A retirement pension from employment in which you did not pay Social Security taxes may reduce your Social Security benefit. If you qualify for your own Social Security retirement or disability benefit and also receive a pension from a job that did not withhold Social Security taxes, the Windfall Elimination Provision (WEP) may apply to you. If you receive a pension from federal, state, or local government employment in which you did not pay Social Security taxes and if you qualify or will qualify in the future for Social Security benefits as a current or former spouse, widow, or widower, the Government Pension Offset (GPO) probably applies to you.
The WEP may reduce--but not eliminate--your Social Security benefit if you turned 62 years of age or became disabled after 1985 and you became eligible after 1985 for a pension from employment in which you did not pay Social Security taxes, even if you are still working. The reduction in your Social Security benefit cannot be more than one-half of your pension amount that is based on earnings after 1956 on which you did not pay Social Security taxes. In 2008, the maximum monthly WEP reduction was $356.
Specifically, the WEP does not apply if any of the following are true:
- You were a federal worker first hired after December 31, 1983.
- On December 31, 1983, you were employed by a nonprofit organization that later began withholding Social Security taxes.
- Your only pension is from railroad employment.
- The only employment in which you did not pay Social Security taxes was before 1957.
- You have at least 30 years of substantial earnings upon which you paid Social Security taxes.
The Social Security Administration (SSA) defines substantial earnings for each year since 1937. You can learn more about the WEP at the SSA Web site at http://www.socialsecurity.gov/WEP. The GPO will reduce your Social Security benefits as a spouse, widow, or widower by an amount equal to two-thirds of your pension. This may eliminate your benefit. However, there are a number of exceptions to the GPO. You can learn more about these GPO exceptions from the SSA Web site at http://www.socialsecurity.gov/GPO.
