Ask The Experts: Retirement

By Reg Jones

CSRS offset and not collecting Social Security

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Q. I am under CSRS offset. I am going to retire in three years at age 62. I know my government pension will be reduced by $213 when I turn 62. According to my Social Security statement, I should receive $888 if I collect at age 62. It states: “At your current earnings rate, if you continue working until 66, you will receive $1,366 a month.” What happens if I don’t collect Social Security at age 62 and wait until full retirement age? Will I receive $1,366 a month minus the $213 offset reduction, minus the windfall elimination provision? (I will have only 20 years under Social Security.) Or will the $1,366 be recalculated since I won’t be paying Social Security from age 62 to age 66? Also, I am divorced and not remarried. My ex-spouse is retired military and under FERS. He has remarried, but I am still entitled to his Survivor Benefit Plan under his military retirement plan. If something happens to him and I start receiving SBP, will my Social Security be affected?

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Social Security quarters and CSRS benefits

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Q. If I retired with 34 years of CSRS benefits and have now earned 40 quarters Social Security, will I be able to draw Social Security benefits?

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CSRS offset and Social Security

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Q. I will avoid the windfall elimination provision if I have 30 years of substantive earnings. Is that still the case if 15 of those earning years for Social Security occurred under CSRS offset? Also, I am 66. Can I receive Social Security, even though I am still working under CSRS? If I can collect Social Security, in a few years, once I retire, how will that affect the Social Security I would collect? Would it be reduced or my CSRS annuity be reduced?

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CSRS and military service and Social Security

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Q. I retired from the Department of Veterans Affairs after 42 years of CSRS service. I also retired from the U.S. Army Reserve with 31 years of service. In the Reserve, I paid into the Social Security system. I always understood that I would not receive Social Security payments due to the windfall elimination provision or government pension offset. However while I was visiting a Social Security office on another matter, a rep told me that because I paid in for more than 20 years, I would receive a percentage of my Social Security entitlement. Is this true, and if it is, where can I find this information? I will be 66 in 18 months.

A. The windfall elimination provision reduces but doesn’t elimination a Social Security benefit. And it only reduces it if you have fewer than 30 years of substantial earnings under Social Security. You can find out more about the WEP and how it might affect you at http://ssa.gov/pubs/10045.html.

The government pension offset only applies to the spousal Social Security benefit of someone receiving an annuity from a retirement system where he didn’t pay Social Security taxes, such as CSRS. In most cases, it will eliminate that benefit. You can find out more about the GPO at http://ssa.gov/pubs/10007.html.

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Windfall elimination provision if spouse did not pay Social Security

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Q. My husband receives a pension in which no Social Security was paid, so the WEP would be applied. However, I worked for 35 years and always paid Social Security taxes. Because we file jointly, will my Social Security benefit be subject to the WEP?

A. Absolutely not! You are entitled to your full earned Social Security benefit.

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CSRS annuity, self-employment and Social Security taxes

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Q. I receive a generous (approximately $100,000) CSRS annuity. I’m self-employed. Considering that the windfall elimination provision may not allow me to collect Social Security benefits, do I have to pay Social Security taxes I will never collect?

A. You are required by law to pay Social Security taxes on earnings from wages or self-employment. Fortunately, the windfall elimination provision won’t eliminate any Social Security benefit you are entitled to. It will only reduce it if you have fewer than 30 years of substantial earnings under Social Security. To see how it might affect you, go to www.ssa.gov/pubs/10045.html.

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Social Security and the windfall elimination provision

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Q. I have approximately 25 years of Social Security credit, five years less than the 30-year total, which would exempt me from a WEP-based Social Security reduction. I am now at full retirement age, collecting my Social Security with a WEP deduction, and also working full time in a position for which I am paying Social Security taxes. Is this year, and every additional year that I work and pay Social Security tax, added to my 25-year total; if so, is there a subsequent recalculation of my WEP deduction every year as I inch toward 30 years with no deduction to my Social Security at 30?

A. No.

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CSRS and spousal survivor benefit from Social Security

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Q. I am 58 and will be retiring from the Defense Logistics Agency soon with 30 years of CSRS service. Before my government service, I earned 34 Social Security credits. I plan to work part time after CSRS retirement to earn the six credits needed for a small (windfall elimination provision) SSA pension. While the money won’t be much, is it important to get 40 Social Security credits to become eligible for a spousal survivor benefit from my wife’s SSA benefits?

A. Because you’ll be receiving an annuity from CSRS, a retirement system where you didn’t pay Social Security taxes, any Social Security spousal or survivor benefit will be affected by the government pension offset provision of law. The GPO would reduce those benefits by $2 for every $3 you receive in your CSRS annuity.

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Social Security qualification age

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Q. I am 60, retired from USPS under CSRS. I was told I will receive my Social Security along with my postal pension at age 60. When I reach 62, I then will be dropped from this and can apply for Social Security directly. I have my 40 quarters in Social Security. Is this true?

A. Whoever told you that was mistaken. He may have thought you were covered by FERS. FERS retirees receive a special retirement supplement that approximates the amount of Social Security benefit they earned while FERS employees. As a CSRS retiree, you would be eligible for a Social Security benefit only beginning at age 62. Note: Because you are receiving an annuity from 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.

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WEP and retirement options

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Q. I’m a current CSRS employee with 34 years’ federal service and also have 15 years of “substantial earnings” for Social Security. My plan is to continue to work until age 70 under the CSRS retirement system. At age 66, can I apply and draw full Social Security retirement benefits? Is it correct that the WEP reduction will take effect only once the individual retires from federal service? I read that WEP does not affect an individual who continues to work and is drawing Social Security benefits.

A. Yes, you can begin receiving your unreduced Social Security benefit when you reach your full retirement age and are still working. And, yes, you won’t be subject to the windfall elimination provision until you retire.

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Substantial earnings

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Q. My substantial Social Security earning has been due to serving 38 years as a senior military reservist. I will have 34 years under CSRS in January 2013. However, 25 years were under CSRS before a three-year break in service. I came back as an offset employee in 2006. How will my Social Security be calculated in comparison to my retirement check? Will I still receive my full CSRS retirement check based on my high-3 and the full Social Security check since I meet the substantial rule with the years? How will this all play out? I will be 63 this month.

A. At age 62, if you are retired, your CSRS annuity will be offset by the amount of Social Security benefit you earned while covered by CSRS Offset. If you retire at age 62 or later, the offset will occur on the day you retire. In effect, you’ll receive the same amount of money; it will just come from two different places, the Office of Personnel Management and the Social Security Administration. However, any additional Social Security benefit you are entitled to will be affected by the windfall elimination provision if you have fewer than 30 years of substantial earnings under Social Security. To find out what constitutes substantial earnings, year by year, go www.socialsecurity.gov/pubs/10045.html.

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Government pension offset

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Q. I am a federal employee under FERS. I was a police officer for 21 years (I receive a pension) and did not pay into Social Security, except for a few years when I worked part-time jobs and made the “substantial earnings limit.” I was hired as a federal worker in 1995 and have 22 years of “substantial earnings” toward Social Security. I am now 64 and planning to retire, except I can’t figure out how much, if any, I will receive in Social Security. I went to a FERS retirement conference last summer, and it was my understanding that the maximum reduction from the windfall elimination provision would be about $380. According to the moderator, the government pension offset did not apply to government employees who paid into FERS during the last 60 months they were employed prior to their retirement date. Friends are telling me this is not correct and I need to check into it. Can you clear this up or direct me to someone who can?

A. The Social Security Administration has an online calculator you can use to estimate how much your Social Security benefit would be. You’ll find it at www.ssa.gov/retire2/anyPiaWepjs04.htm. As for the government pension offset, what the moderator told you is correct. You won’t be subject to the GPO if you paid Social Security taxes on your earnings for five years or more before retiring. You’ll find a list of the exceptions at www.socialsecurity.gov/pubs/10007.html.

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Social Security quarters of coverage

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Q.  I work for the Social Security Administration and I can’t get a clear answer on this one. I have 38 years of federal service, all under CSRS. I am eligible to retire now. I also have 34 quarters of coverage under Social Security. If I retire now and then become re-employed as an annuitant, am I covered under FERS? If so, are my wages then counted towards getting the six additional quarters of coverage I need to get a Social Security benefit?

A.  If you are re-employed, you’ll automatically be placed in CSRS; however, if you’ve been separated from the service for at least three days, you’ll have the option of transferring to FERS. If you do that, deductions will be taken from your pay for both FERS and Social Security. Be aware of two things.

First, in most cases, your salary will be offset by the amount of your annuity.

Second, since you will be receiving an annuity from CSRS, a retirement system where you didn’t pay Social Security taxes, you’ll be subject to the windfall elimination provision when you apply for a Social Security benefit. The WEP  reduces, but doesn’t eliminate, that benefit for anyone who has fewer than 30 years of substantial earnings under Social Security.

 

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CSRS and spousal benefits

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Q.  On March 26,  I will be 62 years old. I work for the Postal Service and am thinking about retiring ,My question is this: My wife is 67 and drawing her Social Security. If I retire from the Postal Service, will I be allowed to take spouse benefits? Also, how much will the Social Security be cut because I am drawing CSRS? My monthly gross amount from CSRS will be about $2,781 but that’s before health insurance and spouse benefits. I am also able to draw Social Security but I have only the 40 quarters. My wife is drawing $1,398 monthly from Social Security.

A. Because you will be receiving an annuity from a retirement system where you didn’t pay Social Security taxes, you’ll be subject to the government pension offset provision of law. The GPO will reduce your spousal Social Security benefit by $2 for every $3 you receive in your CSRS annuity. As for your own Social Security benefit, it will be affected by the windfall elimination provision. The WEP reduces the Social Security benefit of anyone who receives an annuity from a retirement system where he didn’t pay Social Security taxes and has fewer than 30 years of substantial earnings under Social Security.

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Postal Service retirement

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Q.  My husband did eight years active duty in the Navy, and another 12 in the Navy Reserve. He also has 30-plus years with the U.S. Postal Service (under the civil service retirement plan).  He has also bought back eight years of his military time.  How will his retirement work with two civil service retirements?  He is eligible to retire from the Post Office now and to collect from his military at 59 1/2 years of age (in another 4 1/2 years).  Will there be some type of offset or can he collect both retirements with full benefits? He has paid very little into the Social Security fund.  When we get our Social Security benefits summary each year, it says he would receive approximately $400 a month.

A.  He won’t have two civil service retirements. He’ll receive a full civilian retirement benefit and a full military reserve retirement benefit. However, because he’ll be receiving an annuity from CSRS, a retirement system where he didn’t contribute to Social Security, his Social Security benefit will be reduced – but not eliminated - because of the windfall elimination provision of law.

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Going to work for state government

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Q: I am a 55-year old FERS employee eligible to retire as a special category FF/LEO with 27 years federal service. I have been thinking about finding a position teaching or working on the staff of a nearby university that is covered by the state retirement system (Ohio). It is my intention to work until age 65, so when I retire from the university I will be vested in their retirement system, too. The university offers a choice between a defined benefit and defined contribution plan. I have heard about things like the WEP and the Pension Offset Rule but am not certain whether either would apply in my situation. Are there negative impacts to either the federal annuity, annuity supplement or Social Security that would result from post-retirement employment with a state/local government agency?

A: Working for a nonfederal employer would have no effect on your FERS annuity or your eventual Social Security benefit. However, if your earnings from that employment exceed the Social Security annual limit, your special retirement supplement will be reduced or suspended. The limit for 2011 is $14,160. The windfall elimination provision only applies to someone who is receiving an annuity from a retirement system where he didn’t pay Social Security taxes. And the government pension offset only applies to the Social Security spousal benefit of someone who is receiving such an annuity.

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WEP and reserve time

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Q.  I retired from CSRS in 1999.  Since then (2000-2011) I have had 12 years of “substantive earnings” under Social Security.  I was also a commissioned officer in the Air Force Reserve and served from 1976 to 2006.  During those 23 years that I was a civil servant and a reservist I earned military pay when I went on active duty.  In the years I was not mobilized or deployed I only served on active duty for two weeks plus 12 weekends.  I received Social Security credit for all of my active-duty service as a reservist.  However, for many of those years the amount of money I earned as a reservist did not meet the threshold for “substantial earnings” under WEP.  In fact, only four of those 23 years meet the criteria for “substantial earnings.”

Were I to retire today, I would therefore only have 16 years of “substantial earnings” (four while a government civilian/reservist and 12 since retiring) and would thus be subject to the full penalty of WEP.  It does not seem right or fair that the WEP would penalize those of us who retired under CSRS and also chose to serve our country as reservists.  Are there any provisions in the WEP statutes that would allow me to count those many years as a reservist that do not meet the “substantial earnings” threshold?

A.  No. The law applies to everyone who receives an annuity from a retirement system where he didn’t pay Social Security taxes, such as CSRS, and has fewer that 30 years of substantial earnings under Social Security.

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Refund on buyback?

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Q. Worked 33 years for the U.S. Postal Service under Civil Service Retirement System and four years in the Marine Corps. Back in the 1970s, I bought back my USMC time so I could draw both Social Security and civil service retirements as I worked two jobs. Now, with offset in place, I cannot draw Social Security due to USPS retirement. Can I get a refund for my buyback payment since I will never draw Social Security?

A. As a CSRS employee, there wouldn’t be an “offset” that would cancel any Social Security benefit to which you might be entitled. Instead, you’d be subject to the windfall elimination provision. The WEP reduces — but doesn’t eliminate — that Social Security benefit. As for getting a refund of the deposit you made for your active-duty service, you can’t unless you resign from the government before being eligible to retire and ask for a refund of all your retirement contributions.

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Social Security and CSRS

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Q. I am a federal government employee under the Civil Service Retirement System. I started Nov. 24, 1968. I have 42 years, 9 months. I have 40 quarters paid in Social Security. I have been to the Social Security office and asked about the amount of Social Security I would draw. The monthly total was $239 a month before age 66. Then it would be $249 a month after or at age 66. I have my CSRS benefit estimate report. I need to know how Social Security will affect my CSRS retirement pay. I would like to retire, but I need to know what I would be bringing home before I can even start to make any plans. Could you help me with this information?

 A. While your eligibility for a Social Security benefit will have no effect on your CSRS annuity, the fact that you’ll be receiving an annuity from a retirement system where you didn’t pay Social Security taxes means that your Social Security benefit will be impacted by the windfall elimination provision. The WEP reduces — but doesn’t eliminate — that benefit. To learn more about the WEP, go to www.socialsecurity.gov/pubs/10045.html. Then go to www.socialsecurity.gov/retire2/anyPuiaWepjs04.htm, where you’ll find a WEP calculator.

 

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CSRS Offset and WEP

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Q. I am a CSRS Offset employee and I think I will be subject to the Windfall Elimination Provision.  I am currently receiving $845 a month Social Security (reduced for age as I am 63) and I think when the WEP is applied I will get $380.  When my CSRS pension is offset for my Social Security, will the offset be calculated using $845, my original benefit, or $380, the amount that I am actually receiving?

A. The offset to your CSRS annuity will be based on the Social Security benefit you earned while covered by CSRS Offset.

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