Will I Be Affected by the WEP?

Jun 30 2016 - 1:30pm

Hi, I will retire and receive a pension from the Texas Teacher Retirement system in two years. My pension will be based on 30 years total earning history. The first half of my career I did not pay into Social Security, the second half I did. For WEP purposes, will my pension be considered "non-covered" or "covered"? How do they figure that? I can find no answer anywhere to this question and so would really appreciate any help. Thanks, Harry

Harry, because you didn't pay Social Security tax on part of the income your pension is based on, the portion of it based on the income you didn't pay Social Security tax on is by definition non-covered and so will invoke both the Windfall Elimination Provision and the Government Pension Offset. You'll need to determine what percentage of the income it's based on you didn't pay Social Security tax on and then pro rate the annual pension amount accordingly if you enter it in our software. The software will then determine the effects of both the WEP and GPO. Note that beginning with 20 years of substantial covered earnings, the effects of the WEP begin to lessen and are totally wiped out if you have 30 years of substantial income. See the links above for more. Thanks, John