Understanding WEP & GPO Under Social Security Federal Retirement Benefits

By May 18, 2020Benefits, Retirement

Federal employees are often concerned about how Social Security will impact their federal retirement. If you are a CSRS employee, you should know that there are many variables to be considered if you have ever paid into Social Security. In this blog, we are discussing Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) and suggesting ways on how federal employees can maximize their Social Security and get better federal retirement benefits.

Windfall Elimination Provision (WEP)

The windfall elimination provision or WEP, as it’s commonly called, affects CSRS, CSRS offset or FERS transfers. Social Security can be reduced by up to a particular dollar amount. You can mitigate this reduction if you have 20 years or more of substantial earnings, and there will be no WEP effect on your Social Security check if you have more than 30 years of substantial earnings. For substantial earnings, we need to make sure that it is clearly defined. Go to the Social Security website and discover each year what they classify as “substantial earnings”. Look at your record to determine if you have more than 20 or maybe even more than 30 years of substantial earnings. If you do, there is no reduction in your Social Security benefits.

Government Pension Offset (GPO)

If you are drawing a federal pension (again the CSRS group that we referring to specifically) and your spouse is drawing a Social Security check, you will not be eligible to receive a portion of their Social Security check if two-thirds of your pension exceeds the value of what you’d get from spousal benefits. However, it happens very rarely. So, as a planning tip here, make sure that you have accounted for, if the spouse that is drawing a Social Security check passes away, you still have sufficient income to meet your needs in long term good retirement planning.

Please note that both the windfall elimination provision and the government pension offset only affect retired individuals — those who are drawing pension from a system that they did not pay into Social Security over the long haul. So, if you are still employed and hid your full retirement age for Social Security purposes, you may want to consider drawing Social Security right away — either on your own benefit or even on your spouse’s benefit because that is available to you now where it will not be available potentially once you retire.

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Knowing what benefits will be available to you after retirement is important. Take advantage of the best federal retirement benefits calculator by My Federal Retirement Help to get a clear picture and plan accordingly.

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