What is the Windfall Elimination Provision?
If you receive a government pension from employment not covered by Social Security, like a school district, AND are also eligible for Social Security benefits based on your employment with a covered employer, like UTD, a different formula will be used to compute your Social Security benefit than the one used in the benefit estimates. This formula, which will result in a lower benefit, is known as the Windfall Elimination Provision (WEP), and affects workers who reach age 62, or become disabled, after 1985 and are first eligible after 1985 for a government pension. If you think you may be affected by the WEP, contact your local Social Security office for more information.
In United States tax law, the windfall elimination provision is a regulation that aims to prevent retirees from receiving more Social Security benefits than they are entitled to, based on their payments into the Social Security system during their working years. This would have an effect for someone who receives a pension from a job where Social Security payments were not deducted from his paychecks. Whatever pension that person collected from such employment would reduce the amount of his Social Security benefits during retirement. The windfall elimination provision was implemented in 1983 as an effort to increase fairness in the way that Social Security benefits were given. Prior to this time, someone could unfairly receive retirement benefits as if they had earned a low income during their working years. This happened to retirees who contributed little to the Social Security system while working in jobs covered by it, but were well paid in jobs not covered by the program. A person c
A. The Windfall Elimination Provision (WEP) is a modification of the Social Security benefits formula. It reduces Social Security benefits for employees who did not pay Social Security taxes during all of their government work years. Generally, the WEP applies to anyone who receives an annuity based in whole or part on employment not covered by Social Security unless he were eligible to retire by December 31, 1985, or had 30 years of Social Security covered employment. A modified penalty applies if one has between 20 and 29 years of Social Security covered employment. Q. How does the WEP formula work? A. The first factor (the 90 percent factor) is reduced in the modified formula unless an employee has 30 or more years of “substantial” earnings, as defined by the SSA. For those who have worked less than 30 years, the factor is reduced by 5% a year for each year of substantial earnings less than 30 years to a floor of 40% for 20 or fewer years of substantial earnings. The WEP formula doe
