TN 24 (08-10)
GN 02608.107 Exemption for Last 60 Months of Employment Covered Under Social Security
Section 418 of Public Law (P.L.) 108-203 eliminates the “last day” GPO exemption, with certain exceptions, and establishes a new GPO exemption effective for claims filed April 1, 2004, or later. The new exemption requires that the last 60 months of a person's government service before retirement be covered by both Social Security and the pension plan in order to avoid reduction under the GPO. Participation in a deferred retirement option plan (DROP) may or may not be considered participation in the employer's regular retirement system to qualify for the last 60-month exemption or the transitional rule. For an explanation of DROP see GN 02608.102B.3.
B. Policy for exemption based on last 60 months of employment covered under Social Security
1. When GPO does not apply
GPO does not apply if an individual was covered by both the government retirement system and Social Security throughout his/her last 60 months of Federal, State, and local government service. The 60 months need not be consecutive.
2. When GPO applies
If, at any time during the last 60 months of government service, the individual worked in noncovered employment under the retirement system that provides the pension, the individual's spousal benefit will be subject to GPO. GPO will apply, with regard to that pension, even if the individual concurrently worked in another position with the same or a different employer covered by Social Security.
3. Effective date of exemption
This 60-month exemption applies to individuals who either file for Social Security spouse's benefits on or after April 1, 2004, or retire after June 30, 2004. For definition of a spouse see GN 02608.100B.
Transitional rule for last day of service between July 1, 2004 – March 1, 2009. If the last day of government service occurred after June 30, 2004, and before March 2, 2009, the 60 months of Social Security covered service requirement may be reduced (but not to less than one month). Reduce the covered service requirement by the total number of months the worker had in Social Security covered government service under the same retirement system on or before March 2, 2004. The months do not have to be consecutive. Any remaining months needed to fulfill the 60 months requirement must be worked after March 2, 2004.
An individual may purchase credits for service actually performed in the past under the same retirement system and the purchased months of service may be used to reduce the 60-month requirement. However, if an individual’s current retirement system allows the individual to “purchase” or to “transfer” credits for service performed under a different retirement system to increase his or her annuity, neither the “purchased” nor “transferred” credits are considered service and cannot be used to reduce the 60-month requirement.
4. Determining a month of credit toward the 60-month requirement
Social Security covered employment during at least 1 day in a given month constitutes a month of service for purposes of meeting the 60-month requirement. For example, if an individual begins covered employment on July 31, the individual would get credit for the month of July as long as there was no noncovered employment that month under the same pension plan. Any month of noncovered employment covered by the government pension system, whether concurrent or not, excludes that month from Social Security covered employment if it occurred after March 2, 2004.
If an individual worked under a written contract or oral agreement, you should use the terms of the written contract of employment or oral agreement to determine if an employer or employee relationship existed and the number of months that relationship existed. For example, if a contract period is 6 months, consider the worker employed for 6 months.
Teachers usually work under full year contracts that varies in length; e.g., some are for 12 months and some are for 10 months. Teachers earn 12 months of credit toward the 60-month requirement regardless of the contract length provided that they:
However, if a teacher does not work for the entire school year (ex. starts later in the school year, retires mid-year, etc.) give credit only for the actual months that they work under both systems.
C. Examples of applying the last 60 months exemption
1. An individual continues in noncovered employment after July 1, 2004, but also begins to work in a position that is covered by Social Security and the same pension plan.
Mrs. Simms works part-time as a noncovered elementary school teacher in the ABC school district in addition to beginning to work part time in the ABC school district as a guidance counselor in September 2005. Her position as a guidance counselor is a Social Security covered position. None of her Social Security covered employment will count towards her 60-month requirement because she is working concurrently in a noncovered position. However, if Mrs. Simms retires before March 2, 2009, the 60-months requirement can be reduced if she has Social Security covered employment prior to March 3, 2004, within her current retirement plan, even if it was worked concurrently with noncovered employment.
2. An individual plans to retire before March 2, 2009, and has 12 months of prior Social Security covered earnings.
Ms. Jones was working in a noncovered position in March 2004 but had previously worked in a Social Security covered job in the same retirement system for 12 months in 1997. Because she had previously worked in Social Security covered employment for 12 months, the requirement that her last 60 months of employment be in a Social Security covered position is reduced to 48 months. If Ms. Jones begins working in Social Security covered employment under the same retirement system as her prior government work, AND works in the covered position for at least the final 48-month period of her employment, AND her last day of employment is before March 2, 2009, Ms. Jones is exempt from the GPO offset.
3. An individual participates in a DROP and does not meet the GPO exemption.
Ms. Smith has been a member of the State’s Retirement System for 30 years. During her last 3 years of employment, Ms. Smith elected to participate in a DROP. Because this DROP is a separate retirement plan, Ms. Smith cannot use the months of earnings covered under the DROP to decrease the 60 months requirement for the State defined benefit pension.
D. Procedure for the last 60 months exemption
1. Verifying that the 60-month requirement is met
Verify the claimant's allegation that all of his or her last 60 months of employment were covered under Social Security coverage.
If any of the last 60 months are during the transitional period, verify with the pension-paying agency that the Social Security covered employment was within the current pension plan, worked prior to March 2, 2004, and at least one month was worked after March 2, 2004.
2. Evidence of covered employment
a. Primary evidence
The following is primary evidence in verifying the last 60 months of employment:
DEQY if it substantiates the claimant's allegation of the number of months of covered employment for the alleged year(s). If the DEQY shows for the year(s) in question, an amount of Social Security covered earnings consistent with the pattern of earnings in the surrounding years, assume the individual worked 12 months of the year(s) in question, unless the individual alleged a lesser number of months;
Statement or documentation from employer showing the dates or months of Social Security covered employment; and
Employment contract provided by the claimant or the employer that supports the alleged periods of Social Security covered employment.
b. Secondary evidence
The following is secondary evidence in verifying the last 60 months of employment:
claimant's records (e.g., pay stubs, pay envelopes, vouchers, and similar unsigned employer wage statements to the individual) that show the period(s) of Social Security covered employment for alleged period(s) of time;
employers' general policy of employment based on position and period of alleged employment to determine months of coverage;
union records when supported by other evidence of employment;
records of State unemployment insurance agencies subject to the rules in RS 01403.058; and
statements of persons having knowledge of the individual's employment.
3. DEQY earnings pattern does not support allegation
If the above primary or secondary evidence in GN 02608.107D.2.a. and GN 02608.107D.2.b. is unavailable, ask the individual how many months in covered employment were worked for the year(s) in question. Check the DEQY to determine if there were covered Social Security employment with the same employer for the year(s) alleged.
Compare the amount of Social Security earnings on the individual's record to the annual salary amount based on the Federal minimum wage for the year(s) in question. If the posted amount is equal to or greater than the annual salary amount based on the Federal minimum wage for the year in question, accept the worker's allegation concerning the number of months of Social Security covered services.
If the posted amount of Social Security covered earnings is less than the annual amount based on the Federal minimum wage amount, but can be explained, accept the individual's statement as to the number of months of covered employment. For example, if the amount posted is only one-third of the annual amount determined using the Federal minimum wage amount, but the individual explains that he worked only 2-3 hours a day as a school bus driver for 9 months; accept his explanation and give him credit for 9 months of Social Security covered employment that year.
If the DEQY does not substantiate the individual's statement, determine the number of months of credit to allow by finding the percentage of the earnings for a year shown on the DEQY to the value of an annual salary that is based on the Federal minimum wage. For the Federal minimum wage amounts see RS 01404.305.
To calculate the annual Federal minimum wage amount, multiply the hourly wage times 40 hours, times 52 weeks. To determine the percentage divide the amount of actual earnings by the Federal minimum wage annual amount. Based on the percentage amount obtained, (actual earnings divided by annual minimum wage equals percentage) give months of credit as follows:
Percentage Ratio of Earnings Shown on DEQY to Annual Salary Based on the Minimum Wage Amount
Months of Credit
Up to 8.33%
8.34% to 16.66%
16.67% to 25%
25.1% to 33.33%
33.34% to 41.66%
41.67% to 50%
50.1% to 58.33%
58.34% to 66.66%
66.67% to 75%
75.1% to 83.33%
83.34% to 91.66%
91.67% and greater
If the individual alleges pre-1978 earnings, follow earnings “feedback” procedures in MSOM EM 016.001 Earnings Investigation. Use this feedback to identify the employer to ensure Social Security covered employment is within the same retirement system.
4. Examples of reviewing the DEQY to determine Social Security covered employment
Example 1: Paul alleges that he worked 12 months in covered employment in 1995 under the pension system. The DEQY shows covered employment with the alleged employer and earnings of $24,000 in 1995. The amount of an annual salary based on the Federal minimum wage amount for 1995 is $8,840 ($4.25 × 40 hours × 52 weeks) for 1995. For Federal minimum wage amounts see RS 01404.305.
Paul's earnings for 1995, $24,000, are 271 percent of the value of an annual salary based on the Federal minimum wage ($24,000 ÷ $8,840 = 271%). Therefore, Paul would receive 12 months of credit toward the 60-month requirement.
Example 2: Paul also alleges that he worked the entire year in covered employment in 1998 under the pension system. The DEQY shows covered employment with the alleged employer and earnings of $9,000 in 1998. The amount of an annual salary based on the minimum wage amount for 1998 is $10,712 ($5.15 × 40 hours × 52 weeks). Paul's earnings for 1998, $9,000, are 84 percent of the value of an annual salary based on the minimum wage amount ($9,000 ÷ $10,712 = 0.84). Therefore, Paul would receive 11 months of credit for 1998 toward the 60-month requirement. However, if Paul had alleged six months of covered employment in 1998 and the DEQY showed $9,000, Paul would receive only 6 months of credit for 1998 towards the 60 months requirement. Although the money amount, $9,000, in this instance, could allow up to 11 months of credit, we would use Paul's allegation of the number of months he worked since no other evidence is available.
5. Documenting the covered employment period
To document the covered employment period:
Complete the RPOC screen or prepare a SSA-5002 (Report of Contact) to document the source of verification used to determine that the last 60 months of employment were covered under Social Security.
Code this information in Shared Processes (GN 00301.286).
If less than 60 months, document the number of months still needed to meet the GPO exemption.
If the individual requests the number of Social Security covered months he or she has, provide the individual with the amount and annotate the record.
If a paper copy is provided to the individual, file a copy with the individual's record.
6. Resolving discrepancies between allegation of Social Security employment and SSA records
Resolve discrepancies between SSA records and the claimant's allegation of the last 60 months in Social Security coverage, or if during the transitional period, prior months of Social Security covered employment, before allowing an exemption. Resolve by:
information or an explanation from the claimant, or
a statement from the employer for Social Security coverage or from the pension-paying agency for coverage under the retirement system if the claimant does not explain the discrepancy satisfactorily.
Complete the RPOC screen and the Shared Processes screen or prepare a SSA-5002 documenting the claimant's explanation and resolution of all discrepancies.
RS 01404.305, History of Federal Minimum Wage Rates Under the Fair Labor Standards Act 1938-1996
RS 01505.000, Program Administration – Table of Contents
SM 00344.001, Detail Earnings Query (DEQY) Overview
MSOM EM 016.001, Earnings Investigation - Overview
MSOM QUERIES 003.005, Detail Earnings Query (DEQY)