Social Security Windfall Elimination Provision
Most individuals enter retirement knowing they’ve got some form of Social Security benefit coming. What you may not know is if you’re subject to the windfall elimination provision, and how much your Social Security benefits may be cut.
Some people are eligible for multiple retirement income streams. This occurs when you pay into more than one retirement system. The windfall elimination provision is designed to make sure you don’t get “too much” retirement income.
How the windfall elimination provision works
Many federal, state, and local government agency employees are eligible for a pension benefit. This benefit is completely separate from Social Security, and generally a lot richer than Social Security.
Earnings from your federal, state, or other government agency were excluded from Social Security taxes. Since earnings from these entities are’t subject to Social Security taxes, you don’t accrue Social Security benefits.
Most people have had many jobs and did pay something into Social Security. In this case federal, state, and local government employees may still be eligible for Social Security benefits. If you have enough history paying into both systems you may be eligible for both retirement benefits.
How do I know if the windfall elimination provision applies?
If you’re eligible for multiple government based retirement benefits, your Social Security may be reduced due to the windfall elimination provision (WEP). The WEP may apply if:
- You reached 62 after 1985; 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.
The WEP may not apply if:
- 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 for railroad employment;
- The only work you performed for which you did not pay Social Security taxes was before 1957; or
- You have 30 or more years of substantial earnings under Social Security.
How much is the windfall elimination provision penalty?
In cases where the WEP applies your monthly benefits are reduced using the following chart. Find the intersection between the eligibility year (year you attained age 62 or were disabled) and the number of years you paid into social security. Keep in mind the WEP reduction limit is half of your pension from non-covered employment.
|
Years of Substantial Earnings |
|||||||||||
|
Year |
≤ 20 |
21 |
22 |
23 |
24 |
25 |
26 |
27 |
28 |
29 |
30 |
|
1990 |
$178.0 |
$160.2 |
$142.4 |
$124.6 |
$106.8 |
$89.0 |
$71.2 |
$53.4 |
$35.6 |
$17.8 |
$0.0 |
|
1991 |
$185.0 |
$166.5 |
$148.0 |
$129.5 |
$111.0 |
$92.5 |
$74.0 |
$55.5 |
$37.0 |
$18.5 |
$0.0 |
|
1992 |
$193.5 |
$174.2 |
$154.8 |
$135.5 |
$116.1 |
$96.8 |
$77.4 |
$58.1 |
$38.7 |
$19.4 |
$0.0 |
|
1993 |
$200.5 |
$180.5 |
$160.4 |
$140.4 |
$120.3 |
$100.3 |
$80.2 |
$60.2 |
$40.1 |
$20.1 |
$0.0 |
|
1994 |
$211.0 |
$189.9 |
$168.8 |
$147.7 |
$126.6 |
$105.5 |
$84.4 |
$63.3 |
$42.2 |
$21.1 |
$0.0 |
|
1995 |
$213.0 |
$191.7 |
$170.4 |
$149.1 |
$127.8 |
$106.5 |
$85.2 |
$63.9 |
$42.6 |
$21.3 |
$0.0 |
|
1996 |
$218.5 |
$196.7 |
$174.8 |
$153.0 |
$131.1 |
$109.3 |
$87.4 |
$65.6 |
$43.7 |
$21.9 |
$0.0 |
|
1997 |
$227.5 |
$204.8 |
$182.0 |
$159.3 |
$136.5 |
$113.8 |
$91.0 |
$68.3 |
$45.5 |
$22.8 |
$0.0 |
|
1998 |
$238.5 |
$214.7 |
$190.8 |
$167.0 |
$143.1 |
$119.3 |
$95.4 |
$71.6 |
$47.7 |
$23.9 |
$0.0 |
|
1999 |
$252.5 |
$227.3 |
$202.0 |
$176.8 |
$151.5 |
$126.3 |
$101.0 |
$75.8 |
$50.5 |
$25.3 |
$0.0 |
|
2000 |
$265.5 |
$239.0 |
$212.4 |
$185.9 |
$159.3 |
$132.8 |
$106.2 |
$79.7 |
$53.1 |
$26.6 |
$0.0 |
|
2001 |
$280.5 |
$252.5 |
$224.4 |
$196.4 |
$168.3 |
$140.3 |
$112.2 |
$84.2 |
$56.1 |
$28.1 |
$0.0 |
|
2002 |
$296.0 |
$266.4 |
$236.8 |
$207.2 |
$177.6 |
$148.0 |
$118.4 |
$88.8 |
$59.2 |
$29.6 |
$0.0 |
|
2003 |
$303.0 |
$272.7 |
$242.4 |
$212.2 |
$181.8 |
$151.5 |
$121.2 |
$90.9 |
$60.6 |
$30.3 |
$0.0 |
|
2004 |
$306.0 |
$275.4 |
$244.8 |
$214.2 |
$183.6 |
$153.0 |
$122.4 |
$91.8 |
$61.2 |
$30.6 |
$0.0 |
|
2005 |
$313.5 |
$282.2 |
$250.8 |
$219.5 |
$188.1 |
$156.8 |
$125.4 |
$94.1 |
$62.7 |
$31.4 |
$0.0 |
|
2006 |
$328.0 |
$295.2 |
$262.4 |
$229.6 |
$196.8 |
$164.0 |
$131.2 |
$98.4 |
$65.6 |
$32.8 |
$0.0 |
|
2007 |
$340.0 |
$306.0 |
$272.0 |
$238.0 |
$204.0 |
$170.0 |
$136.0 |
$102.0 |
$68.0 |
$34.0 |
$0.0 |
|
2008 |
$355.5 |
$320.0 |
$284.4 |
$248.9 |
$213.3 |
$177.8 |
$142.2 |
$106.7 |
$71.1 |
$35.6 |
$0.0 |
|
2009 |
$372.0 |
$334.8 |
$297.6 |
$260.4 |
$223.2 |
$186.0 |
$148.8 |
$111.6 |
$74.4 |
$37.2 |
$0.0 |
|
2010 |
$380.5 |
$342.5 |
$304.4 |
$266.4 |
$228.3 |
$190.3 |
$152.2 |
$114.2 |
$76.1 |
$38.1 |
$0.0 |
|
2011 |
$374.5 |
$337.1 |
$299.6 |
$262.2 |
$224.7 |
$187.3 |
$149.8 |
$112.4 |
$74.9 |
$37.5 |
$0.0 |
|
2012 |
$383.5 |
$345.2 |
$306.8 |
$268.5 |
$230.1 |
$191.8 |
$153.4 |
$115.1 |
$76.7 |
$38.4 |
$0.0 |
|
2013 |
$395.5 |
$356.0 |
$316.4 |
$276.9 |
$237.3 |
$197.8 |
$158.2 |
$118.7 |
$79.1 |
$39.6 |
$0.0 |
|
2014 |
$408.0 |
$367.2 |
$326.4 |
$285.6 |
$244.8 |
$204.0 |
$163.2 |
$122.4 |
$81.6 |
$40.8 |
$0.0 |
|
2015 |
$413.0 |
$371.7 |
$330.4 |
$289.1 |
$247.8 |
$206.5 |
$165.2 |
$123.9 |
$82.6 |
$41.3 |
$0.0 |
The windfall elimination provision in summary
The WEP can substantially reduce your Social Security benefits. It was ultimately designed to make sure you don’t double-dip your retirement to an extreme amount. If you’re a government worker and pay into your employer plan you need to be aware of how it affects your individual situation.
Understanding and planning for Social Security and other pension benefits is critical to a successful retirement. If you need help planning for retirement feel free to drop us a note here.
What is the form on which I can request waiver of social security windfall?.
Hi John,
Do you have more than 30 years paid into the Social Security system? See attached link https://www.ssa.gov/pubs/EN-05-10045.pdf
My overall average last 30 years would help me make enough significant earned income but my number of individual years only show 26 years where I qualify. Can the overall average be considered or not?
Hi Dennis,
Only the years you actually paid into SS would count towards this. If they’re not listed on your Social Security statement, they won’t count.
I am covered by social security as a dependent of my husband. He has had over 30 yrs in private employment where he had substantial earnings and paid social security. Will I, having social security under his record, also be protected from government windfall oversite when I retire from my state job, under which I pay no social security, but do have a pension?
No, your spousal benefit should not be affected by the Social Security windfall elimination provision.
For the Spousal Benefit question, it would fall under Government Pension Offset provisions. Social Security will reduce her spousal social secuirty by two-thirds of her pension.
Source: https://www.ssa.gov/benefits/retirement/planner/wep.html
I have some retirement from outside the US, plus my US SS. I currently have 20 years in the US,
If I start taking out my US SS before tapping into my foreign retirement, can I then have some WEP free years before I start receiving my foreign pension.
Or can I take out as much as I can of my foreign pension and wait with my US SS until Im 70, thus minimizing the WEP effect?i
I would ask that question directly to the Social Security Administration. I am not an expert in how foreign retirement monies may affect your Social Security benefits and I wouldn’t want to give you incorrect guidance.