Can I avoid the WEP

Jun 28 2016 - 2:45pm

Larry, is there a way I can avoid the Wage Equalization Payment (WEP). I collect Canada Pension Plan and will collect Old Age Security (in one year) from Canada and I understand that my Social Security benefits will be reduced by an amount not known right now when I start to collect Social Security benefits when I turn 66 (in 2 years from now). If I can't avoid, how can I find out how much it will be reduced?

Liz,
The only way to avoid the Windfall Elimination Provision (WEP) when you are receiving a pension from non-covered employment, i.e. employment for which you didn’t pay Social Security taxes, is to accrue 30 or more years of substantial earnings under Social Security.

Please see: https://www.ssa.gov/pubs/EN-05-10045.pdf.

Since the WEP removes an unintended windfall from Social Security benefits, it doesn't matter that your non-covered pension was earned in Canada.
Basically, the WEP ensures that you are treated the same as workers who paid Social Security taxes for their whole career.

You can run MaximizeMySocialSecurity with and without your non-covered pension to see amount of the WEP.

Best,
Mike