Choosing This Retirement Account Over a Traditional 401(k) Could Mean Keeping More of Your Social Security Benefits

Choosing This Retirement Account Over a Traditional 401(k) Could Mean Keeping More of Your Social Security Benefits

Christy Bieber, The Motley Fool

Sun, August 23, 2026 at 4:50 PM GMT+3 3 min read

Sources of guaranteed income that are somewhat protected against inflation are few and far between, but many seniors benefit from one: Social Security retirement benefits.

These benefits are valuable and can be essential to helping you achieve financial security in your later years, so it makes sense to try to maximize the income you collect from them. Surprisingly, one way you can do that is to be strategic about the retirement accounts you invest in.

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Here's what you need to know about how your choice of retirement plans can affect the amount of Social Security income you get to bring home.

This retirement account maximizes Social Security income

If you want to make sure you can bring home as much of your Social Security income as possible, you should invest in Roth accounts. Specifically, you may want to choose a Roth IRA over a traditional IRA. Or you may want to choose a Roth 401(k) instead of a traditional 401(k).

The reason to choose Roth accounts to maximize the Social Security benefits you collect is simple. When you take qualifying distributions from a Roth account, the distributions don't count as taxable income. They also don't count as part of your provisional income, which is the income used to determine if you owe tax on Social Security.

Your provisional income is all of your taxable income, half of your Social Security, and some nontaxable income, like MUNI bonds. Once provisional income exceeds $25,000 if you are a single tax filer, or $32,000 if you are a married joint tax filer, at least part of Social Security becomes taxable. And if you owe tax to the IRS, you don't keep all of your benefits.

Qualifying Roth distributions don't count in provisional income, though, so you can maximize the Social Security income you collect by avoiding giving any to the federal government.

Missing inflation adjustments make your retirement account critical

Many younger workers should strongly consider using Roth accounts if they don't want to lose Social Security benefits to federal taxes. That's because the threshold at which Social Security becomes taxable isn't indexed to inflation.

The $25,000 and $32,000 provisional income thresholds have not changed in decades, and there is no automatic mechanism under the law to increase them, even though income must increase over time to maintain buying power as prices naturally rise.

More retirees owe taxes on Social Security each year due to the issue, but if you invest in a Roth account in your younger years, you do not have to be one of them. So think carefully about your retirement account choices, as the decision will impact your benefits when you get older.

The $23,760 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after.

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View the "Social Security secrets" »

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Choosing This Retirement Account Over a Traditional 401(k) Could Mean Keeping More of Your Social Security Benefits was originally published by The Motley Fool