Social Security Windfall Elimination Provision
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| The Windfall Elimination Provision (WEP) addresses Social Security retirement and disability benefits and generally affects individuals who earned a pension through their employment with a government agency and who also paid Social Security taxes through other employment endeavors. The WEP only affects federal employees whose pension derives from the Civil Service Retirement System. The WEP was instituted to remedy the inequity where individuals whose employment was not covered by Social Security nevertheless had their Social Security benefits computed as if they were lower-wage workers in addition to receiving a pension from their employment. A lower-wage worker receives a higher percentage of their pre-retirement earnings as their benefit amount than does a higher-wage worker.
The benefit reduction occasioned by the WEP will not exceed one-half of the individual's pension that is based on earnings from employment after 1956 where Social Security taxes were not paid. Of note, survivors' benefits are unaffected by the WEP. Additionally, the WEP is inapplicable to 1) federal employees who are hired after 1983, 2) individuals employed by a non-profit organization on December 31, 1983 and who did not have Social Security taxes deducted from their pay for the entire duration of their employment, 3) individuals whose only pension is derived from railroad employment, 4) individuals whose working lifetime includes only employment where Social Security taxes were paid, except for jobs held prior to 1957, and 5) individuals who have amassed at least thirty years of substantial earnings under Social Security. Copyright 2010 LexisNexis, a division of Reed Elsevier Inc. |