Windfall Elimination Provision (WEP) Tax

The Windfall Elimination Provision (WEP) and government pension offset GPO is a special set of laws that applies to disability pensions and retirement pensions from employers that did not withhold Social Security taxes. If you work for any any employer who does  generally not withhold Social Security taxes from your salary, such as a government agency or an employer in another country, it is important to realize that any pension you get based on that type work may reduce your Social Security benefits when they are being paid in retirement.

 

The Windfall Elimination Provision to Social Security may 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 did not pay Social Security taxes after 1985, even if you  are still working

The Government Pension Offset (GPO) also applies to spousal and widows/widowers benefits. If your Social Security retirement benefits would have been affected by the Windfall Elimination Provision (WEP), any Social Security disability you may qualify for will also be affected.

 

The Windfall Elimination Provision (WEP) does not apply if:

  • You are a federal worker first hired after December 31, 1983;
  • You were employed on December 31, 1983, by a nonprofit organization that did not withhold Social Security taxes from your pay at first, but then began withholding Social Security taxes from your pay;
  • Your only pension is based on railroad employment;
  • The only work you did where you did not pay Social Security taxes was before 1957;
  • or You have 30 or more years of substantial earnings under Social Security.

 

Social Security Wages

Before 1983, people who worked mainly in a job not 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 where they did not pay Social Security taxes. Congress passed the Windfall Elimination Provision to remove that advantage.