Ask The Experts: Retirement

By Reg Jones

Social Security and withholding

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Q. I am a married ex-federal employee who transferred from CSRS to FERS in 1998 and retired early under FERS with 18 years’ CSRS and eight years’ FERS in 2005. My spouse worked for the federal government for 16 years under CSRS but did not retire and is not eligible for a pension because she took her retirement contributions out in 1987 and did not return. Both of us have enough qualified work subject to Social Security to be eligible for a Social Security benefit, but just barely.

1. Is either of our Social Security benefits, or are both, subject to the windfall elimination provision or government pension offset? If so, who is affected? 2. If the answer to No. 1 is yes, does the WEP and/or GPO have a different impact on each of our decisions to take our Social Security benefit early (age 62) versus later (66)? Or, to put it another way, should we consider the fact that we are impacted by WEP and/or GPO a factor in each of our decisions to take SS at age 62? 3. Could you explain “spousal benefit” and whether being subject to GPO and/or WEP has an impact on this? 4. Does the decision to take SS early and being subject to WEP and/or GPO have any impact on the spousal benefit?

A. Because you will be receiving part of your annuity from CSRS, a retirement system where you didn’t pay Social Security taxes, you’ll be subject to the windfall elimination provision. The WEP will reduce your Social Security benefit if you have fewer than 30 years of substantial earnings under Social Security. On the other hand, because you’ve been covered by FERS for at least five years, you won’t be subject to the government pension offset.

As you noted, your wife took a refund of her retirement contributions; therefore, she won’t be entitled to an annuity. However, she will be able to receive the survivor annuity you elect. As you probably already know, you are required by law to provide her with a full survivor annuity benefit unless she agrees in writing to a lesser amount or none at all.

Because you both have earned Social Security benefits, while you are still living, each of you will be entitled to the larger of the two benefits, the earned benefit or the spousal benefit. If one of you dies, the other would be entitled to a Social Security survivor benefit in addition to his or her own earned benefit.

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