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How Does WEP Affect My Dependents?

Photo courtesy of Samuel Zeller via Unsplash.com.

Photo courtesy of Samuel Zeller via Unsplash.com.

We’ve reviewed how WEP impacts your own benefits in prior articles. Briefly, when you’re receiving a pension based on work that was not covered by Social Security, your own Primary Insurance Amount will be reduced by as much as $413 per month (2015 figures) or 50% of the pension, whichever is less.

But can this reduction to benefits affect my dependents’ benefits as well?

Since the nature of the WEP calculation is to reduce your Primary Insurance Amount (PIA), that means any benefit that is based on your PIA will also be reduced.

So, if your spouse is planning to receive spousal benefits based on your earnings record and your PIA is reduced due to WEP, the spousal benefit available to your spouse will also be reduced.

For example, Jennifer, age 66 was a teacher for 25 years, and her employment was not covered by Social Security taxes. In addition to her teaching job, she also worked part-time and during the summer breaks in a job that was covered by Social Security. She earned 20 years of coverage as substantial earnings, not enough to reduce WEP, but enough to generate a Social Security retirement benefit.

Jennifer’s PIA (before WEP) is $1,400 per month, and since her pension from the teaching job is $1,500, the total WEP reduction factor for her PIA is $413. Her WEP-reduced PIA is $987.

Jennifer’s husband Scott is also 66. When Jennifer files for her own retirement benefit, Scott intends to file a restricted application for Spousal Benefits. Since Scott has not filed for benefits previously, he will be eligible for a Spousal Benefit equal to 50% of Jennifer’s PIA – $493.50 (50% of $987).

See How to Eliminate WEP for details on what happens to Scott’s benefit if Jennifer dies while he’s collecting Spousal Benefits (spoiler alert: it’s an increase).

12 Comments

  1. […] the Windfall Elimination Provision a bit more completely, including how to eliminate WEP and how WEP can impact your dependents. This prompted quite a few folks to write to me about their own situations, wondering if WEP would […]

  2. Michelle J SensburgNo Gravatar says:

    My husband (German National) and I have an usual situation that seems to confuse SSA agents. My husband moved to the US & retired in 2006. He is receiving his German pension directly from Germany. He has never worked in the USA. In 2013 he became a US citizen. As a US citizen, I have worked only in the USA for over 40 years. I plan to retire & file for Social security benefits in May of this year. My husband will file for spousal benefits since he has no US covered earnings. First we. were told GMO would apply to the spousal benefits until I showed them GM 2608.400 that specifically excludes foreign pensions and social security (which is how the German US treaty treats the German pension). Next they tried to tell us WEP would apply. But since my PIA will not be reduced for WEP, I do not believe the spousal benefit will be reduced by WEP. However I can not find any documentation on point. Can you help me?

    1. jblankenshipNo Gravatar says:

      WEP only applies to your own retirement benefit, and then only if the pension is based on your own work. In your case your husband is filing for a spousal benefit (not his own retirement benefit), which is therefore not subject to WEP.

  3. Ramesh ShahNo Gravatar says:

    Jim
    I have read your comment about WEP effect on Social Security Benefits.
    Recently, I am 65 Yrs+ and applied for SS Benefit to avoid Medicare Premium increase and reported to SSA my UK DHSS Pension deferred till 2020.
    In 2020, when I claim UK DHSS Pension, my US SS Benefits will be reduced based upon 1st Bend of SS in the yr I become 62 Yrs or they will reduced further to reduced my US SS Benefit since increase in UK DHSS deferred Pension?

    1. jblankenshipNo Gravatar says:

      It is based on your first bend point – which is applied when you reach age 62. Regardless of the year that you start the pension, the WEP always impacts your PIA, which is set in the year you reach age 62.

      jb

      1. RameshNo Gravatar says:

        Thank for your reply. It is quite clear that my SS Benefits will be reduced as per your reply. But I am still not clear whether the WEP effect will be during a period or delay untill I start collecting my other pension and then recalculate back from the date I start receiving SS Benefit

        1. jblankenshipNo Gravatar says:

          WEP does not apply until you start the pension that triggers WEP. So if you’re receiving a SS benefit prior to starting the gov’t pension, you may receive the benefit for a period of time before WEP impacts it.

          jb

          1. RameshNo Gravatar says:

            Thank you for your reply. It is now clear to understand.

  4. AnneNo Gravatar says:

    HI Jim: You wrote: Parting Shots

    There is a limit to the amount that your Social Security benefit can be reduced: no matter what your factor has been reduced to (from the original 90%), the resulting reduction cannot be more than 50% of your pension based on earnings after 1956 on which you did not pay Social Security taxes.

    And lastly, the WEP also applies to Disability benefits from Social Security, using the same factors.

    My comment: “,many Gov. benefits have built in limits on SSA “reductions”! thanks!

  5. DeAnn RobinsonNo Gravatar says:

    Thank you very much for answering my question, quickly, clearly and succinctly.

  6. DeAnn RobinsonNo Gravatar says:

    Dear Mr Blankenship,
    I read your April 23 Windfall Elimination Provision article on thecheatsheet.com. Useful information. I wish you had covered another scenario that my 79yo mom has been tussling with for two years. Its the inverse of the one in this blog article. WEP when the state pensioned spouse is the surviving spouse.

    Mom is a retired SC special ed teacher and gets a state pension and SS. My stepdad worked in a bakery and got a pension and SS. Before he died two years ago at age 90 he told that when he passed she should stop her SS and take his. SS said no, that’s “double dipping” Are state pensioned people not allowed survivor benefits?

    1. jblankenshipNo Gravatar says:

      This is another provision called GPO – Government Pension Offset. It is particularly designed to offset Social Security survivor (and spousal) benefits for individuals who are receiving a pension that is based on work for a governmental entity that was not covered by Social Security taxation. How it works is that any survivor benefit due the person who is receiving the pension (in this case your Mother) is reduced by 2/3 of the amount of the pension being received.

      It’s quite unfortunate that this wasn’t understood by your Mom beforehand, but (barring an error by SSA, which isn’t out of the question) the situation you describe sounds accurate in application.

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