Social Security and Windfall Elimination

[Budatx]

WEP

The "30 years of substantial earnings" test, is the KEY to eliminate any impact from WEP. After 35 years of combined city & State service, I retired with no knowledge of WEP. After learning about and researching it, I discovered I needed 4 more years of "substantial earnings" as not all years of city service were covered by SS. Luckily, after a few years of enjoying retirement and deciding I did not want any cut due to WEP, I was able to earn 4 more years of substantial earnings.

I am 68, and plan to claim SS at age 70. We recently confirmed that DW (public university professor, with 403b & 401K retirement) has over 35 years of substantial earnings. Many public service folks I talk with have never heard of WEP and many retirees are shocked when they claim SS and feel the WEP cut.

 

[Sunset]

The substantial earnings test, is (I think) only applicable to WEP .

For 2024 it's $31,275 . You need to earn that amount at a minimum to count as a year of earnings for WEP year counting.
I suspect a lot of folks in the low wage category or part-time fall under this number, and of course find out later when they get WEP'd.

For regular SS If you earn less than $31,275 in the year, you still get another year on the SS chart and it counts towards earnings.

 

[MissMolly]

Here is a chart that lists the years and the substantial earnings required https://www.ssa.gov/pubs/EN-05-10045.pdf

 

[Irishgirlyc58]

Here's the website for the SSA information on WEP including the on line calculator for those who are subject to WEP and the chart of the maximum deduction based on the year you turn 62. This is how they calculate your SSA. I used the calculator many times with different dates etc. and then right before I retired. I also did my own calculations using the PIA information Gumby posted the 40% etc. Both were within about $2-due to where I rounded I'm sure! The SSA calculator was spot on with my benefit amount.

https://www.ssa.gov/benefits/retirement/planner/anyPiaWepjs04.html

 

[imnontrad]

I am an admin for a FaceBook group that is strictly focused on answering SS questions.
WEP reduces her own SS benefit.
But she is also subject to GPO reduction for any spousal benefit. That reduces the spousal/surviving spouse benefit by 2/3 of her pension amount.

 

[TwoBitsCA]

I'm ok with WEP. My WEP reduced payment is $350 per month, and I crawled over 10 years in SS credits.

Do you know how much you would receive without WEP? I think I'm in the same range.

 

[mickeyd]

I am in the same boat as horrnsfan (hookum). It's the SSA law, but recall that DW did not pay into SSA, so she does not get to participate in SSA.

If you go to local SSA office and sit down with one of their flunkies, that can show you the math that they use to adjust for WIN.

 

[Wile E. Coyote]

WEP is like paying for a hamburger at McD's like the person before you and they serve you only 3/4 of it.
If you paid into it, you should get the full amount for the years you paid into it.

Example:
Joe and I work at a job for 20 year paying into SS , both at the same wage.
Joe goes to prison for 20 more years and doesn't pay into SS while in prison.
I travel to China and take an Job teaching English and don't pay into SS, but earn a pension of $600 in the 20 years I work there.
Joe and I both retire and collect SS
Joe gets his full 20 years of SS that he paid into.
I get my SS Wep'd and they take away $300 of SS.

I paid the same to SS as Joe, and just because I got some other Pension the Dear SS decides to cut my SS.

It simply is wrong as I paid into SS the same as Joe.

This affects me vs Joe even if we both worked and paid into SS while earning $15 per hour. Yes they will WEP a person's SS even if it's a meager amount.

Per the SS website they do not WEP you if you have 30 years paying into SS.

 

[Wile E. Coyote]

I spent 9 years working for a City government. They did not pay into SS. They took that money that they did not pay into SS to fund the pension plan. So, those 9 years are not counted towards my SS.

The rest of my employment was subject to SS and I have been more or less employed full time since 15 (otherwise known as 45ish years. I still need to work 3-5 years to overcome some disastrous years (mostly when I was married and moving all the time) where I worked very little (under the substantial employment amounts).

Since I have more than 30 years where I consistently paid into SS I am not subject to WEP for the 9 years).

I have never heard of this circumstance where you are in a government pension that is paying into SS and you are paying into SS where you get penalized. What I believe is happening is they are not allowing you to double dip by getting essentially a way bigger pension amount because it is designed to cover the pension and SS and then also get SS on top of it. I imagine that because I was directly involved in that scenario, but, never retired.

 

[ChrisC]

Do you know how much you would receive without WEP? I think I'm in the same range.

Never bothered to find out. I retired in 2013, and wasn't eligible for SS retirement benefits in 2013, as I didn't have enough credits (or quarters of coverage, as we used to say, back in the day). I worked several days in 2015-16, as a 1099 consultant, and met the earnings requirements for SS. I think my first year of benefits was $279 a month. I have lots of zeros on my SS earnings statement/report as a result of working for the Federal Government from 1979-2013.

Then I worked one year as a seasonal, Federal worker -- in 2019, in which case my earnings that year added to my earnings record for SS. With that added credit (replacing a zero in my earnings record) my benefit increased to $294 a month. And afterwards, my prior Federal employer starting reporting, on a W-2 statement, that the value of my "free" retiree life insurance benefit was imputed income and that resulted in added credits to my earning report, replacing some other zeros. With the last two years of COLA increases, I'm at $350 per month.

 

[ApeX]

How do you calculate your "pension" when using the WEP calculator? Currently have small 401a and 457b plans with my employer, but have no idea how to calculate the projected "pension" I will receive for the few years of work here.
I do now know I'm facing a substantial SS benefit reduction ... which I wasn't aware of when I signed on to provide some on-call hours.

 

[Teacher Terry]

Apex, is there a way for you to withdraw the pension money you paid in and not collect it? Sometimes that’s the better option if the pension is tiny and the reduction to SS is large.

 

[Out of Steam]

Do you know how much you would receive without WEP? I think I'm in the same range.

My WEP reduction will be about the same ($350-400 a month) when I file for Social Security next year.

 

[ApeX]

Apex, is there a way for you to withdraw the pension money you paid in and not collect it? Sometimes that’s the better option if the pension is tiny and the reduction to SS is large.

Maybe. Who would I ask about this? My HR person?

 

[cathy63]

Maybe. Who would I ask about this? My HR person?

Yes, your HR person (who may refer you to your benefits person) is a good place to start. Your employer is supposed to calculate the value of your pension for SSA to use in WEP calculations, so they should also be able to give you that info.

You also might want to read these instructions that SS workers will use to determine whether or not you have a pension that has to be applied towards WEP and how to calculate it if the agency doesn't provide info: https://secure.ssa.gov/poms.nsf/lnx/0300605364

You can also use this info to determine whether you have enough Years of Coverage to be exempt from WEP: https://secure.ssa.gov/poms.nsf/lnx/0300605362

 

[zippy2020]

FYI, Democrat CA Senator Dianne Feinstein, who recently died, every year submitted legislation to eliminate WEP...and every year, the Senate refused to bring it to the floor. Didn't matter which party controlled the Senate, it never went anywhere.

If you feel you are unfairly penalized by WEP, then WRITE TO YOUR SENATOR and REPS to change it. They do not support eliminating WEP because not enough people think it a high priority.

We were aware spouse's SS would be penalized to the max (60%) so we never entered it into our ER calculations. We figured it would be enough to at least pay for his Medicare premiums, LOL.