Russell Long D-LA. The WEP affects members who apply for their own not spousal SS benefits and fail to satisfy certain exceptions. A major exception is that members, who were eligible for their public pension before January 1, i. There is some relief for those with years of SS coverage. If a member doesn't satisfy the exceptions, then they are subject to the WEP, meaning that their SS benefits will be calculated using a different formula.
Like the Commonwealth, the first 6 states, listed below, have almost all or a large majority of their employees not contributing to Social Security, and, therefore, potentially affected by these laws as retirees. As back in the early days of Social Security, certain groups of workers were excluded from coverage, including Federal government employees who generally already had separate Federal retirement benefits and state government employees because, at the time, the constitutionality of Federal taxation on state wages was a questionable point.
The lack of understanding around these complex rules can potentially lead individuals who were at some point in jobs not covered by Social Security or who had spouses working in such jobs to make bad decisions about their retirement based on inaccurate information on their Social Security statement which generally does not include WEP or GPO adjustments.
And because Social Security income serves as the backbone of a successful retirement for many clients, financial planners are responsible for ensuring that they understand how the WEP and GPO rules work and that they can provide sound recommendations to clients affected by these rules.
Accordingly, this post will focus only on the Government Pension Offset GPO rule, including how the GPO works, and the strategies that can be used to maximize the benefits for clients who are potentially subject to the GPO. After all, had the individual worked in a job covered by Social Security, they typically would not have received Social Security spousal or survivor benefits, because their own individual Social Security benefit would be higher which they would have received in lieu of any spousal benefit.
Accordingly, individuals who are subject to the GPO rule include those who meet the following criteria:. At the end of , more than , people were affected by the Government Pension Offset. Thus, the effect of this distinction is that some non-covered pensions such as foreign pensions will trigger the WEP but not the GPO. Example 1 : Ann worked as a schoolteacher for 30 years, and her husband, Robert, was an accountant for a private firm.
Robert retired at the same time and filed for his Social Security benefits. Sadly, when Robert passed away two years after retirement, Ann was devastated. The chart below summarizes how the GPO rule and the Windfall Elimination Provision affect workers and their spouses who have covered and uncovered forms of employment. Thus, as long as the surviving spouse did not have non-covered pension benefits of their own , the GPO rule would not affect the inherited income from a non-covered pension originally belonging to their deceased spouse.
There are two ways for retirees to minimize the effects of the GPO on their Social Security benefits. In other words, an employee must leave their current job under which they would have been subject to the GPO, find new employment that is covered by Social Security and the government pension, and stay in that job or another job that contributes to the government pension and that is covered by Social Security for at least 60 months of service prior to retirement.
These 60 months do not necessarily need to be consecutive. Thus, it is crucial for retirees using this strategy to be very careful not to mix employment during the period that counts as their 60 months of employment even if it is just for one day ; otherwise, the GPO rule may end out compromising their Social Security spousal or survivorship benefits.
The Social Security Administration explicitly states the following :. GPO will apply, with regard to that pension, even if the individual concurrently worked in another position with the same or a different employer covered by Social Security. While the conditions required for the lastmonth rule may not often easily be met by non-educators, this strategy can be a viable option for workers in some school districts.
This "dual entitlement rule" allows an individual to receive only the higher of the two benefits. Her husband works in SS-covered employment. This is called a "partial GPO offset. It is any periodic or lump sum benefit that is based upon your own non-SS-covered employment for a SLG.
The government pension is payable because you qualify for either 1 a retirement benefit based on age and length of service; or 2 a permanent disability, that is, a condition which is expected to continue throughout your lifetime and preclude your return to work.
You are still eligible for Medicare at age 65 based on your spouse's SS-covered employment if you are not eligible for it from your own employment. Second, you are exempt if you are receiving a government pension from SLG employment that is not based on your own earnings.
For example, if you receive a survivor's annuity from your deceased spouse who worked in non-SS-covered employment for a SLG, it is not subject to the GPO. Is that true? What happens if I retire from my non-SS-covered employment, draw the government pension from it, and then begin to work in SS-covered employment? What happens if I receive a government pension from my non-SS-covered employment as a lump sum?
Example: During Tony's career, she works both in the private sector in which she was covered by Social Security and for a school district in a non-SS position. Tony's husband spends his entire career in SS-covered employment. Tony reaches the age at which she can draw a Social Security benefit. She goes to the local SSA office to apply for her benefits. Because of the GPO, Tony's dependent benefit from her husband is either reduced or eliminated. If Tony had not worked in the non-SS-position for the school district, the reductions would not have applied.
In , Congress revisited the Social Security Act and looked at many issues, including the dual entitlement rule. Can I be exempt from the GPO based on my employment in the second state? My wife is a california retired teacher- she has 35 SS credits from previous work- she worked for 2 years in private sector after retirement and paid SS. The GPO will only impact Social Security benefits for an individual who earned the non-covered pension.
How does GPO affect benefits drawn by an ex spouse? I was also previously married over 10 years to someone else and should qualify to draw spousal SS benefits from them, their employment is not government related.
I also paid into SS myself but the earnings are much smaller. Carroll could you please confirm that the Government Pension Offset does not apply to foreign pensions? Why is this if I paid into social security when I was employed with the state?
Hello — I have a GPO question. I am currently a teacher in Texas and expect to retire at 66 with 13 years of service. Prior to teaching, I worked in industry and have paid into Social Security since If he passes away, how … Read more ».
I think what bothers me most about the windfall offset is that the money that Social Security is denying me is money I paid into the system. No employer contributes to Social Security it is all employee paid.
Give me my money regardless of where I worked or other retirement plan. This is so unfair. If you file for SSDI, your spouse is eligible for spousal benefits.
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