Ask The Experts: Retirement

By Reg Jones

CSRS Offset

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Q. Does the Windfall Elimination Provision apply to anyone in CSRS Offset who is 55 or older and has 30-plus years of service upon retirement?

A.  The windfall elimination provision applies to anyone who receives an annuity — in whole or part — from a retirement system where he didn’t paid Social Security taxes and has fewer than 30 years of substantial earnings under Social Security.  Anyone who is covered by CSRS Offset has at least five years of pure CSRS service in his work history, so the WEP applies.

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Affected by WEP?

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Q: Does the Windfall Elimination Provision apply to anyone in CSRS Offset who is 55 or older and has 30-plus years of service upon retirement?

A: The windfall elimination provision applies to anyone who is receiving an annuity – in whole or part – from a retirement system where he didn’t pay Social Security taxes and has fewer tha 30 years of substantial earnings under Social Security.

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CSRS Offset and Social Security

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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.

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CSRS Offset and the WEP

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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.

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WEP for Canadians

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Q: I recently discovered that I would probably lose part of my anticipated Social Security benefits to the WEP because I lived and worked in Canada, as a Canadian citizen, before moving to the U.S. and later becoming a U.S. citizen. If I retire at my full retirement age, I will have 25 years of substantial earnings/contributions to U.S. Social Security, and will also receive payments from the Canada Pension Plan. The latter will total just more than $500 per month. Will my wife’s Social Security benefits, based on my earnings because she did not work the requisite number of years, also be affected? Will she receive 50 percent of what I’ll receive before or after the WEP is applied to my Social Security benefit? She will not be receiving much, if anything, from the Canada Pension Plan. Secondly, I understand that some people are trying to challenge the WEP and its application to Canadians who’ve moved to the U.S., such as myself. Do you know anything of this? Is there any way for me to avoid the WEP?

A: Although your Social Security benefit would be reduced by the windfall elimination provision, your wife’s spousal benefit would not. However, the amount she would receive would depend on the age at which that benefit began. If she waited until she reached her full retirement age, she would receive 50 percent of your unreduced benefit; if earlier, a lesser amount. I’m not aware of any effort to challenge the application of the WEP to Canadians who have moved to the U.S. Absent a change in the law, the only way you could avoid the affect of WEP would be to have 30 years of substantial earnings under Social Security.

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WEP vs. GPO

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Q: Can you explain the differences between the Windfall Elimination Provision and the Government Pension Offset?

A: The windfall elimination provision reduces (but doesn’t eliminate) the Social Security benefit of anyone who receives an annuity 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. The government pension offset reduces the Social Security spousal or survivor benefit of anyone who is receiving an annuity — in whole or part — from a retirement system, such as CSRS (but not CSRS Offset), where he didn’t pay Social Security taxes. The reduction is $2 for every $3 received in that annuity.

 

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CSRS Offset, redeposits and the WEP

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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.

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Social Security benefits alongside CSRS

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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?”

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FERS retiree with CSRS component

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Q. I am retiring at age 56 under FERS with a CSRS component.  I plan to continue working part time, paying into Social Security and will make approximately $10,000 per year.  I plan to collect Social Security at age 62 when my FERS supplement ends.  Will my Social Security benefit be affected by my CSRS component?

A. Yes, if you have fewer than 30 years of substantial earnings under Social Security. Then your Social Security benefit will be affected by the windfall elimination provision.

 

 

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WEP repeal status

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Q. The WEP law will negatively affect me and a lot of people I know. Please, can you give those of us affected an update on any repeal actions now in Congress?  I know there were bills put forward, but I don’t know the status, any recent activity or the likelyhood of this repeal ever being realized.  Many conservatives are promoting class warfare and pit nongovernment workers against public service employees. We are not the problem. Please update us on the viability of this repeal going forward, and, if you will, how those affected can push the repeal. Who to write, who to push, how to organize, etc.  Maybe our actions could help. I hope so.

A. S. 113, the Public Servant Retirement Protection Act of 2011, which would repeal the windfall elimination provision, was introduced by Sen. Kay Bailey Hutchison on Jan. 25, 2011, without any co-sponsors. The bill was referred to the Senate Finance Committee, where it now sits. There isn’t any companion bill in the House. While you can always contact your members of Congress to encourage action, in the current fiscal climate it’s unlikely that any action will be taken on it this year.

 

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Spousal Social Security benefits

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Q My husband and I are both CSRS retirees.  My husband also receives a small amount from Social Security for quarters completed prior to government service.  I do not receive any Social Security.  If he passes away before me, would the windfall elimination provision apply to a spousal benefit?  Would I even receive a spousal benefit as a CSRS retiree?

A. Because you won’t be receiving a Social Security benefit based on your own work record, the windfall elimination provision won’t apply to you. However, any spousal or survivor Social Security benefit to which you’d be entitled will be affected by the government pension offset provision. The GPO will reduce that benefit by $2 for every $3 you receive in your CSRS annuity.

 

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Windfall elimination provision

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Q. While in the Army stationed in western Germany, I met and later married my wife, a German citizen. We were married in December 1974. She accompanied me to the U.S. in July 1977 with permanent resident status.  She worked in the U.S. and the income was reported to the IRS on our joint return. In 1979, we returned to Germany where she worked for the military PX and the commissary and was paid in local currency as a German. This was done in accordance to the Host Nation agreements in place. She did not receive a W2 from either the PX or the commissary, but did pay income tax to the German government.
As far as I know, the Defense Department and the Army Air Force Exchange System (AAFES) had this arrangement with the German government under what was called the Status of Forces Agreement.
She was paid in Deutsch marks and we have no idea of the amounts, the conversion rates at the time, or how much tax was paid to the German government. I am sure the income was not very high and want to know how to get an exception to her having to suffer under the windfall elimination provision. The period of time where she worked was from 1980 through 1990. She has worked (by my count) 22 years under Social Security.

Can you provide us with any information that we can use to avoid this penalty? Her retirement from her work in Germany is only around $400 per month.

A. While there are exceptions to the windfall elimination provision — see www.socialsecurity.gov/pubs/10045.html — none of them would apply to your situation. As a result, there is no way to avoid the penalty.

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Social Security and WEP

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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.

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Windfall elimination

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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.

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Spousal benefit

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Q: I am a 1998 CSRS/FERS transfer. My wife is retired and collecting a Social Security benefit. Next year when I turn 66 I thought I would take a spousal benefit off of my wife’s Social Security. Is it not true that because I have more than five years in FERS there is no GPO reduction in that spousal benefit? About a year later I plan to retire and start receiving my annuity of CSRS/FERS retirement. Even though I then would be receiving a pension that partially consists of CSRS where no Social Security was paid, wouldn’t there still be no GPO as I had completed more than five years in FERS? I wanted to do this so I could wait until age 70 before collecting my Social Security off of my own earnings, thus reducing the WEP penalty as I would have a total of over 25 years of Social Security earnings.

A: Because you have at least five years of creditable service under FERS, any Social Security spousal benefit you are entitled to won’t be affected by the government pension offset.

 

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Federal survivor benefit

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Q: If I elect a survivor benefit for my husband and I die before he does, will his Social Security/FERS pensions be reduced by either WEP or GPO? I am 62, retiring next month with 42 years of CSRS federal service. By law I must leave my husband a survivor annuity of 55 percent of my base salary for which monthly payments will be taken out of my retirement annuity. He is now 64, retired last year with 10 years of federal service (FERS) and now receives Social Security pension and a FERS annuity.

A: Neither the windfall elimination provision nor the government pension offset apply to FERS retirees. Therefore, receiving the survivor annuity you elected for him would have no affect on either his FERS annuity or his Social Security benefit.

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Substantial earnings and WEP

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Q: I am a firefighter for a large city that has an employee-based pension system (not Social Security). I have also been a member of the National Guard and operated a private business for 30 years on which I paid Social Security tax. Several places on the Internet use the term “30 years of substantial earnings under Social Security” in reference to Government Pension Offset (GPO). My Social Security earning sheet shows $2,464 “Your Taxed SS Earning” in 1977 and runs $3,000 to $10,000 though 2006. What does “substantial” mean, and how will WEP and GPO affect me?

A: You’ll find the year-by-year list of dollar amounts that constitute substantial earnings at www.socialsecurity.gov/pubs/10045.html.

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CSRS and the windfall elimination provision

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Q: I worked for the Department of Defense for 37 years and have more than 40 quarters. If I were to collect Social Security today I would get a little less than $350. If I wait until I am 65 years old, I could collect more than $700 in Social Security. I was married for 14 years. My former husband receives Social Security disability as well as VA 100 percent disability. I am remarried and my new husband receives twice as much as my former husband in Social Security. Which would be the best route to take here? If I collect the $350 now, would I make out better by collecting my current husband’s Social Security because the government would not take as much from me? If I collected the $350 now, would I still have to pay back because of the windfall?

A: We aren’t qualified to answer questions that deal with divorce and benefit entitlements. What I can tell you is that based on your work history, you will be subject to the windfall elimination provision. The WEP will reduce your Social Security benefit because you are receiving an annuity from CSRS, a retirement system, where you didn’t pay Social Security taxes and have fewer than 30 years of substantial earnings under Social Security. Because of your CSRS annuity, you would also be subject to the government pension offset, which reduces the Social Security spousal benefit by $2 for every $3 received in your annuity.

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Appealing the WEP

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Q: I worked in Canada until 1997. I moved to the U.S. in 1997 and became a citizen in 2007. I have been receiving pensions from the Canadian government (Canada Pension Plan). The pension is based on what I contributed through my paychecks in Canada. I am also including that amount in tax returns for the U.S. I applied for my Social Security benefits from the U.S. and they are considering my Canadian pensions as windfall income. I feel that the rule is being applied to me unjustly. Is there any way I can appeal?

A: The windfall elimination provision reduces the Social Security benefit of anyone who receives a pension 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. That provision includes pensions from another country.

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GPO/WEP

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Q: I working for the federal government in September 2010 at the GS 13 level after ending a 30-year career in state government in which I paid no Social Security taxes. I have accumulated approximately 30 quarters of Social Security credits over the years. Most of these credits were earned at low-paying jobs during my high school and college years. Will I be eligible for any Social Security benefit after I reach 40 quarters of credit? Do the provisions of both the GPO and WEP apply to my circumstances?

A: Because you are a FERS-covered employee, Social Security taxes are being taken out of your pay. As a result, it will take less than three years before you will have 40 credits and have met the basic requirement for a Social Security benefit. If you eventually receive an annuity from your career in state government, you will be subject to the windfall elimination provision. The WEP will reduce your Social Security benefit if you receive an annuity in whole or part from a retirement system where you didn’t pay Social Security taxes. The government pension offset follows the same rules for any spousal or survivor Social Security benefits to which you may be entitled.

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