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Navigating Social Security While Working: Essential Insights for Schneider National Employees

Healthcare Provider Update: Healthcare Provider for Schneider National: Schneider National primarily utilizes UnitedHealthcare as its healthcare provider for employee health benefits. UnitedHealthcare is renowned for offering a range of health insurance plans, including those that cater to commercial trucking and logistics companies through tailored healthcare solutions. Potential Healthcare Cost Increases in 2026: As we move toward 2026, Schneider National, like many employers, may face significant healthcare cost increases primarily due to anticipated premium hikes in the ACA marketplace. With some states expected to see increases over 60%, and the loss of enhanced federal premium subsidies looming, employees could experience out-of-pocket premium costs rising by as much as 75%. This alarming trend stems from escalating medical costs and the financial pressures on insurers, which may lead to tougher choices for companies in managing benefits while ensuring their workforce stays adequately covered. Click here to learn more

65 is the new 55 when it comes to retirement from your Schneider National firm, meaning you may have the option to work at the same time you claim Social Security benefits. If you retire from Schneider National and get a part-time job or some consulting income, your paycheck can affect the amount you receive monthly, the amount you owe in taxes for the year, and your Medicare premiums.

Reasons abound to keep working, but for most, it simply comes down to math and to emotions.

With a longer lifespan on average, many of our clients from Schneider National are concerned they won't have enough savings to last their lifetime, and understandably so.

If you plan to keep working after retiring from your Schneider National while collecting Social Security, here is what you need to keep in mind:

Timing Matters

If you start your Social Security benefits before your (FRA), or full retirement age (which is between 66 and 67, depending on the year you were born), you will end up with a permanently reduced monthly benefit because of the early age. If you claim at the earliest possible age of 62, your monthly checks could be up to 30% less than at your full retirement age(FRA). ¹

There will also be an earnings test until you reach that full retirement age(FRA): If you have earned income in excess of $19,560 in 2022, your benefits will be reduced by $1 for every $2 of earned income over the limit.

The year you reach your full retirement age(FRA), the earnings test limit is $51,960 in 2022, and your benefits will be reduced by $1 for every $3 of earned income over the limit.

These reduced benefits do not just 'disappear'. If your benefits have been reduced due to earnings, your monthly Social Security check will be increased after your full retirement age(FRA) to account for benefits withheld earlier due to excess earnings.

Note: Earned Income does not include investment income, pension payments, government retirement income, military pension payments, or similar types of 'unearned' income.

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'Earned Income' includes wages, net earnings from self-employment, bonuses, vacation pay, and commissions earned—because they're all based upon employment. Once you reach your full retirement age(FRA), there is no earnings test and no benefit reductions based on earned income.

Scenarios: Claiming Social Security at 62 while working

This hypothetical example is calculated by Fidelity Financial Solutions Team, using Social Security and tax tools. The tools are based on data and methodology published by the Social Security Administration (as of March 2022) and Internal Revenue Service (as of March 2022). All benefits are calculated in today’s dollar.(See: Income Taxes And Your Social Security Benefit for more information.). The actual benefit would be adjusted for inflation. State/Local taxes are not considered. All the numbers are rounded to the closest $500. Example assumes an individual turning 62 in 2022, makes $100K/year before retirement, $65K/year expenses in retirement, receives $24K/year Social Security benefits at age 62, single tax filing status, and standard deduction for federal tax purpose. Any additional income needs are covered by withdrawals from tax deferred account, therefore are fully taxable.

Tax Impacts

Separate from the earnings test, Social Security benefits themselves are subject to federal income taxes above certain levels of 'combined income.' Combined income generally consists of your adjusted gross income (AGI), ² nontaxable interest, and one-half of your Social Security benefits.

For individual filers with combined income below $25,000, none of your Social Security is taxed. For joint filers with combined income below $32,000, none of your Social Security is taxed. (See: Income Taxes And Your Social Security Benefit for more information.)
For individual filers with combined income of $25,000 to $34,000, 50% of your Social Security benefit may be subject to federal income taxes. If your combined income exceeds $34,000, then up to 85% of your Social Security benefits could be taxed.
For joint filers with combined incomes of $32,000 to $44,000, 50% of your Social Security benefit may be subject to federal income taxes. If your combined income exceeds $44,000, then up to 85% of your Social Security benefits could be taxed.

Regardless of your income level, no more than 85% of your Social Security benefits will ever be subject to federal taxation.

Additionally, 11 states also tax your Social Security benefits. The rules and exemptions vary widely across this group so it is wise to research the rules for your state or consult with a tax professional if you're one of our Schneider National clients that this applies. ³

State Social Security Tax

The eleven states below impose a tax on Social Security benefits to varying degrees.

Colorado

Colorado's pension-subtraction system exempts up to $24,000 in pension and annuity income, including some Social Security benefits. The exemption is based on your age, starting at age 55.

Connecticut

Connecticut partially or fully exempts Social Security benefits, based on a person's filing status and income.

Kansas

Kansas exempts Social Security benefits from state tax, based on the taxpayer's income. Your Social Security benefits are exempt from Kansas income tax if your federal adjusted gross income (AGI) is $75,000 or less, regardless of your filing status.

Minnesota

Minnesota partially taxes Social Security benefits. The state allows a subtraction from benefits ranging from $2,725 for married taxpayers who file separately, to $4,260 for single taxpayers, to $5,450 for married taxpayers who file jointly. The rule is subject to phaseouts starting at incomes of $82,770 for joint married filers, $41,385 for married taxpayers filing separately, and $64,670 for heads of household and single filers. The subtraction is less for these incomes and eventually phases out entirely as you earn more.

Missouri

Missouri exempts Social Security benefits from state tax, provided that the individual is age 62 or older and has adjusted gross income of less than $100,000 if married and filing jointly, or $85,000 for all other filing statuses. Those who earn more than that might qualify for the exemption if they're disabled.

Montana

Montana asks residents to use the Montana Individual Income Tax Return to determine the portion of Social Security benefits that's taxable by the state (page 5 and page 6). That might be different from the federal amount.

Nebraska

Starting in 2022, Nebraska began phasing out taxation of social security benefits. The state allows a deduction for Social Security income that's included in your federal adjusted gross income if your federal Adjusted Gross Income(AGI) is less than or equal to $61,760 for married couples filing jointly, or $45,790 for all other filers.

New Mexico

Starting in 2022, the state of New Mexico changed rules that would exempt most seniors from paying tax on social security benefits. This exemption is available to taxpayers with the following income thresholds — $100,000 for single filers, $150,000 for married filers filing jointly, and $75,000 for married filers filing separately.

Rhode Island

Rhode Island has an exemption on Social Security taxation for those who have reached full retirement age as defined by the IRS. Eligible taxpayers must have federal Adjusted Gross Income(AGI)s of $88,950 if single, or $111,200 if married and filing jointly.

Utah

In late 2019, Utah adopted a sweeping tax bill that includes a tax credit for Social Security benefits that are included in a taxpayer's federal adjusted gross income. The Adjusted Gross Income(AGI) thresholds are $25,000 for married filing separately, $50,000 for married filing jointly, and $30,000 for single filers.

Vermont

Vermont previously followed the federal rules for determining the taxable portion of Social Security benefits, and then it adopted exemptions for taxpayers with incomes below $25,000 for single filers and $32,000 for other statuses. Benefits for those with higher incomes are taxed at incremental levels, with no exemption available for Adjusted Gross Income(AGI) of over $55,000 if single or over $70,000 if you're married and file jointly.

Medicare & Social Security

In addition to federal and possibly state income taxes, you will pay Social Security and Medicare taxes on any wages earned in retirement. There is no age limit on these withholdings, nor any exemption for any sort of Social Security benefits status.

These earnings can also count toward the calculation of your benefits. The Social Security Administration checks your earnings record each year and will increase your benefit, if appropriate, based on these additional earnings.

If you are making much less in retirement than before, could it hurt your benefits?

No. This is because the benefit payment is still based on your 35 highest years of earnings. At worst, there would be no impact; at best, it could help if this replaces any of the lower 35 years.

Note: Your earnings may not only push you into a higher tax bracket, but also into a higher threshold for your Medicare premiums once you are over 65. Medicare sets the cost (premium) for Part B each year at a fixed rate for most participants ($170.10 a month for 2022), but it increases for individuals with an annual income over $91,000 and married couples with an annual income above $182,000. The cost for these higher-earning participants can range from $238.10 to $578.30 per month in 2022.

If your income is above a certain level, you may have to pay IRMAA (Income-Related Monthly Adjusted Amount) in addition to your Part B or Part D premium. We recommend you consult with a tax professional for more details on whether or not you are affected.

Can I Contribute to a Retirement Account?

Another key advantage of ongoing earned income even after you collect Social Security is that you can keep contributing to your retirement savings accounts like traditional IRAs, health savings accounts (HSAs), Roth IRAs, and 401(k)s.

Note: If you are over 72, you will have to take the required minimum distribution (RMD) from your traditional IRA, except for during the 2020 pause because of COVID-19.

Your traditional 401(k), or similar Schneider National retirement plan, is a different story. In general, you can continue stashing away money in your current Schneider National-provided plan as long as you're still working, even part-time, and you can delay taking your RMD until after you retire.

These additional savings can help, especially if your savings are running a bit behind your goals. The combination of the added savings, tax-deferred growth potential, and the ability to defer tapping into your savings can be powerful, even at the end of your working career.

What are the eligibility criteria for employees to participate in the Schneider Electric pension plan, and how do these criteria vary for salaried and hourly employees of Schneider Electric? In your answer, please elaborate on the implications of the different eligibility dates and any exceptions that may apply, such as coverage under collective bargaining agreements or participation in other retirement plans maintained by Schneider Electric.

Salaried and Hourly Employees: Eligible employees include those hired before January 1, 2006. Salaried employees become plan members the January 1 after joining the company if they are scheduled to work at least 17.5 hours per week, or if working less but completing 1,000 hours in a year. Hourly employees become members upon completing one hour of service. Exceptions: Employees hired or rehired after December 31, 2005, those covered under a collective bargaining agreement unless specified otherwise, and employees currently accruing benefits under another qualified company plan are ineligible.

How does the Schneider Electric pension plan calculate the monthly retirement benefit for participants, and what factors contribute to the final benefit amount? Discuss the importance of years of service, salary history, and the effect of any early or late retirement provisions on the final pension benefit.

The pension benefit for salaried employees is calculated using a formula considering years of benefit service, average monthly compensation, and covered compensation as of December 31, 2009. The benefit depends on the retirement age, chosen benefit payment form, and if benefits are received under another company plan. For hourly employees, the pension benefit is determined by the years of benefit service as of December 31, 2009, and a pension rate effective at that time.

What options are available for employees of Schneider Electric regarding spousal benefits under the pension plan, particularly if a participant passes away before or after retirement? In answering this question, detail how these options could affect survivors' financial stability and the importance of proper beneficiary designations during an employee's tenure at Schneider Electric.

Pre-Retirement: If an employee dies before pension payments start, the surviving spouse may receive a monthly death benefit at the employee’s normal retirement date, with payments potentially starting as early as the employee's 55th birthday. Post-Retirement: Joint and survivor annuity options are available, which provide continuing income to the spouse after the participant's death. The benefit amount is adjusted based on the selected payment option.

What procedures must be followed by Schneider Electric employees to initiate the retirement process and apply for pension benefits? Include in your discussion the timeframes and eligibility requirements for different retirement options, and highlight the consequences of failing to comply with these processes.

Employees must actively apply for pension benefits through the Schneider Electric Retiree Benefits Center. The application should be made close to the retirement date but no later than 90 days prior. The process includes choosing a payment method and, if applicable, obtaining spousal consent for certain payment options.

How does Schneider Electric ensure that benefits under its pension plan comply with the regulations set forth in ERISA, and what protections are offered to plan participants regarding benefit entitlement? Discuss the implications of these regulations and how they safeguard the interests of Schneider Electric employees.

The plan is designed to comply with the Employee Retirement Income Security Act (ERISA), offering protections like vesting rights and fiduciary standards to ensure benefit security. Participants are entitled to a fair process for benefit claims and appeals.

What steps can Schneider Electric employees take if their claim for pension benefits is denied, and what rights do they have under ERISA to appeal such denials? Explain the importance of understanding the claims review process and the role that documentation plays in successfully navigating benefits disputes.

If a pension claim is denied, participants can appeal the decision by following the process outlined in the plan document, which includes a review and potentially an adjustment of the claim.

How does the Schneider Electric pension plan handle the calculation of benefits for employees who were re-hired after a break in service? In addressing this question, explore the effect of prior service on future benefits and the rules governing vesting and accrual for these employees as stated in the plan.

Re-hired employees retain their previously earned benefits as of December 31, 2009, but they do not accrue additional benefits. If re-hired after a break and not fully vested, previous service may count towards vesting upon return, depending on the duration of the break in service.

What is the significance of the Pension Benefit Guaranty Corporation (PBGC) in the context of Schneider Electric's pension plan, and how does it provide an additional layer of security for employeesâ€™ retirement benefits? Discuss how the PBGC's involvement affects participantsâ€™ perceptions of the safety and reliability of their pension benefits.

PBGC provides an insurance backstop that guarantees continuous payment of earned pension benefits up to legal limits in the event the plan fails financially, enhancing the security of the pension for employees.

What considerations must employees of Schneider Electric keep in mind when planning for early retirement, especially concerning the benefit reduction factors that apply? Elaborate on how consistent planning and understanding of these factors can influence an employeeâ€™s financial readiness for retirement.

Employees can elect early retirement beginning at age 55 with at least 10 years of vesting service. However, benefits are reduced based on how early the retirement starts relative to the normal retirement age.

How can Schneider Electric employees contact the company to obtain more information about the pension plan and retirement benefits? Detail the available resources, including specific contact numbers and web links, ensuring that employees know where to direct their inquiries regarding the Schneider Electric pension plan.

Employees can contact the Schneider Electric Retiree Benefits Center at 1-800-964-8843 for information about their pension plan and benefits, or access details online at the provided portal.