By Reg Jones
January 18th, 2012 | Creditable service: CSRS Creditable service: FERS CSRS annuity computation FERS annuity computation Government pension offset RETIREMENT SOCIAL SECURITY Windfall elimination provision
Q. My wife started working under the Civil Service Retirement System in July 1982 and continued to work under CSRS until August 1989. She is re-entering the government workforce. She plans to stop working in eight years when she will be 57, and will have 15 years of government service. It appears she would be eligible for deferred retirement benefits at age 62. How will her benefits be calculated?
A: It all depends. When she returns to work for the federal government, she’ll be covered by CSRS Offset (CSRS and Social Security), with the option of transferring to the Federal Employees Retirement System (FERS and Social Security). If she stays in CSRS Offset, her entire annuity will be calculated under the CSRS formula. When she applies for deferred annuity at age 62, her CSRS annuity would be offset by the amount of Social Security benefit she earned while covered by CSRS Offset. The dollar value would be the same but the money would come from two different sources. If she transferred to FERS when she applied for a deferred annuity at age 62, her CSRS time would be calculated under the CSRS formula and her FERS time under the FERS formula. Note: Because in both cases, she would be receiving part of her annuity from CSRS, a retirement system where she didn’t pay Social Security taxes, her Social Security benefit would be subject to the windfall elimination provision. The WEP reduces the Social Security benefit of anyone who doesn’t have at least 30 years of coverage under Social Security.
October 11th, 2011 | Windfall elimination provision
Q: I am a GS-13 planning to retire at 70 with 19 years in CSRS, 11 years in CSRS Offset, and 19+ other substantial years under Social Security. No matter how many times I read the other questions and answers, I keep thinking they say my total retirement will be the sum of my CSRS retirement reduced by the net Social Security benefit after WEP reduction, PLUS the net Social Security benefit after WEP reduction. In other words, Total = (CSRS – (SS-WEP)) + (SS-WEP) = CSRS as if Social Security doesn’t exist. Am I confused? Can you straighten me out?
A: When you retire, the CSRS Offset portion of your total annuity will be offset by the amount of Social Security benefit you earned while a CSRS Offset employee. The net result will be the same. The payments will just come from two places, OPM and the Social Security Administration. Because you will have 30 years of substantial earnings under Social Security, the windfall elimination provision won’t apply. As a result, neither the portion of your Social Security benefit earned under CSRS Offset nor the additional benefit earned elsewhere will be affected.
August 2nd, 2011 | Windfall elimination provision
July 19th, 2011 | Windfall elimination provision
Q: I had 13 years of Social Security employment (max contribution) before entering CSRS Offset in 1991. My salary was always maximum Social Security contribution. I am 64 and considering retirement at age 66. Do CSRS Offset years count in meeting the 30 year requirement to avoid WEP?
A: All years of Social Security-covered employment in which you had substantial earnings count toward the 30 years needed to avoid the windfall elimination provision.
Q: I am getting ready to retire. I worked for the government from 1968 to 1972, then worked in the private sector and earned my 40 quarters in Social Security. I returned to work for the federal government in 1984 as a Civil Service Retirement System Offset employee. I was told that because I earned my 40 quarters from the private sector that my government annuity would not be reduced: I will get a full government annuity and a full Social Security check. Is that right?
A: By law, your CSRS annuity will be reduced at age 62 by the amount of Social Security benefit you earned while covered by CSRS Offset. Whether you will be affected by the windfall elimination provision depends on how many years of substantial earnings you have under Social Security. If you have 30 or more years, there won’t be any reduction in your Social Security benefit. If not, your Social Security benefit will be reduced. You won’t be subject to the government pension offset.
Q: I had 13 years of Social Security employment (max contribution) before entering the Civil Service Retirement System Offset in 1991. I am 64 years old and considering retirement at age 66. Do CSRS Offset years count in meeting the 30-year requirement to avoid the windfall elimination provision?
A: All years of Social Security-covered employment in which you had substantial earnings count toward the 30 years needed to avoid the windfall elimination provision.
May 20th, 2011 | Windfall elimination provision
Q: I am a 63 and ready to retire. I am from Romania where I worked for 15 years and paid for the corresponding Romanian Social Security, so I got a small pension (about $250) from there. I moved to the U.S. in 1985 and became a U.S. citizen. I’ve worked here for 25 years and pay for U.S. Social Security. I never worked again in Romania after I came to the U.S. I applied for Social Security in the U.S. and it seems that my U.S. Social Security benefits will be reduced because I get a pension from Romania. Some of the Social Security employees are saying that the Windfall Elimination Provision applies to me, some are saying that it does not. My question is: Does the Windfall Elimination Provision apply to me?
A: Yes, it does.
Tags: SOCIAL SECURITY
Q: I just received notice from Social Security that my benefits check may be reduced because of the windfall elimination provision. I retired under the Civil Service Retirement System Offset program Oct. 31, 2010. My time in service under CSRS was approximately five years, nine months. I withdrew the money that I put in after each job because at the time I did not expect to retire from civil service. My last withdrawal from CSRS was from the period of May 1981 to December 1982. I returned to government work in May 1984 and was placed in the CSRS Offset category. Because I did not pay back the redeposits I withdrew, my government annuity is reduced each month.
Will Social Security reduce my benefits under the WEP even though my government annuity is already reduced because I did not pay back the redeposits?
A: Because you took those refunds before March 1, 1991, your annuity was actuarially reduced based on the amount you owed and your age when you retired. Because a portion of your CSRS Offset annuity is based on pure CSRS service where you weren’t covered by Social Security, you are subject to the windfall elimination provision. If you had fewer than 30 years of substantial earnings under Social Security, your Social Security benefit will be reduced.
Q: I requested retirement calculations for mid-2014 and recently learned that after I left the government in September 1984, the retirement money I withdrew would have to be repaid in order to receive the benefits for that money. I withdrew $3,700; repayment with accumulated interest would be more than $22,000. I returned to the government in March 1987 under the Civil Service Retirement System Offset program. I thought I read that if a person who receives money under CSRS can also receive full Social Security benefits (no windfall) if that person has enough credits with Social Security (approximately 30 years). Is this true?
A: Yes, if you have at least 30 years of substantial earnings under Social Security. For more information about the Windfall Elimination Provision and what constitutes “substantial earnings,” visit the Social Security Administration’s WEP page here and click on “How does it work?”
March 8th, 2011 | Windfall elimination provision
Q: My latest Social Security estimate pamphlet says the maximum monthly reduction for WEP in 2010 is $381. Does that mean I would take whatever amount they estimate my monthly amount will be and can count on having no more than $381 deducted from that amount for the WEP penalty?
A: The windfall elimination provision reduces but does not eliminate the Social Security benefit of anyone who receives an annuity from a retirement system where he didn’t pay Social Security taxes, such as CSRS, and has fewer than 30 years of substantial earnings under Social Security. To find out how the WEP might affect you, go to www.socialsecurity.gov/retire2/anyPiaWepjs04.htm.
March 1st, 2011 | Windfall elimination provision
Q: In calculating the effect of WEP, how do the years I work between age 66 and 70 count? I plan to keep working and apply for Social Security when I am 70. At age 66, I will only have 18 years of substantial contributions under Social Security. If I continue to work until I am 70, will the additional four years of substantial contributions count in calculating the WEP when I apply for Social Security? Or will the WEP be based only on my years of substantial contributions as of age 66?
A: The windfall elimination provision is applied when you have the age and service needed to receive an annuity, whether or not you continue to work after that point.
Q: I recently went into the Social Security office and was given three different answers by three different people regarding offsets and the windfall elimination provision. I received an increase in my Social Security monthly payment for 2011 based on my 2009 earnings. In 2009, I made more then the minimum and qualified for another year (26 years now) toward my 30-year full exemption from the offset and windfall, so should Social Security also have given me an additional 5 percent because I now have one more year of substantial earnings toward my 30-year exemption?
I was told by the Social Security office that they do not recalculate it yearly and won’t until I get all 30 years completed. I will have 27 years when they calculate 2010 earnings next year. The real question is, are they supposed to calculate the additional year that I have earned toward my 30 years of substantial earnings immediately and give me money now, or do they wait until all 30 years are completed?
A: If you are subject to the windfall elimination provision, the reduction in your Social Security benefit is determined at the point you first become eligible for that benefit and is permanent. Any subsequent increases you are entitled to based either on cost-of-living adjustments or additional Social Security-covered earnings are simply added to that original, reduced base.
Q: A friend told me that her monthly Social Security benefit was reduced by $250 because of the profits made from the sale of a house that she inherited from her mother. Can this be true?
A: The Social Security earnings limit only applies to earnings from wages or self-employment, and then only for those individuals who haven’t reached full retirement age. In the ordinary course of events, income received through the sale of a home wouldn’t be considered to be earnings. However, if she reported any portion of the proceeds as earnings on her federal income tax return (because she served as a real estate agent, for example) that amount would be subject to the earnings limit.
Q: I retired at age 55 with 34-plus years of service. I quit after 13 years of civil service and returned to civil service after 3 1/2 years of private employment. I just turned 61. I paid Social Security for over 20 years. If I elect to request Social Security benefits at age 62, how will this affect my civil service pension?
A: Because you are now covered by CSRS Offset, at age 62 your annuity will be offset by the amount of Social Security benefits you earned while covered by CSRS Offset. The net effect will be that you’ll get the same amount of money, but it will come from two different places: the Office of Personnel Management and the Social Security Administration. However, since you will be receiving an annuity partly based on employment where you didn’t pay Social Security taxes and have fewer than 30 years of substantial earnings under it, your Social Security benefit will be reduced through the workings of the windfall elimination provision.
Q: I am a federal employee and I am also receiving Social Security benefits. I understand that when I retire and start receiving my civil service annuity, my monthly Social Security benefits will be recalculated because of the windfall elimination provision. At the time I started receiving Social Security, my number of years of substantial earnings for WEP purposes was 23. Because I am a Federal Employees Retirement System transferee, my current salary is subject to FICA. Will the years subsequent to the initial receipt of Social Security will be added to my 23 years? In other words, if I work and pay into FICA for five years after I started receiving Social Security, will my number of years of substantial earning for WEP purposes be 28?
A: It doesn’t matter where or when your Social Security credits were earned, only that you have to have 30 years (120 credits) of substantial earnings under Social Security to avoid the windfall elimination provision. The WEP applies to anyone who is receiving an annuity, in whole or part, from a retirement system, such as the Civil Service Retirement System, into which he didn’t pay Social Security taxes. To see what each year of earnings would have to be to qualify as substantial, read this WEP fact sheet.
Q: I have 33 years under the Civil Service Retirement System. Prior to that, I was with a private company and completed 32 quarters under Social Security. I will be 70 years old in June. My separation notice under the Base Closure and Realignment Act will be issued in June, and I will have to leave my job by Sept. 15. What are my best options to qualify for Social Security (40 quarters)? I understand there will be offset payments. Should I continue work two more years, finding another job after Sept. 15, and forget Social Security?
A: You can only acquire Social Security credits by earning enough through wages or self-employment to qualify for them. To earn one credit in 2011, you’d need to earn $1,120. If you do become eligible for a benefit, it will be affected by the windfall elimination provision, which reduces the Social Security benefit of anyone who receives an annuity from a retirement system, like CSRS, into which he didn’t pay Social Security taxes.
Q: I’m a disabled federal retiree drawing a federal retirement. I paid into Social Security while on National Guard status for 30 years. I’m currently working and paying into Social Security and will have enough quarters to draw Social Security payments at age 62. I understand there is an offset that will apply to my retirement. I have received a Social Security statement every year; my past statement shows I will draw around $750 at age 62. Is this my retirement amount after the offset, or do I need to reduce this amount by the offset amount? If that’s the case, what would the total amount be?
A: You are referring to the windfall elimination provision, which reduces the Social Security benefit of anyone receiving an annuity, in whole or part, from a retirement system, such as the Civil Service Retirement System, into which he didn’t pay Social Security taxes. To find out more about the WEP, visit the Social Security Administration’s Government Employee page. Once there, you can use SSA’s online calculator to see how the WEP would affect you. There’s an easier-to-use calculator here.
Q: After reading all the horror stories about the windfall elimination provision and Social Security demanding payback of erroneous payments, I’m writing to verify my Civil Service Retirement System Offset and WEP reductions. I have 22 years of CSRS service, from 1973 to 1995, put in 13-plus years of nonfederal work, and then was re-employed with the federal government as a CSRS Offset employee in 2008. I plan to retire at 62 with 27 years, 8 months of federal service, with about five years of that under CSRS offset.
My personnel office says that I am not subject to the government pension offset, but it can’t seem to explain whether I’m subject to WEP. They listed a Social Security deduction amount of $40 on my retirement estimate, but I’m still waiting to understand if this is a WEP deduction. I was under the impression that the WEP would cut my Social Security benefit in half. If the formula for CSRS Offset employees is time of CSRS Offset service multiplied by Social Security benefit amount divided by 40, then the reduction will not be so severe.
A: Anyone who is receiving an annuity, in whole or part, from a retirement system in which he didn’t pay Social Security taxes is subject to the windfall elimination provision if he has fewer than 30 years of substantial earnings under Social Security. While application of the WEP doesn’t normally reduce the Social Security portion of the benefit due to those receiving a CSRS Offset annuity, in rare instances it might. For more information about the WEP and how it is applied, go to this Social Security Administration fact sheet.
Q: I am 65 years old and will be 66 in January. I am contemplating retirement from the federal government. I worked in the private sector for more than 20 years and switched over to the government in 1985. I am under the Civil Service Retirement system. I was informed by a co-worker that my Social Security benefits, which I am counting on heavily to support my family, will be reduced substantially because I am under CSRS. Is this true?
A: Your Social Security benefit would only be affected if you have fewer than 30 years of Social Security-covered employment. If that’s the case, your Social Security benefit would be reduced, but not eliminated. To better understand how the windfall elimination provision works, read the Social Security Administration’s fact sheet.
Q: I retired with Civil Service Retirement System at 50 years old with 25 years’ law enforcement service. I’ve been self-employed for the past three years and reached my 40 quarters, including my pre-federal employment. I make a decent self-employment income now at around $90,000, and pay substantial Social Security quarterly payments. My concern is that basically the offset is going to take away most of my Social Security pay at 62/65. That said, are my payments to Social Security still mandatory? I realize my quarterly taxes are, and the IRS distributes them accordingly.
A: Deductions for Social Security are mandatory and will be taken from all earnings from wages and self-employment. While you will be affected by the windfall elimination provision, you will still receive a Social Security benefit when you apply for it. It will be smaller than it would have been had you either been 1) receiving an annuity from a retirement system where you paid Social Security taxes or 2) had at least 30 years of Social Security-covered wages.