Hi Larry,
I worked in the UK for 25 years and then the US for 25 years. During these years I paid into each countries social security schemes.
Does the windfall provision reporting rule include ALL foreign pensions from previous foreign employers? As I read the rule, I will be penalized for payments from pensions earned before I came to the usa. Is this fair? or even legal?

Hi,

The Windfall Elimination Provision, or WEP, was passed into law by Congress. Therefore, unless it's overturned by the courts, it's legal. Whether it's fair or not depends on each person's opinion.

Basically, all foreign pensions that are based on a person's work and earnings are included in WEP. Some countries have pensions that are based on age and residence only, and those pensions are exempted from WEP (https://secure.ssa.gov/apps10/poms.nsf/lnx/0201701320). Also, if the foreign country has a totalization agreement with the US and uses a person's US earnings in order to qualify them for the foreign pension, then those totalization pensions may also be exempt from WEP (https://secure.ssa.gov/apps10/poms.nsf/lnx/0201701310).

In your case, if your US earnings have been 'substantial' by WEP definition for 25 years, you may not be subject to the full WEP reduction. For more information on this provision, see the following pamphlet: https://www.ssa.gov/pubs/EN-05-10045.pdf.

Best, Jerry