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Windfall Elimination Provision (WEP) for Social Security

windfall of peppers

Photo credit: jb

If you have worked in a job where your pay was subject to Social Security tax withholding, and also have worked in another job where Social Security tax is not  withheld, such as for a government agency or an employer in another country, the pension you receive from the non-Social Security taxed job may cause a reduction in your Social Security benefits. This reduction is known as the Windfall Elimination Provision (WEP). It’s named such since it was enacted to eliminate the “windfall” that would otherwise be received by a worker who fit into this description. Without the WEP, the worker would effectively be double-dipping by receiving full benefits from both the pension and Social Security.

This provision primarily affects Social Security benefits when you have earned a pension in any job where you did not pay Social Security tax and you also worked in other jobs long enough to qualify for Social Security benefits. However, federal service where Social Security taxes are withheld (Federal Employees’ Retirement System) will not reduce your Social Security benefits, since Social Security tax is applied to earnings. The WEP may apply if:

  • you reached age 62 after 1984; or
  • you became disabled after 1985; and
  • you first became eligible for a monthly pension based on work where you did not pay Social Security taxes after 1985, even if you are still working.

Here’s How WEP Works

True to form, the Social Security Administration doesn’t make it easy to figure all this out…

You must start out by understanding your Primary Insurance Amount, which begins with your Average Indexed Monthly Earnings (AIME), and then take the Bend Points for the current year into account. For 2022 the first Bend Point is $1,024 and the second Bend Point is $6,172. As we discussed in the article on Primary Insurance Amount (PIA), the amount of your AIME that makes up the first Bend Point is multiplied by 90%; the amount between the first Bend Point and the second Bend Point is multiplied by 32%; and finally any amount above the second Bend Point is multiplied by 15%. These three figures are added up to create your PIA.

However – if WEP applies to your situation and you reached age 62 after 1989, the 90% factor (applied to the first Bend Point) can be reduced to as little as 40%. Effectively, this reduces the PIA by as much as $512 per month (for 2022). The reduction factor was phased in if you reached age 62 between 1986 and 1989.

Exceptions

Again true to form, the SSA has exceptions to the rule. If it turns out that your service in the Social Security taxed job was for 30 years or more and you earned “substantial” wages (substantial is defined as $27,300 for 2022 and has been indexed over the years), then your 90% factor is not reduced at all. If you had substantial earnings for at least 21 years but less than 30 years, the 90% factor is reduced by 5% each year between 21 and 30 years that you had “substantial” earnings in the Social Security-taxed job, starting at 45% for 21 years of substantial earnings.

Additionally, the WEP doesn’t apply to Survivor’s benefits or Spousal benefits (but the Government Pension Offset does). Other exceptions include the following:

  • You are a federal worker first hired after December 31, 1983;
  • You were employed on December 31, 1983 by a nonprofit organization that did not withhold Social Security taxes from your pay at first, but then began withholding Social Security taxes from your pay;
  • Your only pension is based on railroad employment; or
  • The only work you did where you did not pay social Security taxes was before 1957.

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. Likewise, if your AIME is less than the first bend point and all of your PIA is within that 90% bracket, the minimum Social Security benefit is 50% of your original PIA.

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

68 Comments

  1. Brian says:

    Great article! I am an expat in Japan and just learned of this (WEP). I double-checked my SS account and I have exactly 30 years of ‘substantial earnings’ (not including 2024). So if I understand correctly, I will not be subject to WEP even if I continue to pay into Japan’s pension system and I could have 2 pensions at age 65. The Japan one will not pay much at all, though, so I would hope the US one continues to pay the full amount (provided it remains solvent!)

    Due to the Totalization Agreement between the US and Japan, I can get an exemption from paying into US SS, if I choose to. Or continue to pay into both. But I have to think I could put that 15.3% of self-employment tax into a conservative IRA and it would do a lot better in the next 10 years. According to the SS tool, my payment won’t be that much different if I wait until 65 or FRA.

    1. jblankenship says:

      Sounds like you’re in a good position! Good for you!!

  2. Jerry Hunter says:

    The maximum WEP reduction is understated. My eligibility year is 2019, so my maximum WEP is supposed to be $463. That amount is increased each year after age 62 with COLA, such that now my WEP penalty is $566 and growing. SSA needs to be more honest about the magnitude of the reduction.

    1. jblankenship says:

      You are mistaking WEP reduction (which is a reduction to your PIA) with amount of benefit reduction caused by WEP reduction.

      Your benefit amount increases by the COLA each year as well. So the WEP percentage of benefit reduction remains the same. This is accomplished by reducing your PIA, not your actual benefit, and then the benefit is calculated based on the reduced PIA. COLAs are applied to the benefit amount once calculated from the PIA.

      So in actuality, if you filed for benefits at age 62, your WEP reduction would be something less than the maximum for your eligibility year, since your benefit is also reduced to its minimum.

      Here’s an example, using made up figures:
      Let’s say the PIA for the individual is $1,200. This means if he waits until FRA he’d get $1,200/month, increased by whatever COLAs have been applied since his age 62. We’ll say his WEP reduction is (at maximum) $300. So he could only look forward to $900 at FRA, increased by COLAs of course. Here’s how that plays out, assuming FRA=67:

      File at Age 62 – without WEP, benefit is $840
      – with WEP, benefit is $630
      (this is a reduction of only $210 from his non-WEP benefit, not the maximum reduction of $300)
      File at Age 63, with COLA of 5% – without WEP, benefit is $945
      – with WEP, benefit is $709
      File at age 64, with COLA of 5% – without WEP, benefit is $1,058
      – with WEP, benefit is $794
      File at age 65, with COLA of 5% – without WEP, benefit is $1,204
      – with WEP, benefit is $903
      File at age 66, with COLA of 5% – without WEP, benefit is $1,361
      – with WEP, benefit is $1,021
      File at age 67, with COLA of 5% – without WEP, benefit is $1,532
      – with WEP, benefit is $1,149
      (WEP reduction in benefit dollars at this point works out to $383, even though WEP reduction to PIA has remained constant throughout)
      File at age 68, with COLA of 5% – without WEP, benefit is $1,737
      – with WEP, benefit is $1,303
      File at age 69, with COLA of 5% – without WEP, benefit is $1,959
      – with WEP, benefit is $1,469
      File at age 70, with COLA of 5% – without WEP, benefit is $2,198
      – with WEP, benefit is $1,649
      (reduction in benefit dollars at this point is $549)

      The point is that the WEP reduction to the PIA was 25%, $300/$1200. And this percentage of reduction remains the same throughout, regardless of COLAs.

      I suppose, by the same token, SSA is also understating the amount of the Delayed Retirement Credits. These are stated as 8% for each year (2/3% per month) of delay in filing after Full Retirement Age. But the actual benefit you receive is also increased by COLAs yearly, and compounded.

  3. Graeme Hutchison says:

    Dear Mr. Blankenship, I wonder if you could provide me with some guidance.

    I am a UK citizen, now living in the UK. I am aged 65 and partially retired. During my working life I spent many years working in the US and now receive monthly US Social Security payments, which are taxed in the UK.

    From my years working in the UK, I am eligible for National Insurance payments which I can take from next year. I also am eligible to receive a private company pension – also for years worked in the Uk and which I have so far not taken.

    My understanding is that the NI payments (when taken) need to be advised to the IRA and will attract WEP. My question is whether future payments (when I decide to take them) from the private company pension scheme would also attract WEP and indeed whether the totalization agreement between the two countries and which I understand is there to avoid double counting of social security payments means that I do not have to advise the US authorities of this?

    Regards, Graeme

    1. jblankenship says:

      My (limited) understanding of the totalization agreements is that they are designed to allow for counting work credits from one country when determining benefits for another country. Such that, if you did not have enough credits in the US system for Social Security, you could use credits from UK to produce a benefit in the US.

      Regardless, I believe it is appropriate to report the private pension to SSA as well as the NI payments, and yes, these will produce WEP impact on your US SSA benefit.

  4. Elizabeth says:

    I hope to receive a portion of my ex-husband’s foreign pension as part of a divorce settlement. I have been told by SSA that this will not affect my SS through WEP or GPO, because it is not my earned income. But what if I receive the foreign pension directly from the provider, through a DRO? (This is the preferred method, since it would be automatic) Would that affect my SS? Thank you

    1. jblankenship says:

      Still, the foreign pension is not based on your earnings, so my opinion is that it would still not affect your SS benefit. I would confirm this with SSA if I were you though.

  5. Michelle says:

    Hi, can you help clarify what SSA means by the last sentence of this statement, pertaining to earnings not covered by SSA…?:

    “The examples above apply only to benefits paid to the worker and do not include future COLA increases. The WEP reduction may be larger if family members qualify for benefits on the same record. However, the total WEP reduction is limited to 1/2 of the pension based on the earnings that were not covered by Social Security.”

    https://www.ssa.gov/benefits/retirement/planner/wep.html

    Do you interpret this as the WEP reduction won’t be more than 1/2 of the other pension one is entitled to? This is important for me because I worked in Germany and will get a minimal German pension (ca. 160 Euro/month). In this example, SSA would NOT reduce my US benefit by more than half of my 160 Euro German payment? Meaning I would receive a WEP no greater than ~$80? I have my 40 SSA credits but only 15 substantial earnings in the US, and 7 in Germany.

    My WEP based on the calcs will be at least $500 (at least 1/2 my PIA). And my German pension will only be $160.

    From what I understand, the US will not ask for my German earnings for any calculation. But perhaps they will know my German pension benefit amount? Or is WEP calculated based

    Thank you for a great website FULL of useful info!!

    1. jblankenship says:

      Yes, that’s exactly the case. WEP reduction is limited to not more than 50% of your non-covered pension, or not more than 50% of your PIA, whichever is less (meaning whichever results in a smaller reduction).

      1. Michelle says:

        thanks for the reply. 50% of my PIA is about 8 times what 50% of my German pension is. I almost want to opt for a lump sum payout of the German pension to avoid any potential miscalculation of WEP. Do you know how they confirm what a German pension is? Also, what rights one has if the WEP deduction is more than 50% of the other pension?

        Thank you.

        1. jblankenship says:

          Re: your rights – you have a right to have a WEP impact no more than 50% of the amount of the pension that triggers WEP. It’s the rule. If they get it wrong, you call them and tell them it’s not right.

          And no, I don’t know how they determine or confirm what a German pension is. I suggest that you keep good records of your pension payments as your documentation.

        2. Sabine Burt says:

          Hi Michelle I am in the same situation
          Wenn du in Deutschland einen Rentenantrag stellst melden die der SSA das und wie iche es verstehe wird dann der Antrag gueltig fuer die SS hier
          Es gibt ein Formular welches du ausfuellen musst falls du nicht beide Renten beziehen moechtest

  6. Tim Hansen says:

    Hello Mr. Blankenship, I’m not sure if you are still responding to these posts, but I thought I’d give it a try.

    I’m 60 years old and worked as a police officer for 13 years after retiring from the Coast Guard with 25+ years of service. Prior to the police officer job, I had 26 years of substantial earnings. The police department had its own retirement system, so I didn’t pay into SS for the last 13 years. I have my USCG Pension with is $4900 a month, which I earned while paying into SS and my PD Pension is $2500 a month. I’m now working part time so my income will not reach the substantial level by SS standard. During 2022 my income with this part time job will be about $10000 and in 2023 it will by 26000

    I’ve been trying to figure this out using the SS WEP calculator and I come up with $1068 at 62 and $1600 at 67. It is very difficult to follow their instructions, and I just want to know if I’m in the ballpark. I don’t want to overestimate what the payment should be.

    Any insight you can provide would be very much appreciated.

    Tim

    1. jblankenship says:

      Hi Tim – without knowing your Primary Insurance Amount it’s difficult to know if your estimates are coming up correctly. At age 60 your bend points have not yet been established so the amount of WEP will be unknown until your age 62 as well. But based on what you’ve written, it seems as if the maximum WEP impact would be a reduction from 90% of the first bend point to 70%, which (using the 2023 bend points) would be a reduction of approximately $223.

      1. desiree says:

        My husband is a police officer with 27+ years. He can retire now at 53 and work more if he chooses. However, I assume he will still be subject to WEP. My question is whether my husband can collect spousal benefits based on my record or does WEP preclude him from doing so.

        Desiree

        1. jblankenship says:

          Actually, it is the GPO (Government Pension Offset) that will affect a spousal benefit for your husband. When receiving a pension from a government source, the spousal (or survivor) benefit is reduced by 2/3 of the amount of the government pension. In many cases this eliminates the spousal benefit altogether.

  7. Tom says:

    If I cash out my entire STRSOH Defined Contribution plan and spend all that money before claiming Social Security at age 67, am I still subject to the WEP? Also is the WEP penalty against both my own contributions and the State matching contribution in the DCP?

    1. jblankenship says:

      This can be a very confusing area of the Social Security rules.

      To be considered “not a pension for WEP purposes” according to POMS RS 00605.364 Determining Pension Applicability, Eligibility Date, and Monthly Amount(A)(2)(a):

      Withdrawals of the employee’s own contributions and interest made before the employee is eligible to receive a pension are not pensions for WEP purposes if the employee forfeits all rights to the pension. This rule applies even if the employer paid the employee contributions.

      In order to understand this, we need to get the definition of “eligible”, which is taken from POMS RS 00605.360 Windfall Elimination Provision(B)(1):

      Eligible for a pension means that a person meets all requirements for the pension except for stopping work or filing an application. For more information about pension eligibility, see RS 00605.364B.

      So in order to bypass WEP application, you must withdraw your own contributions and interest to the plan prior to your eligibility. Most plans specifically do not allow taking withdrawal of your pension before you’re eligible. If your plan allows you to do this, then you might be able to get around WEP in this manner. I’d get in touch with someone at Social Security to talk this through because I suspect this is an area that has been tested regularly.

      Lastly, WEP reduction applies specifically to a pension which is made up of both your own and the employer contributions. Both components are used to determine the WEP reduction amount, when applicable.

  8. Joe A says:

    Hi jim,

    I’m am currently firefighter in a city plan that does not pay into social security. I am considering retiring from the FD in a year and still a little unclear on the WEP. I paided into social security in other jobs for 17 years starting in 1986. Only 10 of those years qualify as substatial earnings. It is my intension to work another 15 years in a job that pays into SS to complete at least 25 substatial earning years. That would put me at full retirement age for SS.

    My pension would be aproximately $5000 a month. My current full retirement SS benefit is $1106 a month.

    My question is, if I retired from the FD next year and did not have any further substantial SS years, would I recieve anything from social security as 50% of my pension is more than my SS benefit?

    Thank you,
    Joe

    1. jblankenship says:

      The WEP is limited to the lesser of the following:

      50% of the first bend point (which for 2021 would be a total of $498) or
      50% of your Social Security benefit (based on your estimate this would be $553) or
      50% of your non-covered pension (if it’s $5,000, then this would be $2,500).

      So the smallest amount is 50% of the first bend point, or $498 (if this year was the year your benefit was calculated).

      Hope this helps!

      1. Joe A says:

        Yes it does. Thanks again!

  9. Janine m Sawyer says:

    HI,
    I have 15 years of substantial earnings. But now I am working in a public agency that does not contribute to social security. (been here for 14 years) we \choose funds in a 401 insteae. Because the agency kicks in 25% over out SSecurity amount, SS considers this a pension.

    At 61 and 9 months I took about several large withdrawals, starting with a $5K withdrawal. As I understand it, Social Security may see that as my pension.
    With the windfall my SS amount at 66 would have been about $600, but if they consider the $5K withdrawal as my pension, that would wipe out my soc sec earnings…?
    I called Social Security, and they said they will not know for sure until I file for benefits. Can you help. I have a constant stomach ache over this.

    1. JMSawyer says:

      PS my real distribution in about 2-3 years will be more like $2500 I am 64 now, hoping to retire at 66 or 67 (I am not counting Social Security anymore….)

    2. jblankenship says:

      I can try to explain it to you but please understand this is complicated. Without seeing your actual statements it’s pretty vague.

      The “pension” amount will be determined by the balance of your 401(k) account when you began taking withdrawals, and your age at that time. If you take that balance and go to the table toward the bottom of this page (https://secure.ssa.gov/apps10/poms.nsf/lnx/0300605364), you should be able to determine what the “monthly” amount is considered to be from your pension.

      From what you’ve told, you were 61 at the time of the withdrawal, and if this was after June 1, 2016, you’d divide the balance of the account by 188.6. If the resulting amount is less than double the WEP reduction, then your actual WEP reduction may be less.

      Bottom line is that the amount of the withdrawal you took has no bearing on the WEP reduction – it’s based on the balance in your 401(k) when you started the withdrawals. In the end, SSA is the only one who can give you the full accounting for how much your benefit will be and how much of a reduction is applied.

      1. Janine m Sawyer says:

        Thanks so much…I will look at the table and try to calculate.

        1. Janine m Sawyer says:

          I was 61, the balance of my 401 was about 240K. that divided by 188.8 is about 1272. Now I get confused. you say that if this is less than double the WEP reduction, then my WEP reduction may be less…
          At 66 my normal SS payment would be about 1276, and with the WEP reduction it comes to about $600….
          So…?
          Are you saying its a wash? I will get no Social Security? I appreciate your input.

          1. jblankenship says:

            No – you must have something mixed, because you’re indicating that the WEP reduction would be $676 – and that’s way more than the maximum WEP. The maximum WEP would be something less than $498 (depends on your year of birth).

            At any rate, since your pension amount comes out to $1,272, unless you have 20+ years of substantial earnings, you’ll be assessed the maximum WEP for your age. My estimate is that your benefit will be something around $775-850, after WEP reduction.

          2. Janine says:

            your full retirement age (66 and 4 months), your payment would be about……. $1,232 a month
            age 70, your payment would be about………… $1,594 a month
            age 64, your payment would be about…… $ 1,061 a month

            Hi so, I took the 5K out at 61.5 Years old.
            So are we calculating the SS from that year? which I would assume it would be about 800 something….
            Thanks

          3. jblankenship says:

            No, the WEP impact doesn’t apply until you start receiving your benefit. So if your FRA is 66y4m, that means your year of birth is 1956. Your maximum WEP impact is therefore $428 (see the table toward the bottom of this page: https://www.ssa.gov/benefits/retirement/planner/wep.html

            So if you filed for benefits to begin in the month that you reach the age 66y4m, your benefit would be $1,232 minus $428, which equals $804.

            The only reason we needed to know the amount of your “pension” is to determine if the monthly equivalent would be something less than $856 – because the WEP impact cannot be more than 50% of your pension monthly amount. Since your pension calculated to $1,272, we don’t need to consider that amount any longer. The maximum WEP impact will apply to your situation, as I calculated above.

      2. Wendy says:

        I had 26 years earnings with SS, then for 18 years worked for state. I knew nothing about WEP when I was hired but as I understand it, whether I worked. 1 year or 18, WEP takes away part of my SS. Also working after age 70 with SS payments, it will not improve my situation. I didn’t withdraw until 70 years old so I was able to appreciate the extra $$.
        Any chance government is looking to remove WEP?

        1. jblankenship says:

          I haven’t seen anything recently regarding elimination of the WEP. Occasionally there are bills introduced but they rarely get any traction.

  10. Carlton Loomis says:

    I have a real hard time with the term double dipping. I worked three jobs for thirty eight years as a firefighter ,respiratory therapist and at an airport. I hardly feel like I was double dipping.

    1. jblankenship says:

      I can appreciate your position. In all of my years of working with the Social Security system, I’ve never bought into the concept completely. My understanding of it (as if that’s necessary?) is only partly completed by looking at the way the benefit is calculated – with more weight given to the lower earnings levels. Have a look at the article Why is there WEP (Windfall Elimination Provision) in Social Security? for my explanation of the “why”. It won’t take away the unfairness of the provision, but maybe will help explain it a bit.

      1. Rhonda says:

        I’m very confused, I have 20 years of service credit I don’t know if that’s considered substantial years or not. I’ve been working for the state for 25 years and will continue to for the next seven I’m trying to figure out this whole windfall elimination act? Is there anyway you can assist me this is confusing

        1. jblankenship says:

          Compare your Social Security-covered earnings, year-by-year, with the Substantial Earnings Table. If your earnings for a particular year are equal to or greater than the Substantial Earnings amount, then you have one year of credit. If you have more than 20 years of credit, your WEP impact may be reduced.

  11. K Joffrion says:

    i have a city of houston fire department civil service pension. i have 29 yrs of substantial earnings what % will i lose if i take ss now at 64

    1. jblankenship says:

      Very broadly estimated, since I don’t have all of your information – approximately $45 a month reduction for that situation.

  12. Andy says:

    While making my own WEP table I realize that I have met the substantial earnings amount for 26 years out of the 30 I need to make the WEP go away.
    My total earnings where double the SE amounts but I guess it’s only the number of years that counts.
    Since I had a couple of years where my earnings was reduced due to unemployment my question is if there is any rules on how unemployment affects the SE amount? Can lower earning due to unemployment still be counted towards SE years?

    1. jblankenship says:

      Check your earnings record on your account at SocialSecurity.gov. Those figures are the ones that are used to determine substantial earnings years of credit.

  13. Keith says:

    I keep seeing the phrase “full benefit” and “full pension”. I worked part of my career in the USA, and part of my career in the UK. During the USA years, I paid into Social Security. During the UK years, I paid into the UK pension system. I’m planning to receive Social Security that reflects the 12 years I worked in the USA (IRS estimates around $1,130 per month) as well as the UK pension that reflects the 20 years I worked in the UK (HMRC estimates around £650 per month). Neither of these are a “full benefit”, but I would be perfectly happy with two partial benefits.

    Am I to understand that my Social Security would be impacted simply because I also have a UK pension? Isn’t my American SS benefit supposed to be based on my work in the USA?

    1. jblankenship says:

      Unfortunately that’s the way it works.

  14. Ron Roseman says:

    I worked in Texas schools as a teacher for only 13 years (w/o paying SS). I am receiving a small pension for that time. Will even that small amount of time negate all the other years of paying SS? (I don’t think I will have 30 years Substantial Earnings. I can believe 30 non SS paying years triggering the WEP, but 13???)

    1. jblankenship says:

      Unfortunately, any pension paid based on non-SS-covered work will trigger WEP.

      However, WEP does not negate your Social Security benefit, it reduces the benefit. The maximum reduction is the lesser of: 50% of the amount of the non-SS-covered pension, 45% of your SS benefit, or 50% of your applicable first bend point. For 2020 if you are 62, 50% of your applicable first bend point is $480. If your pension is anything less than $960, then the amount of the WEP reduction would be 50% of the pension monthly amount, unless your SS benefit would be less than $960, in which case the maximum reduction is 45% of the SS benefit. WEP cannot reduce your SS benefit to zero, the maximum reduction (percentage of the SS benefit) is 45%. If you were 62 in an earlier year than 2020, the first bend point would be lower.

  15. Ian says:

    JB,

    We Brits are masters of understatement. This provision is literally daylight robbery – I get punished for working and contributing more. This provision appears to impact poor people more than richer people to boot.

    Wondering though if I don’t tell either side about the existance of credits in other’s system how would they connect UK Ian to US Ian?

    Thanks,

    1. jblankenship says:

      Ian –

      I appreciate your humor with the situation… I find it’s necessary to keep from losing your mind.

      Regarding keeping things secret, something tells me that “the twain shall meet” at some point. And then you’ll likely either lose payments going forward until any overage is paid up, or you’ll be billed for the overage in a lump sum. In either case it’s not a good scenario. Best of luck to you!

      jb

  16. Ian says:

    JB,

    Thank you. I am pretty sure that I will not have sufficient years (max 25 of the required 30) in the UK system to qualify there without the inclusion of some US SS credits as provides for under the agreement – so I will not get a full UK pension. If I am reading the agreement papagraph correctly that will mean no WEP on my US SS. I would have 100% of my US SS and 83% of the UK pension.

    The reason I am concerned was that I am considering making 5 years worth of type 3 (voluntary) contributions into the UK system and that would would give me 30 years in the UK system and a full UK pension. That becomes a less desirable option if I am then negatively inpact by the WEP. I would have 80% of US SS and 100% of UK SS. This will probably be a lower amount than in the scenario above.

    To complicate things further though, independent of the above, if I earn a private pension in the UK the WEP seems to kick in anyway. In that case the type 3 contributions might still make sense.

    It seems that in practice I am going to lose 20% of my US SS in nearly ever conceivable scenario unless the WEP is repealed. It seems to be an unjust provision and if meant to address the internal US issues of pensions related to non-SS taxed income then it could be rewritten to remove exclude consideration of overseas pensions entirely.

    1. jblankenship says:

      I hope things work out well for you, Ian.

      I had to laugh – did you actually just use the term “seems to be an unjust provision” with regard to US tax law? I hope you’re not just realizing this now, after being here for 21 years?

      Cheers,

      jb

  17. Ian says:

    I am also trying to make sense of the Windfall Elimination Provision. My siutaion also involves the UK but us the reverse of the gentlemen above – I am a UK citizen who has been in the US since 1989 and currently has 21 “substantial” years of SS coverage, however I am planning to return home next year. I have been able to calculate my PIA etc. and hence the maximum impact of any overseas pensions such as the UK’s Old Age Pension. I agree that the inclusion in the WEP of pensions from “employer in another company” is descriminatory as WEP does not apply to any non-social security pensions I have earned in the US. What I am looking for clarification on is where it says in the TotalizationAgreement with the UK:

    “If you qualify for Social Security benefits from both the United States and the United Kingdom and didn’t need the agreement to qualify for either benefit, the amount of your U.S. benefit may be reduced. This is a result of a provision in U.S. law that can affect the way your benefit is figured if you also receive a pension based on work that was not covered by U.S. Social Security. For more information, call our toll-free number, 1-800-772-1213, and get the publication, Windfall Elimination Provision”

    Does this mean that if I only qualify for UK retirement benefits becuase of this Agreement the WEP does not apply to the UK benefits? Thanks.

    1. jblankenship says:

      Ian –

      I think you’re reading it correctly, if I’m following your situation correctly. If you only qualify for your UK pension because of the inclusion of your US SS credits, then the WEP effect is already in place, meaning that the two pensions are coordinated with one another. If you continue working and earning pension credits upon your return to the UK, you might be in the position described by the paragraph you quoted, and therefore your US SS benefit could be impacted via the WEP.

      Hope that helps –

      jb

  18. Marge Cantello says:

    I just don’t get it!!! If I worked to qualify for Social Security benefits then why was I only given 1/3 of what I earned. That’s similar to working 30 hours and getting paid for 10 hours??? What has working under Civil Service got to do with working under Social Security? I am now 72 years old and have to make the decision to either work the rest of my life or learn to live in poverty. Is this my American dream?

  19. william cook says:

    Jim,
    I am in the final stages of the application for Social Security retirement benefits,and have an almost identical set of circumstances to David.I fully expected to receive the lower formula amount when I received the U.K.state pension in 3 years time,what I did not expect was for the reduced formula to be applied based on a personal voluntary contributory Company pension being received from the U.K.Do you have any insight on this,as I am considering an appeal?
    ps I would refer David to the”Totalization Agreement with the United Kingdom”on the Social Security.gov web site.I am 99.9%sure that impact is only effective on receipt of U.K.benefit.

    1. jblankenship says:

      William –

      You may have basis for an appeal, as the WEP is (in theory) supposed to primarily impact recipients of plans such as government pensions, but “employer in another country” is also specifically listed as a source of data to determine WEP impact. I’ll be interested in hearing the outcome of your case if you do appeal.

      jb

  20. Bill says:

    I have the quarters but have never earned substantial income under Social Security. Although I remain in the Federal Government as a full time employee, I’ve been collecting my Social Security at the full rate for over two years, ever since I turned 65. Since I plan to retire on December 31st, I called Social Security to find out what effect the Windfall Elimination Provision would have on my $711.00 monthly allotment. The agent I talked to could not give me a firm figure, but since I have been under the substantial earnings cutoff for all but two or three of the 25 years I have held second jobs (I’m an adjunct professor at a local college, a job that has other compensations besides money.), she said my check would be reduced to 40 percent of the $711. That would be about $284.00. That’s fine, but I thought that by law they could not reduce the allotment below half of what a person receives, but perhaps that applies only to folks with “substantial” earnings. Also, the agent said that when I receive a cost of living raise on my CSRS retirement, my Social Security will be reduced by that amount. She added that I would be penalized if I failed to report the increase immediately to Social Security. Is all of this true? I’ll trust your word over hers.

    1. jblankenship says:

      Bill –
      You’ve got the same information that I have – As I understand it, your reduction to your Social Security benefit should not be more than 50% of your non-covered pension. I got that information from SSA Publication No. 05-10045, which reads in part:

      If you get a relatively low pension, you are protected. The reduction in your Social Security benefit cannot be more than one-half of the amount of your pension that is based on earnings after 1956 on which you did not pay Social Security taxes.

      You should be okay – although you might go to your local SSA office and ask them to clarify and agree with this assertion.

      Hope this helps!

      jb

  21. jan says:

    Hi DAvid,

    please look at the provisions of the US-UK “totalization agreement” on social security benefits.

    j

  22. David says:

    Thanks Jim,

    Thats kind of what I have been gathering so far. I’ve also downloaded the AnyPIA calculator and if I enter an amount for non-covered amount, then it does indeed whack it quite hard (drops from $1375 pm to $1181 pm).

    We’ll see what happens when I submit a claim later this year

    Cheers

    David

  23. David says:

    Jim,
    I keep reading this and the official docs but cannot get a defintive answer. WEP appears to be implemented if you have a pension from a job where SS was not deducted. I have been told that a state pension from a foreign government (UK) would cause the WEP to be implemented.

    In my case, I lived in the UK until age 45 paying taxes and National Insurance Contributions. I continued to pay NI after leaving the UK for USA and am now fully paid up for 100% UK Basic State Pension.

    I also have over 40 quarters of work paying Social Security in the USA and am entitled to a Social Security Income when I choose to retire.

    If I decide to take my US Social Security benefits now, does my UK Basic Pension affect my US Social Security – I won’t get the UK pension until 2011?

    Many thanks for your help

    David

    1. jblankenship says:

      Hello, David –

      The way I understand it is that your Social Security benefit can be reduced by as much as 40% of the first bend point – for 2010 that is the first $761 of your PIA. The amount of the reduction is supposed to be guaranteed to be no more than half of your pension from the non-covered employment.

      What I don’t know for sure is how the SSA calculates this reduction in the case where you’re not collecting the other pension. Perhaps the reduction will not come into affect until you begin the other pension?? I’d check with the SSA to find out for sure (and come back here to let us know what you find!).

      Hope this helps –

      jb

  24. Nicholas Lepore says:

    I have a question regarding my situation.
    I collect a pension from the state of Mass., which I share with my x wife. I have put 25 years in SS by working outside my public teaching job. I plan to put 30 years in so I can collect without a penalty. I am presently teaching p/t in a private school and meeting substantial earnings, but will have to work until I’m 74 to meet that goal. In the past I missed substantial earnings by small amounts: 1989 by $134.00, 1991 by $2.00, 1993 by $830.00 and 1999 by $134.00. Is there any way I can have some of these reviewed and accepted by SS or have my previous employer adjust the yearly figures (by adjusting the following years figure) to meet substantial earnings? Thank you

    1. jblankenship says:

      Hello, Nicholas –

      All I can tell you is that it can’t hurt to ask – I would definitely go to your local Social Security Administration office and present your information. (I wouldn’t hold my breath though.)

      On the other hand, the reductions will be pretty minimal for your situation, when you’re at age 70 with (for example) 26 years in substantial earnings. By my calculations, using 2010 figures, the WEP reduction would amount to roughly $152 per month – not money you’d wish to throw away, but at age 70 looking at four more years of work, you might consider otherwise. Just a thought.

      I wish you well –

      jb

  25. Charlotte D says:

    Will do, it may take a while but I hope the end result is positive.

    Stay tuned.

    cd

  26. Charlotte D says:

    Mr. Blankenship, you have been very helpful. If you would like I could let you know how things turn out in case anyone else has this problem. Thanks again.

    cd

    1. jblankenship says:

      Please do, Charlotte – I’m sure I’m not the only one who will be interested in your result!

      Best wishes,

      jb

  27. Charlotte D says:

    Thank you for your prompt answer back. I thought that may be the only road, what type of attorney would I contact? Would it be Social Security benefits or civil?

    cd

    1. jblankenship says:

      I suppose a civil attorney could probably get you started in the right direction – it’s not necessarily a Social Security issue as much as it is a question of your rights to complete information. Best of luck to you.

      jb

  28. Charlotte D says:

    I worked as a per diem for a little over 4 years at a local school district from 1989 to 1992. When hired I was asked if I wanted to join the the NYS Retirement System. I was told since I wouldn’t being making a lot of money if I didn’t join at this time I could always buy my time back. which I did when I was hired full time at another district. At no time was I told at the first job, that they were not deducting Social Security contributions from my check. When I went to the Social Security department to sign up for retirement benefits I found out about the Windfall Elimination Provision and how it effect a portion of my Social Security income. How is this possible when not given the option by being asked if this is what I wanted. I would never had refused contributing into SS. If you could give me any information or tell me what legal rights I may have it would be greatly appreciated.

    1. jblankenship says:

      I’m very sorry to hear about your situation, Charlotte. Unfortunately, I don’t know of any recourse that you would have in this situation, but I’m also not an attorney. I suggest that you talk to an attorney about the situation to see if there is any legal position that you could take.

      Best wishes to you –

      jb

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