Last June someone asked a question about this: What Is The Effect On Social Security If You Participate In 401(a), 403(b) Or 457 Plans?
Category:
Non-Covered Pension - WEP / GPO
Jun 12 2017 - 7:06am

It did not seem you actually answered their question, though. They said clearly that they were going to OPT OUT of their government pension and keep their social security. That would mean that their 457/401k/403b was supplemental as far as the employer is concerned.

However, in the link you gave them, [https://secure.ssa.gov/apps10/poms.nsf/lnx/0300605364], it says this:
"Payments received from defined contribution plans (e.g., 401(k), 403(b), or 457 plans) based on non-covered employment are considered a pension subject to WEP regardless of the source of contributions (employer only, employee only, or a combination of both), if the plan is the primary retirement plan."

However, it is not clear (at least to us), that if you opt out of the pension plan but participate in the 457/401k/403b supplemental plan, if this still exempts you. This is because it is possible that the SSA considers the supplemental plan to be YOUR primary plan with the government job since you forfeited the primary pension plan.

Do you think that is a possible interpretation?

Thanks,
Gaius

Hi Gaius,

I don't believe so. I think that what is meant by 'primary pension plan' in the section you quoted from Social Security's manual refers to the employer's primary plan.

I'm not sure what you mean by opting out, though. If a person has been contributing to a non-covered pension plan and then decides to 'opt out' by withdrawing their contributions, such withdrawals can be considered as lump sum distributions in lieu of a pension depending on the circumstances involved. However, if you are referring to a person who never participated in an employer's primary pension plan and instead only made voluntary contributions to a supplemental savings type plan offered by the employer that doesn't include employer contributions, I think it's pretty clear that distributions from such a plan would not be subject to either WEP or GPO. As you can tell from reading Social Security's operation's manual, though, this is a complicated issue and must be evaluated by Social Security on a case by case basis.

Best, Jerry