Ask Larry

Will My Deferred Investment Count As A Non-Covered Pension?

When I applied for spousal benefits the examiner concluded that a type of deferred investment (like an IRA) by a former employer was considered a "pension" and subsequently reduced this benefit by more than half. I am wondering if this really constitutes a "pension" under the Windfall Elimination Provision? I did not make any contribution if that is an issue. Currently I am delaying taking Social Security but would this determination still hold true at that time.

Hi,

I'm unable to give you a yes or no answer without a lot more information. If this was a defined benefit plan that your employer contributed to, and your wages were exempt from Social Security taxes while you were employed there, then there is a very good chance that it will count as a non-covered pension for purposes of SSA's windfall elimination provision (WEP). For more information on this subject, refer to this pamphlet: https://www.ssa.gov/pubs/EN-05-10045.pdf, and this section of Social Security's operations manual: https://secure.ssa.gov/apps10/poms.nsf/lnx/0300605364.

Best, Jerry

Posted: 
Jul 8 2016 - 5:15pm
MaxiFi software running on a laptop
Get What's Yours!
Discover tens of thousands in extra retirement dollars with Maximize My Social Security software!
  • Find your maximized strategy
  • Unlimited what-ifs
  • Step-by-Step filing instructions
  • Our software's lifetime-benefit increase for an illustrative couple earning $65K each and planning to take retirement benefits at 62.

    Results will differ based on your specific case and filing strategy.

Getting Started is Easy
Web-based software. Works on ALL browsers. No download.
$40 Annual Household License
$250 Annual Financial Advisor License