The wage income from a NSO option does not count against your social
security benefits. It does, however, trigger SS withholding, and makes you
eligible for an IRA contribution. Consider a Roth.

there is a wealth of information on stock options and other employer stock
compensation at www.mystockoptions.com


"baumgrenze" <baumgrenze[at]yahoo.com> wrote in message
news:1119992622.520007.278020[at]g49g2000cwa.googlegroups.com...
- quote -

If one is under 65.3 years of age, wages reduce one's social security
benefits.

Does the 'wage' income generated by the exercising a non-qualified
stock option (NQSO) by a 64 year old, after retirement, have the same
impact on benefits? The option in question was exercised and the shares
were acquired by payment of the exercise price, a fee, and withholding
tax. The shares are considered a long term investment.

Along with federal and state income tax, FICA (Social Security and
Medicare) taxes were also withheld. I have seen explanations that the
difference between the exercise price and the option price is treated
as 'wages' for tax purposes. See, e.g.:

http://www.mellon.com/hris/fyi/fyi_07_23_99b.html

July 23, 1999

IRS Says FICA Due On Exercise Of Qualified Stock Options

The IRS National Office issued a memorandum (FSA 199926034) concluding
that the excess value on exercise constitutes wages subject to FICA
withholding.

Offsetting this, the SSA seems to require that to impact benefits,
'wages paid' need to be for services rendered in the same year.

Has anyone had experience with this question?

Thanks,

John