Ask The Experts: Retirement

By Reg Jones

Windfall elimination provision wording

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Q. The Windfall Elimination Provision states: “The only work you did where you did not pay Social Security taxes was before 1957, or you have 30 or more years of substantial earnings under Social Security.”

Are these statements separate or combined? What does the year have to do with it? What is the formula for calculating substantial earnings? Take into consideration that at the time, single mothers with three dependents did not earn “substantial earnings.” By the way, how much is substantial? It seems to me that the date I began work eliminates the windfall, along with my almost 30 years of Social Security earnings, which should not be subject to the WEP. Starting in 1956, the college I attended helped me work two jobs to cover all my expenses.

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WEP

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Q. I would like to know who is responsible for informing employees who work for the government of the windfall elimination provision. I was not told about the WEP until I went to the Social Security office to file for my Social Security retirement. My Social Security benefits were reduced by more than $1,000 per month. I worked hard all my life with two jobs for over 30 years. For what? Just to have my benefits go to someone who did not work but gets benefits. How are you to be informed of this law?

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Windfall elimination provision

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Q. I retired in 2006 under CSRS as an air traffic controller. I had 33 years of government service between the Air Force and the Federal Aviation Administration. I started receiving Social Security disability payments this month. I receive a periodic statement from the Social Security Administration stating what my benefits are and how much I would receive each month. The statement showed $1,200 a month. I receive $705 a month instead. I’ve earned enough credits working prior to and after my CSRS career. Why am I penalized when I have earned both benefits in my opinion?

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Social Security reduction

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Q. I am a retired GS-1811 (federal law enforcement) CSRS retiree (2005) with 25 years civil service and 7 years military I bought back. I’m 59 now and when I reach 62 or older and want to collect Social Security, I know my CSRS retirement will be reduced, but by how much? I used SSA.gov/estimator and got the figures, but there was no place to enter the fact I have a federal retirement. Do the figures I received on SSA.gov/estimator already factor my federal law enforcement retirement?

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Substantial earnings

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Q. I have “just missed the mark” for a couple of my years when I did not have substantial earnings. Is there any way to go back and purchase the year(s) or pay the difference?

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Post-1956 deposit

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Q. The following statement was made in an answer to a question ask about post-1956 deposit: “You can’t get a refund of the deposit you made for your active-duty service. What’s done is done. If you retire at age 62 and aren’t eligible for a Social Security benefit at that time, you’ll never have to worry about losing those years and having your annuity recomputed.”

I will retire at age 60 and have paid in a post-1956 deposit. I am in CSRS and will have 41 years and eight months with the post-56 deposit (eight years, six months of military service). I have worked for 40 quarters and am eligible for Social Security (military service and work prior to the military). However, due to the windfall elimination provision, I do not plan to ask for Social Security benefits until I am 65 or older. Will my annuity be recomputed after I reach 62 even though I have no intention of requesting my Social Security benefit until 65 or 70? Can I expect some kind of reduction in my annuity? I understand my Social Security benefit will be reduced by two-thirds once I apply for it.

A. Because you made a deposit for your active-duty service, you’ll not only get credit for that time in your annuity computation but your CSRS annuity won’t be affected no matter when you apply for a Social Security benefit. However, as you noted, your Social Security benefit will be reduced because of the windfall elimination provision. That’s because you will be receiving an annuity from a retirement system where you didn’t pay Social Security taxes and have fewer than 30 years of substantial earnings under Social Security.

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Windfall elimination provision

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Q. I expect to retire with income from a state employee retirement, CSRS offset and Social Security paid while working other than the CSRS offset Social Security.

To what extent will the windfall elimination provision apply? Since there are two Social Security eligibilities, does the WEP apply to both? Will the CSRS offset Social Security portion be reduced by the WEP as well as the Social Security earned when working for nongovernment employers?

A. At age 62, your annuity will be reduced automatically by the amount of Social Security benefit you earned while a CSRS offset employee. If you have fewer than 30 years of substantial earnings under Social Security, you’ll also be subject to the windfall elimination provision. If you are subject to the WEP, it could affect the amount of Social Security benefit attributable to your CSRS offset service.

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WEP

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Q. I retired in 2011 with 30 years and three months employment with the Postal Service at the age of 56 years and six months with a CSRS pension. I had 32 quarters of paying in to Social Security when I retired. I worked part time from June 2012 to October 2012 for an insurance company and earned about $6,200. How many more quarters do I have to go to receive a supplemental Social Security pension, and is it also true that I will only receive about one-third of what I would normally be entitled to?

A. You have already earned four credits in 2012. If you earn $4,640 in 2013, you’d get four more credits and be eligible for a Social Security benefit.

Yes, it’s true that your Social Security benefit would be less than it would have been if you didn’t receive an annuity from a retirement system where you didn’t pay Social Security taxes. Because you do — and because you’ll have fewer than 30 years of substantial earnings under Social Security — you’ll be subject to the windfall elimination provision.

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Social Security eligibility

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Q. I am 67 years old, employed as a federal civil servant with 35 years of service this year.  Can I collect Social Security benefits? What effect will that have on my retirement? I was under CSRS until FERS came into existence. I switched to FERS, believing I would not stay in civil service and wanted to pay Social Security taxes. It worked out that I did stay in the government, so I should have a portion of CSRS (about eight years) and the rest under FERS when I retire.

A. Because you have reached full Social Security retirement age, you can continue working and receive a Social Security benefit. However, that benefit will be affected by the windfall elimination provision. The WEP reduces the Social Security benefit of anyone who receives an annuity — in whole or part — from a retirement system, such as CSRS, where he didn’t pay Social Security taxes and has fewer than 30 years of substantial earnings under Social Security.

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CSRS Offset and WEP

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Q. I am a CSRS Offset GS14/10 employee who left Veterans Affairs Department employment in 1985 after 11+ years and returned to VA employment in 1991. I will be 66 years old in July and am considering retiring Jan. 3, 2014. At that point, I will have 24 years of offset employment, 30 years of Social Security contributions (including the 24 offset years) and 37 years of service (including sick leave).

My wife is in a similar CSRS Offset situation and is also considering retirement Jan. 3, 2014, at age 61. She will not take Social Security benefits until age 66. She will have 18 years of offset employment, 19 years of Social Security contributions (including the 18 offset years) and 32 years of service.

What impact will offset and the windfall elimination provision have on my VA pension and Social Security benefits?

A. Your CSRS annuity will be reduced by the amount of Social Security benefit you earned while a CSRS Offset employee. The same is true for your wife. Both of you would also be subject to the windfall elimination provision if you had fewer than 30 years of substantial earnings under Social Security. Note: While someone would have only needed to earn $4,520 in 2012 to earn four Social Security credits, he or she would have had to earn $20,475 for it to be considered substantial earnings. For more information about the WEP, go to http://ssa.gov.pubs/10045.html.

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WEP

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Q. I will be retiring with 33 years under CSRS on April 3. I am 61 years of age and will be able to collect a small Social Security amount at age 62 (July 14).

I have enough quarters in Social Security from working in the private sector before I joined the federal government. I am scheduled to receive $529 at age 62.

How much will I receive from Social Security? I am told that I will not receive the full $529. I make about $62,000 a year, since I am a GS-9 Step 10. I understand that there is a windfall provision in which I will receive less.

A. You’ll be subject to the windfall elimination provision if you have fewer than 30 years of substantial earnings under Social Security. The WEP will reduce but not eliminate your Social Security benefit. To find out more about the WEP, go to http://ssa.gov/pubs/10045.html.

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CSRS retirement and no military payback

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Q. I have 38 years under CSRS and have not paid back my four years of military service. I am 63 years old and am thinking about retiring this year. I have 40 quarters under Social Security. When I retire, am I eligible for a partial Social Security annuity, along with my federal retirement pension?

A. You’ll get full credit for your active-duty service in determining your length of service. However, when you reach age 62, your annuity will be recomputed without those four years, which will reduce your annuity. While you’ll be eligible for a Social Security benefit, it will be affected by the windfall elimination provision. The WEP will reduce that benefit if you have fewer than 30 years of substantial earnings under Social Security.

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WEP recalculation?

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Q. I am receiving Social Security reduced by the windfall elimination provision. I am collecting Canada Pension Plan for 10 years of employment with no Social Security for that time. I am continuing to work at age 70 and plan to continue doing so. At the end of this year, I will have 30 years of substantial Social Security earnings. Will they then do a recalculation and give me back the windfall amount, or am I stuck with the deduction forever?

A. No, they won’t. What you got is what you get.

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WEP

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Q. I am retired under CSRS, and have more than 40 credits of Social Security accrued. I am almost 62, and want to apply for Social Security benefits. How much will the windfall elimination provision hit me for? I spoke to several other CSRS retirees, and only a few said they took a 60 percent reduction, while some took no reduction. I can’t figure why each case appears to take a different amount off due to WEP.

A. Anyone who receives an annuity in whole or part from a retirement system where he didn’t pay Social Security taxes is subject to the windfall elimination provision. The WEP reduces but doesn’t eliminate the Social Security benefit of anyone who has fewer than 30 years of substantial earnings under Social Security. For more information about the WEP and how it works, go to http://ssa.gov/pubs/10045.html.

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WEP and disability retirement

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Q. I am a 57-year-old federal employee with 11 years creditable service under FERS. Earlier in life, I became disabled as a result of a line-of-service duty incident after 15 years as a California law enforcement officer. I receive a lifetime industrial disability retirement (tax-free) from the California Public Employees’ Retirement System.

I intend on retiring in five years, at 62½. Will I be subject to the windfall elimination provision due to my law enforcement employment outside of the Social Security system? Does my disability retirement play any role in reducing my Social Security entitlement? By my calculations, I will have 26 years of  substantial earnings under Social Security.

Also, I’m still trying to figure out the meaning of “bend point.”

A. The windfall elimination provision will apply if you have fewer than 30 years of substantial earnings under Social Security. I’m not aware that your disability retirement benefit will have any effect pro or con on your Social Security benefit.

Social Security benefits are weighted in favor of low-income workers. The bend points you referred to are the points at which the percentages used in the benefit computation change. In 2013, the first $791 of a beneficiary’s average indexed monthly earnings (AIME) would be multiplied by .90, over $791 but less than $4,768 by .32 percent, and everything over $4,768 by .15 percent.

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WEP

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Q. I worked four years under CSRS and drew the retirement funds out and did not pay them back. When I was reinstated, it was under the CSRS Offset. I retired and drew the CSRS Offset but did not apply for my Social Security benefits until I reached age 66 in October. I just got notified by Social Security that I would be subject to the windfall elimination provision from my Social Security check. Is this correct? I have 29 years and three months of substantial earnings, according to their table for substantial earnings. Actually, for these years, I far exceed that amount on their table. They have given me 30 days to submit additional information to them, and that time is running out. I have tried to research this myself from a number of publications both by OPM and Social Security and the information seems to be conflicting.

A. The fact that you withdrew your CSRS retirement contributions doesn’t alter the fact that a portion of your annuity will come from that period of service. Therefore, you are subject to the windfall elimination provision. However, if you have 29 years and three months of substantial earnings under Social Security when you retire, the reduction in your annuity would be minimal.

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CSRS Offset

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Q. I am CSRS Offset, having retired in 2001, and have been working in the private sector since that time. I turned 62 last year, applied for, and began drawing Social Security. However, my annuity has not been reduced.  I have been holding out what I had estimated my reduction would be, anticipating that at some point the Social Security Administration would want the money. I have 34 years of substantial earnings, which includes my 14 years as an offset employee. Do these years affect the offset amount? Does this mean my annuity could possibly not be reduced? I have contacted the Office of Personnel Management and the SSA with no results.

A. If you have at least 30 years of substantial earnings under Social Security, you are exempt from the windfall elimination provision.

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WEP

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Q. I expected to retire with a CSRS Offset pension and a pension from a state public employees system not covered by Social Security. It appears that the windfall elimination provision is going to reduce my CSRS Offset Social Security portion to almost nothing. Can that be right? Your descriptions of CSRS Offset always say the benefit will be the same it will just be paid partly from CSRS and partly from Social Security. But windfall elimination appears to reduce the Social Security portion by 40 percent.

A. The windfall elimination provision does reduce the Social Security benefit of anyone who receives an annuity, in whole or part, from a retirement system where he or she didn’t pay Social Security taxes and has fewer than 30 years of substantial earnings under Social Security. If your Social Security benefit is based solely on your CSRS Offset-covered service, the WEP will reduce that benefit.

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Substantial earnings

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Q. I have been reading your responses regarding the windfall elimination provision and you continually say 30 years of “substantial” earnings under Social Security.  What are considered “substantial earnings”?

I am 60 years old, with 26 years of government service and more than 16 years in private industry. I have almost 30 years that I paid into Social Security between the two. However, the earlier years were at a much lesser salary that I now make. (My earnings were $10,000 a year in the earlier years.) Does that qualify for “substantial earnings” under Social Security? Or will I have to work longer to avoid the WEP?

A. Here’s the difference. In 2012, you’d receive four credits (one year’s worth) if you earned $4,520. For those earnings to be considered substantial, you’d have to earn $20,475. To see what are considered substantial earnings in prior years, go to http://ssa.gov/pubs/10045.html.

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Social Security quarters

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Q. I’m 59 years old and have 38 years government service under CSRS. I have 39 quarters Social Security paid in. Do I only have to work one more quarter to qualify for Social Security by the time I’m 62? Someone told me I had to work so many quarters in the last 10 years.

A. You only have to have 40 credits under Social Security to qualify for a Social Security benefit at age 62. Just be aware that if you are still working when you apply for that benefit, it will be affected by the annual earnings limit, which will reduce that benefit by $2 for every $3 you earn above the limit. In 2012, that limit is $14,640. If you are retired, you’ll be subject to the windfall elimination provision, which will reduce but not eliminate your Social Security benefit if you have fewer that 30 years of substantial earnings under Social Security.

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