Q&A: How Social Security affects IRA distributions

Q: You recommended in thisQ&A that the reader consider not claiming Social Security at 62 and use distributions from her 401(k) and IRA to cover the gap until she reaches full retirement age or until she decides to claim her Social Security benefit.

If she took your advice, would she still continue to pay Social Security taxes each year out of her 401(k)/IRA distributions until she files for Social Security benefits? If so, is it the full percentage of Social Security tax (12.4%) that she would pay?

I am considering taking IRA distributions too when I retire from the workplace at age 63 to carry me through until I claim at age 66 but am unable to find any information about paying Social Security taxes.

Another question: Since I likely will be taking smaller IRA distributions per year than what my annual salary has been, will my Social Security benefit eventually decrease during these years because I am paying less into the Social Security system? Pamela Bowerman, Chicago, Illinois

A: Social Security (Federal Income Contributions Act, or FICA) taxes are due only on earned income, so they would not be due if one retired from work and was withdrawing income from an IRA or a 401(k), says Jim Mahaney, vice president of strategic initiatives at Prudential Financial in Newark, N.J.

"That said, once Social Security is claimed, one could be paying taxes on your Social Security income," says Mahaney.

"In fact, one way many retirees can lower the taxes due in retirement on Social Security benefits is by delaying their claim of Social Security since Social Security income receives favorable tax treatment under current law. By delaying their Social Security, they create a larger income stream that receives favorable tax treatment."

As for your second question, Mahaney says Social Security benefits would not be reduced based on the size of your IRA withdrawals. Social Security benefits are based on the highest 35 years of one's work history and are not related to IRA withdrawals.

Read How work affects your benefits and Benefits planner: Income taxes and your Social Security benefits

Robert Powell is editor of Retirement Weekly, contributes regularly to USA TODAY, The Wall Street Journal and MarketWatch and teaches at Boston University.