retirement earning limitations (pensions, federal, separate, father)

[ogplife]

Is it true there is federal law that imposes limitations on earnings covered for retirement purposes? I think it is somewhere between 150,000 and 200,000. If so why do they have this rule?

[Submariner]

I have never heard of any such thing.

As far as I know you can have as many private pensions paying you as you wish.

There once was no limit on how many Federal pensions you could get so folks were getting three federal pensions. It was called 'Triple-dipping'. But that has since been restricted. There are folks who were grand-fathered and allowed to keep their three pensions from the federal government. But today you can only double-dip. [at 18 go in the military at 38 get a DOD pension. Then go to work for the post office and work there until you are 58 and get a USPS pension. Now under current law, if at 58 you started working for the Forestry service you would never get their pension. At 65 you would still get your SSA, because that is a separate insurance policy that you have paid into, it is not considered federal money. So today you can have two federal pensions plus SSA.]

If you a have large investment portfolio, your earnings from that are often 'passive income', which means that you did not work directly with the business. [like say it was all stocks or bonds, where you are not the CEO of the company] That income can not be sheltered, so you may get stuck paying the full 'capital gains' taxes on that income.

If your portfolio is ownership in a business where you maintain a role in managing the company, then your income is an 'active income'. In that case, then you could shelter most if not all of the income, and avoid paying any taxes.

Any un-sheltered income once it grows to a large enough amount you do hit a trip-wire where suddenly you can no longer deduct any write-offs. You must then pay a flat percentage of your income, this is called the 'Alternative Minimum Tax'.

The only limits that I am aware of are limits concerning paying income taxes.

a. earn as much as you wish and keep it sheltered.

b. If un-sheltered then 'passive incomes' are required to pay 'capital gains' taxes.

c. you can have as many private pensions paying you as you wish. But you are limited to how many Federal pensions you can get.

d. Income from un-sheltered sources once it hits a trip-wire can no longer be deducted from and you must pay the AMT on it.

But I am not aware of any 'limits' on how much you could earn.

[Tesaje]

Maybe the OP means the limitations on contributions to retirement accounts? There are limits on Roth IRAS, regular IRAs, 401ks and similar plans but the limits are because each of these shelter or defer taxes. There is no limit on the income you earn, the money you save or the payout in retirement. There are limits to how much of that you can shelter or defer the tax on those monies. You can always put more money away in non-tax sheltered investments. Unless, of course you are extremely wealthy. Warren Buffet keeps pointing out how little he has to pay in taxes compared to his employees and he doesn't take steps to shelter his income.