When planning for retirement, it’s vital to stay abreast of all of the Social Security Administration’s (SSA) exceptions. While there aren’t many, the Windfall Elimination Provision (WEP) can affect your Social Security benefit. And when planning for retirement, it’s important to know exactly how much of a benefit you are eligible to receive.
If you have 30 years of paychecks with FICA taxes withheld, this won’t affect you. But it will affect you if you work for a federal, state or local government agency or a non-profit organization. The windfall elimination provision may also affect American citizens who work outside the United States.
Why Does the Windfall Elimination Provision Exist?
The Social Security trust is funded by people who pay taxes into the system throughout their careers. Some government and public employers do not withhold Social Security taxes from your salary. Instead, many of them offer their own form of a retirement or disability pension. (This category includes teachers, firefighters, police officers and others.) In effect, that means enforcing the windfall elimination provision prevents people from “double dipping” into the system.
What is the Windfall Elimination Provision Reduction?
The WEP is simply a different formula for determining how much Social Security benefit a person receives. The SSA has a great chart to help determine how much it may reduce your benefits. (Keep in mind that the chart does not reflect cost-of-living-adjustments, early retirement, delayed retirement, or other factors.) This calculator can also help you determine how your benefit may be affected by the WEP.
Who Does the Windfall Elimination Provision Affect?
The WEP does not affect every worker. The workers’ that WEP will affect are those who:
- Earn a retirement or disability pension from an employer who didn’t withhold Social Security taxes
- Qualify for Social Security retirement or disability benefits from work in other jobs for which you did pay taxes
- Reached 62 after 1985
- Became disabled after 1985
- First became eligible for a monthly pension based on work where you didn’t pay Social Security taxes after 1985
- Performed federal service under the Civil Service Retirement System (CSRS) after 1956
There are a few exceptions to the WEP. It does not apply to you if:
- You are a federal worker first hired after December 31, 1983
- You were employed on December 31, 1983, by a nonprofit organization that didn’t initially withhold Social Security taxes from your pay, but later began withholding Social Security taxes
- Your only pension is for railroad employment
- The only work you performed for which you didn’t pay Social Security taxes was before 1957
- You have 30 or more years of substantial earnings under Social Security
Does the Windfall Elimination Provision affect Survivor Benefits?
The WEP applies only to a worker’s benefits. However, there may still be reductions in benefits for widows, widowers, and other survivors, but not because of the WEP. Another rule called the Government Pension Offset (GPO) affects spouses and survivors. Under the GPO, Social Security benefits are cut by two-thirds of a pension you receive from the job. (Only for jobs for which does not require you to pay Social Security taxes.)
Here’s an example of how it works: If your pension is $600, the SSA will deduct 2/3 of that (i.e., $400) from your Social Security payment. So if you’re eligible for a $500 spouse, widow/widower’s benefit, you’ll only receive $100 a month from the SSA. ($500-400=$100).
You May Qualify for Legal Assistance
The laws and exceptions surrounding Social Security benefits and the WEP especially are complicated. You can talk to an experienced disability attorney for free and get answers that only apply to you. They’ll help you determine any WEP deductions from your benefits that may apply. They’ll also help with questions regarding survivor benefits.
You’re 3x more likely to get benefits the first time you apply if an attorney files your paperwork. Since these attorneys always work on contingency, you’ll pay $0 if the SSA won’t award you benefits. And if you do win, then you’ll only pay a small, one-time fee.
Ready to see if you may qualify? Click the button below to start your free disability benefits evaluation now.
Mandy Voisin is a freelance writer, blogger, and author of Girls of the Ocean and Star of Deliverance. As an accomplished content marketing consultant, mom of four and doctor's wife, Mandy has written hundreds of articles about dangerous drugs and medical devices, medical issues that impact disabled Americans, veterans' healthcare and workers' compensation issues since 2016.