Helping Federal Employees and Annuitants Understand Their Benefits

 

Windfall Elimination Provision (WEP)

Will WEP impact my CSRS annuity?



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Updated 7/9/2015

Federal Employee's CSRS WEP Social Security Adjustment

If you accrued 40 quarters (10 years) of employment where social security payments were withheld you are eligible for benefits. Your Primary Insurance Amount (PIA), which is simply your Social Security payment, will be impacted. The Windfall Elimination Provision (WEP) can significantly reduce your Social Security payout.

Complete information with links to FREE online WEP calculators are listed below. 

WEP Header

WEP Menu

 

Windfall Elimination Provision (WEP)

Many federal employees have held other jobs before, during, and after retirement including feds who served active military and/or Reserve and National Guard duty where earnings were subject to Social Security. If you aren’t sure if you are eligible you need to contact Social Security at 1-800-772-1213 or visit their excellent web site at www.socialsecurity.gov to request a history of your Social Security payment and status.   

This provision reduces your Social Security benefits if you have less than 30 years of “substantial” coverage and earned a CSRS federal retirement benefit. Substantial earnings equaled $2,250 dollars in 1972 and $20,475 in 2012. A complete list of substantial years is included below. 

If you receive a relatively low pension, you are protected. “Your Social Security reduced benefit cannot be more than one-half of that part of your pension based on your earnings after 1956 from which Social Security taxes were not deducted.”

The most your Social Security benefit will be reduced with 20 or less years of substantial earnings in 2012 will be $387.

Social Security benefits are based on the worker’s average monthly earnings adjusted for inflation. They separate your average earnings into three amounts and multiply the amounts using three factors. For example, for a worker who turns 62 in 2012, the first $767 of average monthly earnings is multiplied by 90 percent; the next $3,857 by 32 percent; and the remainder by 15 percent. The sum of the three amounts equals the total monthly payment amount.

The 90 percent factor is reduced in the modified formula and phased in for workers who reached age 62 or became disabled between 1986 and 1989. For those who reach 62 or became disabled in 1990 or later, the 90 percent factor is reduced to 40 percent.

There are exceptions to this rule. For example, the 90 percent factor is not reduced if you have 30 or more years of “substantial” earnings in a job where you paid Social Security taxes. See the first table that lists the amount of substantial earnings for each year, the second table lists the percentage reduction for the number of substantial years from 21 to 30.  The annual Social Security Earnings Reports that they previously sent out provided all of this detailed information and you could easily determine your number of substantial earnings years. If you are age 60 or older you will continue receiving these reports.

WEP Assistance

Substantial Earnings

 

Year Substantial
earnings
1937-54 $ 900
1955-58 $1,050
1959-65 $1,200
1966-67 $1,650
1968-71 $1,950
1972 $2,250
1973 $2,700
1974 $3,300
1975 $3,525
1976 $3,825
1977 $4,125
1978 $4,425
1979 $4,725
1980 $5,100
1981 $5,550
1982 $6,075
1983 $6,675
1984 $7,050
1985 $7,425
1986 $7,875
1987 $8,175
1988 $8,400
1989 $8,925
1990 $9,525
1991 $9,900
1992 $10,350
1993 $10,725
1994 $11,250
1995 $11,325
1996 $11,625
1997 $12,150
1998 $12,675
1999 $13,425
2000 $14,175
2001 $14,925
2002 $15,750
2003 $16,125
2004 $16,275
2005 $16,725
2006 $17,475
2007 $18,150
2008 $18,975
2009 - 2011 $19,800
2012 $20,475


Years of substantial
earnings
Percentage
30 or more 90 percent
29 85 percent
28 80 percent
27 75 percent
26 70 percent
25 65 percent
24 60 percent
23 55 percent
22 50 percent
21 45 percent
20 or less 40 percent

 

WEP Calculator

 

To estimate your WEP reduction use the Free software offered by FedRetireSoftware. The Social Security web site also offers a WEP calculator however you will need to enter all your past earnings taxed by Social Security, which are shown on your Social Security Statement. The Social Security office automatically sends Social Security Statements to workers or former workers age 25 or older about 3 months before their birthdays. If you have not received one, you can submit a request online and receive your Statement by mail in 2 to 4 weeks. However, if you request a Statement this year, we will not automatically send you another Statement until next year.

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