We have a client with a 401A, non covered retirement account and is leaving their employer. They have no prior substantial earnings years. They are starting a new covered job and plan to work there for many years.
if we choose to roll this 401A to an IRA now (she is 40 yrs old today), and we take distributions from that IRA beginning age 60, when she takes her SS benefit at FRA, how is the SS benefit affected?
Will it be reduced by WEP?
When calculating WEP they ask for a pension amount. She does not have one. How will that be calculated? Will they use the account balance as of the rollover date? or the account balance at the point she files for SS benefits?

Hi. Yes, it sounds like your client's Social Security retirement or disability benefits would likely be reduced by the Windfall Elimination Provision (WEP). Social Security would likely consider the rollover to an IRA as a lump sum distribution in lieu of a pension, and would calculate a prorated monthly rate for WEP calculation purposes using the method explained in the following section of Social Security's operations manual: https://secure.ssa.gov/apps10/poms.nsf/lnx/0300605364#c5.

Our software (https://maximizemysocialsecurity.com/purchase) is fully programmed to handle benefit calculations involving the WEP and Government Pension Offset (GPO) provisions, so you may want to strongly consider using our software option designed for financial advisors.

Best, Jerry