TN 80 (06-21)

RS 00605.360 Windfall Elimination Provision

CITATIONS:

Social Security Act, § Sections 215(a)(7) and 215(d)(3);
20 CFR 404.213 and 404.243.

A. Background

The Social Security Amendments of 1983 (P.L. 98-21) include a provision that reduces the Primary Insurance Amount (PIA) for a numberholder (NH) who is entitled to Social Security retirement or disability benefits and a pension based in whole or in part on his or her own earnings from employment not covered by Social Security. The Windfall Elimination Provision (WEP) modifies the NH PIA, as explained in RS 00605.360C.2 in this section.

B. Definitions

1. Eligible

Eligible for a pension means that a person meets all requirements for the pension except for stopping work or filing an application. For more information about pension eligibility, see RS 00605.364B.

2. Entitled

Entitled to a pension means a person has applied for a pension and has proven his or her rights to benefits for a given period.

3. Pension

A pension is a periodic or lump sum payment from an employer's retirement or disability plan based in whole or in part on non-covered earnings. The payment can be from a defined benefit (DB) or defined contribution (DC) plan (e.g., 401(k), 403 (b), or 457).

4. Defined benefit plan

A plan funded by an employer (or employer and employee) providing a specific retirement or disability benefit based on a general formula that considers salary, age, and years of service.

5. Defined contribution plan

A plan funded by an employer (or employer and employee) that provides a benefit based solely on the amount contributed to the account, plus interest income earned and any gains or losses allocated to the account.

6. Years of Coverage (YOCs)

YOCs are substantial years of Social Security earnings. See chart in RS 00605.362A.1.

C. WEP application

1. When WEP applies

WEP applies when:

  1. a. 

    A worker becomes eligible for old-age retirement insurance benefits (RIB) after 1985; or

  2. b. 

    A worker becomes eligible for disability insurance benefits (DIB) after 1985; and

  3. c. 

    For the same months after 1985, the worker is entitled to RIB or DIB, the worker also becomes entitled to a monthly pension(s) for which the worker first became eligible for after 1985, and the pension is based in whole or in part on earnings in employment which were not covered by Social Security.

NOTE: If the worker is entitled to spouse’s benefits on another social security number, the Government Pension Offset (GPO) may apply. For more information about GPO, see GN 02608.100.

NOTE: An individual receiving disability benefits may also be subject to the Public Disability Benefit (PDB) Offset in addition to WEP. For more information about PDB Offset, see DI 52101.001.

2. WEP PIA calculation

We base Social Security benefits on the monthly average of a worker's lifetime earnings. We split the average monthly earnings into portions and multiply each portion by a constant percentage. For more information about the computation of the PIA, see RS 00605.021.

In the basic formula for figuring the retirement or disability PIA, we multiply the average monthly earnings according to the following:

  1. a. 

    Multiply the first part of the average earnings by 90 percent;

  2. b. 

    The second part of the average earnings by 32 percent; and

  3. c. 

    Any part of the remaining average monthly earnings, multiply by 15 percent.

For the WEP PIA calculation, for workers who reach 62 or become disabled in 1990 or later, we replace only the 90 percent factor by a factor ranging from 85 to 40 percent, depending on the number of substantial earnings years or YOCs the NH has. For information about substantial earnings or YOCs, see RS 00605.362A.

For workers who reached age 62 or became disabled between 1986 and 1989, see RS 00605.360E.

For more information about computing the WEP PIA, see RS 00605.369.

3. How the WEP PIA is used

The WEP PIA determines:

  1. a. 

    Benefit amounts for all beneficiaries on the NH record,

  2. b. 

    The family maximum payable,

  3. c. 

    NH eligibility for auxiliary or survivor benefits on a different record,

  4. d. 

    The independently entitled divorced spouse (IEDS) benefit when the NH is not yet entitled to Social Security benefits. For more information on an IEDS and WEP involvement, see RS 00202.100B.5.

The WEP PIA does not apply when the special minimum PIA method is used.

4. When to recompute the PIA to apply WEP

Recompute the PIA to apply WEP if the NH becomes entitled to an applicable pension after entitlement to RIB or DIB, if the PIA is not already in WEP status. Apply WEP in the first month of the pension entitlement. For more information about recomputation of the PIA, see RS 00605.366B.

Do not recompute a PIA already in WEP status, due to changes, such as yearly increases in the money amount of the pension, or for entitlement to additional pensions. For more information about pension changes, see RS 00605.364D.

5. When WEP no longer applies

The WEP PIA no longer applies when:

  1. a. 

    The entitlement to the pension payment ceases or the proration of a lump sum payment based on a specified period ends. A NH who returns to work or voluntarily stops receiving benefits may not necessarily indicate entitlement to the pension ceases. Obtain evidence that entitlement to the pension has ceased. If the NH is again entitled to a pension, develop for WEP.

  2. b. 

    The NH dies (in the month of the NH's death, the PIA is recalculated without applying WEP), or

  3. c. 

    The NH meets a WEP exemption by earning 30 YOCs. The system will automatically identify additional YOCs and consider a recomputation of a WEP PIA.

D. Eligibility to RIB or DIB for WEP purposes

WEP is applicable only when the eligibility date to Social Security RIB or DIB is after 1985. If the RIB or DIB eligibility date is prior to 1986, WEP does not apply.

1. Eligible for retirement benefits

A NH is eligible for a Social Security RIB in the month he or she attains age 62.

2. Eligible for disability insurance benefits before 1986

A NH is eligible for a DIB in the month of disability onset when the claimant meets both fully and DIB insured status.

To compute DIB benefits, there are two separate computations to consider. SSA uses the computation that is more beneficial to the claimant.

  1. a. 

    If the onset date is before 1986, WEP does not apply to the disability exclusion (freeze) computation.

  2. b. 

    For the non-freeze computation, the NH is eligible in the first month of the waiting period.

EXAMPLE: If the onset date is December 15, 1985, and the first month of the waiting period is January 1986, we would compare two PIAs. The exclusion PIA would not be subject to WEP because the eligibility date is before 1986. The non-freeze computation would be subject to WEP because the eligibility date is 1986. After comparison, we pay the higher PIA.

3. Prior period of disability before 1986

A prior period of Social Security disability exempts an individual from WEP only if the individual became entitled to a disability benefit or a freeze computation before 1986 and remained so entitled in any of the 12 months immediately before attaining age 62 or the new disability onset. However, the WEP will apply in computing the PIA if this prior period of disability is disregarded, that is, it is a non-freeze computation.

For definitions of freeze and non-freeze computation, see RS 00605.220 and RS 00605.225.

E. WEP for eligibility between 1986 - 1989

The WEP was phased in for workers who were eligible for RIB or DIB and a pension from non-covered employment beginning in 1986 and ending in 1989. For information about YOCS for eligibility after 1989, see RS 00605.362A.2.

Replace the 90% factor as follows based on year of eligibility when the worker has 20 or fewer YOCs:

Eligibility Year First Factor in Benefit Formula
1986 80 percent
1987 70 percent
1988 60 percent
1989 50 percent
1990 and Later 40 percent

For eligibility year 1990 and later for 20 or fewer YOCs, replace the 90% factor with 40%.

If the NH has 21 or more YOCs, adjust the first factor in the WEP formula, according to the chart at RS 00605.362A.3.

F. References

RS 00605.362 Windfall Elimination Provision Exceptions

RS 00605.364 Determining Pension Applicability, Eligibility Date, and Monthly Amount

 


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0300605360
RS 00605.360 - Windfall Elimination Provision - 06/24/2013
Batch run: 06/15/2021
Rev:06/24/2013