Some organizations like government agencies, nonprofit institutions and foreign agencies pay pensions to retired employees. Your Social Security may be reduced if you receive a pension.
There are two laws relating to pension and Social Security:
Windfall Elimination Provision (WEP)
Your pension will affect your Social Security depending upon how long you have worked and whether you have paid Social Security taxes or not. An attorney can help you calculate this easily. However, the WEP will not affect your Social Security if:
- the pension you get is a survivor benefit
- if you started your first job as a Federal Government employee after December 31, 1983
- You took up a job with a nonprofit organization on December 31, 1983, and your employer started cutting Social Security taxes from your salary only after some time.
- You receive pension because of railroad employment
- You did not pay Social Security taxes on employment before 1957
- You have at least 30 years of earnings left under Social Security
- Your pension is too low. An attorney would explain in detail if you fall in this bracket of exemption.
Government Pension Offset
This law affects the Social Security of your spouse if you’ve not paid Social Security taxes. An attorney can help you find out whether this law would affect you or your spouse. This law also covers Social Security of widows and widowers.
- What Happens to Assets When Creating a Trust? - February 27, 2017
- Are Living Wills Different from Regular Wills? - February 28, 2017
- Why Wills are Such a Common Estate Planning Tool? - March 1, 2017