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WEP and GPO: How these two provisions affect Social Security recipients
Government workers in 15 states participate in retirement plans that do not include contributions to the Social Security program, which makes them vulnerable to two provisions that can reduce their benefits in retirement. The states are Alaska, California, Colorado, Connecticut, Georgia, Kentucky, Louisiana, Maine, Missouri, Massachusetts, Ohio, Texas, Rhode Island, Nevada, and Illinois.
The Windfall Elimination Provision or WEP affects workers who earned pension money from a government entity in which they did not pay Social Security payroll taxes, as it was not required that they pay into Social Security during their time in that role. The WEP offset can be a problem to those who have worked in both the public and private sectors, or a state or government agency with a pension and a non-state or government agency in which they paid Social Security taxes. Even though both retirement benefits may have been earned separately from each other, WEP can still reduce the amount of Social Security benefits paid to workers. However, the WEP adjustment reduces but does not eliminate the monthly Social Security check the worker receives.
The bigger issue may be the Government Pension Offset or GPO, as it can severely affect recipients of Social Security survivor and spousal benefits if they themselves worked for a state or government agency at any point in their career. GPO will affect them if, during their employment, they became eligible to receive a government pension and did not contribute to Social Security. The specific problem is their survivor or spousal benefits from Social Security could be cut by two-thirds of the amount of their own government pension payout. Read the full article from Forbes on WEP and GPO, including a brief history behind their enactment, here.
The AMAC Foundation offers a free-to-the-public advisory service to all folks ageing into–or already in–Social Security. This service provides guidance in understanding the complexities of Social Security and the myriad rules and regulations associated with the process for claiming benefits, with NSSA-Certified Social Security Advisors available via email or telephone to discuss options. Learn more about this service via the Foundation’s website.