Windfall Elimination Provision 10045 EN 05
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2018 Windfall Elimination Provision Your Social Security retirement or disability benefits can be reduced The Windfall Elimination Provision can affect how we calculate your retirement or disability benefit. If you work for an employer who doesn’t withhold Social Security taxes from your salary, such as a government agency or an employer in another country, any retirement or disability pension you get from that work can reduce your Social Security benefits. When your benefits can be affected This provision can affect you when you earn a retirement or disability pension from an employer who didn’t withhold Social Security taxes and you qualify for Social Security retirement or disability benefits from work in other jobs for which you did pay taxes. The Windfall Elimination Provision can apply if: • You reached 62 after 1985; or • You became disabled after 1985; and • You first became eligible for a monthly pension based on work where you didn’t pay Social Security taxes after 1985. This rule applies even if you’re still working. This provision also affects Social Security benefits for people who performed federal service under the Civil Service Retirement System (CSRS) after 1956. We won’t reduce your Social Security benefit amounts if you only performed federal service under a system such as the Federal Employees’ Retirement System (FERS). Social Security taxes are withheld for workers under FERS. How it works or increased depending on whether the worker starts benefits before or after full retirement age (FRA). This formula produces the monthly payment amount. When we apply this formula, the percentage of career average earnings paid to lower-paid workers is greater than higher-paid workers. For example, workers age 62 in 2018, with average earnings of $3,000 per month could receive a benefit at FRA of $1,479 (49 percent) of their pre-retirement earnings increased by applicable cost of living adjustments (COLAs). For a worker with average earnings of $8,000 per month, the benefit starting at FRA could be $2,636 (32 percent) plus COLAs. However, if either of these workers start benefits earlier, we’ll reduce their monthly benefit. Why we use a different formula Before 1983, people whose primary job wasn’t covered by Social Security had their Social Security benefits calculated as if they were long-term, low-wage workers. They had the advantage of receiving a Social Security benefit representing a higher percentage of their earnings, plus a pension from a job for which they didn’t pay Social Security taxes. Congress passed the Windfall Elimination Provision to remove that advantage. Under the provision, we reduce the 90 percent factor in our formula and phase it in for workers who reached age 62 or became disabled between 1986 and 1989. For people who reach 62 or became disabled in 1990 or later, we reduce the 90 percent factor to as little as 40 percent. Some exceptions The Windfall Elimination Provision doesn’t apply if: Social Security benefits are intended to replace only some of a worker’s pre-retirement earnings. • You’re a federal worker first hired after December 31, 1983; We base your Social Security benefit on your average monthly earnings adjusted for average wage growth. We separate your average earnings into three amounts and multiply the amounts using three factors to compute your full Primary Insurance Amount (PIA). For example, for a worker who turns 62 in 2018, the first $895 of average monthly earnings is multiplied by 90 percent; earnings between $895 and $5,397 by 32 percent; and the balance by 15 percent. The sum of the three amounts equals the PIA which is then decreased • You were employed on December 31, 1983, by a nonprofit organization that didn’t withhold Social Security taxes from your pay at first, but then began withholding Social Security taxes; • Your only pension is for railroad employment; • The only work you performed for which you didn’t pay Social Security taxes was before 1957; or • You have 30 or more years of substantial earnings under Social Security. SocialSecurity.gov (over) Windfall Elimination Provision The Windfall Elimination Provision doesn’t apply to survivors benefits. We may reduce widows or widowers benefits because of another law. For more information, read Government Pension Offset (Publication No. 05-10007). Social Security years of substantial earnings If you have 30 or more years of substantial earnings, we don’t reduce the standard 90 percent factor in our formula. See the first table that lists substantial earnings for each year. The second table shows the percentage used to reduce the 90 percent factor depending on the number of years of substantial earnings. If you have 21 to 29 years of substantial earnings, we reduce the 90 percent factor to between 45 and 85 percent. To see the maximum amount we could reduce your benefit, visit www.socialsecurity.gov/planners/retire/wep-chart.html. A guarantee The law protects you if you get a low pension. We won’t reduce your Social Security benefit by more than half of your pension for earnings after 1956 on which you didn’t pay Social Security taxes. Year 1937–1954 1955–1958 1959–1965 1966–1967 1968–1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 Substantial earnings $900 $1,050 $1,200 $1,650 $1,950 $2,250 $2,700 $3,300 $3,525 $3,825 $4,125 $4,425 $4,725 $5,100 $5,550 $6,075 $6,675 $7,050 $7,425 $7,875 $8,175 $8,400 $8,925 $9,525 $9,900 Year 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009–2011 2012 2013 2014 2015-2016 2017 2018 Contacting Social Security The most convenient way to contact us anytime, anywhere is to visit www.socialsecurity.gov. There, you can: apply for benefits; open a my Social Security account, which you can use to review your Social Security Statement, verify your earnings, print a benefit verification letter, change your direct deposit information, request a replacement Medicare card, and get a replacement SSA-1099/1042S; obtain valuable information; find publications; get answers to frequently asked questions; and much more. If you don’t have access to the internet, we offer many automated services by telephone, 24 hours a day, 7 days a week. Call us toll-free at 1-800-772-1213 or at our TTY number, 1-800-325-0778, if you’re deaf or hard of hearing. If you need to speak to a person, we can answer your calls from 7 a.m. to 7 p.m., Monday through Friday. We ask for your patience during busy periods since you may experience a higher than usual rate of busy signals and longer hold times to speak to us. We look forward to serving you. Substantial earnings $10,350 $10,725 $11,250 $11,325 $11,625 $12,150 $12,675 $13,425 $14,175 $14,925 $15,750 $16,125 $16,275 $16,725 $17,475 $18,150 $18,975 $19,800 $20,475 $21,075 $21,750 $22,050 $23,625 $23,850 Years of substantial earnings 30 or more 29 28 27 26 25 24 23 22 21 20 or less Percentage 90 percent 85 percent 80 percent 75 percent 70 percent 65 percent 60 percent 55 percent 50 percent 45 percent 40 percent Social Security Administration Publication No. 05-10045 | ICN 460275 | Unit of Issue — HD (one hundred) January 2018 (Recycle prior editions) Windfall Elimination Provision Produced and published at U.S. taxpayer expense Printed on recycled paper
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