The Windfall Elimination Provision or WEP
WEP, or the Windfall Elimination Provision, is a statutory provision in U.S. law that has to do with the benefits paid out by the Social Security administration through the Social Security Act, Title II.
WEP specifically lowers the Primary Insurance Amount of an individual’s Disability Insurance Benefits or Retirement Insurance Benefits once the individual is entitled or eligible to a pension from a job that did not give to the Social Security Trust Fund. Furthermore, it can affect the other individuals who claim certain social security benefits on the record.
If an individual work for an employer that does not withhold taxes from Social Security from a salary, such as a foreign employer or government agency, the pension received may reduce the Social Security benefits. WEP affects just how much of a disability or retirement benefit is calculated.
WEP primarily affects individuals who have earned a pension while not paying Social Security taxes and also individuals who have worked other jobs for a given length of time to be qualified for a Social Security disability benefit or retirement benefit.
For example, WEP affects benefits when any portion of an individual’s federal service is covered after 1956 under by the Civil Service Retirement System. But, federal service where taxes are withheld will not reduce the amount of Social Security benefit amounts. WEP may apply to individuals who:
• Are at least 62 after 1985
• Become disabled after 1985
• Become eligible for a monthly mention without having paid Social Security taxes after 1985
A different formula is used because these social security benefits are only made to replace a portion of a employee’s pre-retirement earnings. Social security benefits usually end up having lower-paid employees receiving a higher return in comparison to those employees who are highly paid.
Prior to 1983, individuals who worked in positions that were not covered by social security had their own individual benefits measured in as if the people were low-wage, long-term employees. These workers would receive benefits that showed their higher earnings, along with a pension without ever paying social security taxes. The purpose of WEP was to eliminate this advantage.
There are some exceptions to WEP:
• Being a are a federal worker that was hired after December 31, 1983.
• Being employed on December 31, 1983 by a nonprofit organization, if they did not withhold Social Security taxes initially, but then started to do so.
• If the pension is based only on railroad employment.
• The work that was done that did not have Social Security taxes was before 1957.
• You have at least 30 of substantial earnings that were under soRcial security.
• WEP is not applicable to survivor’s benefits, but the benefits can be potentially reduced for widowers or widows due to a different provision of the law.