year-old Ernst & Young employees get $100m bonuses that Social Security counts in the year earned, not received.
In brief
63-year-old Ernst & Young employees get $100m bonuses that Social Security counts in the year earned, not received. Social Security counts Ernst & Young bonuses in the year earned, not received, avoiding early retirement penalties. Originally reported by 24/7 Wall St..
Bonus Rule Shift
Ernst & Young will pay $100 million in human skills bonuses to employees.
“Ernst & Young said it will award $100 million in bonuses to employees who demonstrate human skills”
Social Security Timing
Social Security counts bonuses in the year earned, not received.
“At 63, Social Security counts the bonus in the year he earned it, not the year it arrives”
Earnings Test Rule
Earning over $24,480 triggers Social Security to reduce benefits.
“In 2026 you can earn $24,480 from work before Social Security holds back $1 in benefits for every $2 above the limit”
Special Payment Rule
Bonuses count as work done, not received, for Social Security purposes.
“Compensation you receive after you retire, for work you performed while still on the job, sits outside the annual earnings limit”
Bonus Timing Example
Bonus lands in next year, counts as work done in current year.
“Picture a hypothetical Ernst & Young employee who turns 63 this fall, qualifies for a human skills bonus on this year’s performance, and retires December 31”
Tax Impact
Bonus income affects Social Security taxability in the year received.
“The bonus counts as ordinary income in the year you receive it, and that can pull more of your Social Security into taxable territory”
Claiming Strategy
Take bonus before Social Security starts to avoid tax penalties.
“If the timing is flexible, take the bonus in a year before benefits start”
Permanent Impact
Early claiming reduces Social Security by 25% for life.
“Claiming at 63 against a FRA of 67 permanently reduces the benefit by 25%”
Here's the gist
Social Security counts Ernst & Young bonuses in the year earned, not received, avoiding early retirement penalties.
