Are you eligible for a pension from a job where Social Security was not withheld from your paycheck? If so, the Windfall Elimination Provision, part of the Social Security Amendments of 1983, may affect your Social Security payment. This change was introduced to eliminate the unfair advantage of those who did not pay into Social Security but still received a pension and full Social Security payment.
When you receive your yearly Social Security Statement, you will see an estimated payment amount for your full retirement age. If, however, you have ever worked any job that did not withhold Social Security, and you will receive a pension from that job, the amount you see is not correct.
So, why doesn’t the government have the correct payment amount? There is no way for the Social Security Administration to know if you will be receiving a pension until you apply for benefits. If you think your Social Security payment may be affected by this rule, you should visit the Social Security Administration website and review the Windfall Elimination Provision sheet to determine if you will be affected.
The SSA website also includes a Windfall Elimination Provision chart and a Windfall Elimination Provision calculator to help you calculate show what your reduced amount might be.
Your actual payment will depend upon a number of variables, including the number of years you worked but didn’t pay Social Security, the income received amount from that job, your lifetime income, and your expected retirement age. Also, if you are eligible to collect on your spouse’s Social Security benefits, your pension may cause that amount to be reduced as well.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.