In earlier articles we talked about the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP). These two rules within the Social Security Administration’s procedures reflect reductions to Social Security benefits for receiving pension benefits from a job where your salary is not subject to Social Security withholding. Usually these are federal, state, or local government jobs, including teaching jobs at public institutions. The WEP applies to your own Social Security benefit and pension, while the GPO applies to your spousal or survivor’s Social Security benefit and your own pension.
The WEP may impact you if you are receiving a pension from a non-covered government job and you also are qualified to receive Social Security benefits based upon your own record. The same holds true for Spousal benefits – if you are receiving a government pension and are eligible for Spousal benefits, these can be reduced by the WEP. Survivor’s benefits are NOT subject to the WEP. For 2010 the maximum WEP reduction is $355.50, but it can be much less (even eliminated) depending on how long you worked in the Social Security-covered job and how much money you made there.
The GPO may impact you if you are receiving a pension from a government job and are qualified to receive Survivor’s benefits based upon your spouse’s or ex-spouse’s record. Your Survivor benefit may be reduced by an amount equal to two-thirds of the amount of your pension.
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I can learn from you, you can learn from me - please leave your comments and links!Jim Blankenship, CFP®, EA, is an expert in personal retirement, IRAs, and tax issues, with more than 25 years of experience in the industry. Read more from this author
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[...] IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (or in any attachment) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication (or in any attachment).GPO and WEP – When Do These Apply? [...]
[...] will likely apply. You can read more about the impact of these non-Social Security jobs at this article which explains the Windfall Elimination Provision and the Government Pension Offset (WEP and GPO respectively, if you’d like more [...]