Effective Dates: 01/16/2024 - Present Previous | Next

TN 121 (01-24)

RS 00605.362 Windfall Elimination Provision Exceptions

A. Exemption based on Years of Coverage

Workers who have 30 years of coverage (YOC) are fully exempt from the Windfall Elimination Provision (WEP). Workers with 21 to 29 YOCs are eligible for a partial exemption.

When a New Start 1978 Primary Insurance Amount (PIA) computation applies, use all wages on the earnings record, including military service wage credits from 1937 to the present to determine the total number of YOCs. When you include alleged military service, the system considers the service when calculating the YOCs. When using military service for YOC purposes, see RS 01701.000.

1. Amount of earnings needed per YOC

Use the following chart to determine the number of YOCs beginning with 1951.

To obtain the pre-1951 YOCs, divide total pre-1951 wages by $900. Drop any remainder. The total pre-1951 YOCs cannot exceed 14.

Amount Needed Per YOC

Year	Amount	Year	Amount	Year	Amount
1951	$900.00	1952	$900.00	1953	$900.00
1954	$900.00	1955	$1050.00	1956	$1050.00
1957	$1050.00	1958	$1050.00	1959	$1200.00
1960	$1200.00	1961	$1200.00	1962	$1200.00
1963	$1200.00	1964	$1200.00	1965	$1200.00
1966	$1650.00	1967	$1650.00	1968	$1950.00
1969	$1950.00	1970	$1950.00	1971	$1950.00
1972	$2250.00	1973	$2700.00	1974	$3300.00
1975	$3525.00	1976	$3825.00	1977	$4125.00
1978	$4425.00	1979	$4725.00	1980	$5100.00
1981	$5550.00	1982	$6075.00	1983	$6675.00
1984	$7050.00	1985	$7425.00	1986	$7875.00
1987	$8175.00	1988	$8400.00	1989	$8925.00
1990	$9525.00	1991	$9900.00	1992	$10350.00
1993	$10725.00	1994	$11250.00	1995	$11325.00
1996	$11625.00	1997	$12150.00	1998	$12675.00
1999	$13425.00	2000	$14,175.00	2001	$14,925.00
2002	$15,750.00	2003	$16,125.00	2004	$16,275.00
2005	$16,725.00	2006	$17,475.00	2007	$18,150.00
2008	$18,975.00	2009 – 2011	$19,800.00	2012	$20,475.00
2013	$21,075.00	2014	$21,750	2015–2016	$22,050
2017	$23,625	2018	$23,850	2019	$24,675
2020	$25,575	2021	$26,550	2022	$27,300
2023	$29,700	2024	$31,275

2. Benefits payable beginning January 1989 - Partial exemption for workers with 21 - 29 YOCs

Beginning with benefits payable for January 1989, workers with 21 - 29 years of coverage are eligible for a partial exemption as follows:

YOCs	First Factor In Benefit Formula
30 or more	90 percent
29	85
28	80
27	75
26	70
25	65
24	60
23	55
22	50
21	45
20 or less	40 percent

3. Benefits payable between 1986 - 1988 - Partial exemption for workers with 26 - 29 YOCs

For benefits payable between 1986-1988, the partial exemption affects workers with 26-29 YOCs as follows:

YOCs	First Factor In Benefit Formula
29	80 percent
28	70
27	60
26	50
25 or less	40 percent

When the worker qualifies for both the WEP phase-in based on age and the exception based on YOCs, use whichever yields the higher PIA. For information about the phase-in based on age, see RS 00605.360E.

B. Exemptions to the WEP

The following are exemptions to the WEP:

1.

Eligibility to the retirement or disability pension prior to 1986. Vesting in a pension plan before 1986 does not constitute pension eligibility. For information about pension eligibility and vesting in a pension plan, see RS 00605. 364B. For early-out offer or discontinued service prior to 1986, see RS 00605.360D in this section.
2.
A pension for an employee of a nonprofit organization who was exempt from Social Security coverage on December 31, 1983, and became covered for the first time effective January 1, 1984 by P.L. 98-21, unless the employee was covered under an exemption waiver certificate that had been terminated prior to December 31, 1983.
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  An employee may have worked for a the non-profit organization that waived exemption from Social Security coverage, but then terminated that waiver prior to December 31, 1983, and thus had non-covered employment prior to that same date.
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  For more information about service for non-profit organizations, see RS 01901.540.
3.

A pension based solely on domestic or foreign non-covered employment prior to 1957;
4.

A pension based on non-covered military reserve earnings from 1957-1987. For instructions on when the WEP exception applies to military reservist pensions, see RS 00605.383;
5.

A pension based on foreign totalized benefits. For instructions on when the WEP exception applies to pensions based on totalization agreements, see RS 00605.386.
6.

An annuity (or retirement benefit) based on earnings under the Railroad Retirement Act.

C. Payments that are not pensions for WEP

Some payments are not considered pensions for WEP purposes such as foreign pensions based solely on residency or citizenship. It is not necessary to document an exemption for these payments. See GN 00307.290.

The following payments based on the worker's employment are not pensions for WEP purposes:

1.
A Federal pension for a Federal employee first hired on or after January 1, 1984, who is covered under Social Security based on the mandatory coverage provision in P.L. 98-21.
- •
  
  This provision extended Social Security coverage to Federal employees only. For more information about Federal civilian employment, see RS 01901.340B.
- •
  
  This does not include a Federal employee who worked under non-covered employment, participated in the Civil Service Retirement System (CSRS), and then became covered under Social Security at some point. This employee is entitled to a Federal pension based on both non-covered and covered employment and subject to WEP.
2.

Payments to a minister based on service as a minister. A minister's income can be self-employment for Social Security coverage purposes, as explained in RS 01802.060.
3.
Workers' compensation (WC) payments under Federal or State law.
- •
  
  However, pension payments that are "like" or "in lieu of" WC payments are subject to WEP.
- •
  
  For information about WEP applicability and the Federal Employee's Compensation Act, see RS 00605.372A.1.

D. Early-out or discontinued service for pension eligibility before 1986

1. Meeting the early-out or discontinued service exception

WEP does not affect workers eligible for a pension before 1986 under an early-out option offer or discontinued service if the worker meets all requirements for the pension other than having actually filed. The options must have been offered specifically to the worker. For the development required for early-out or discontinued service, see RS 00605.366D.6.

2. Deferred Retirement Option Plans (DROP)

A DROP is a retirement plan option offered to employees who are eligible to retire and receive benefits under the employer's regular defined benefit (DB) retirement plan while continuing to work. Employers determine the amount of contributions made to the employee's DROP account, how the account will gain interest, and the amount of interest the plan earns. Some employers credit the employee's DROP account with the normal retirement benefits the employee would have received from their DB retirement plan. Continuing to work does not increase the years of service and compensation used in the DB payment formula. When the employee eventually retires, the funds in the DROP account are paid to the employee, in addition to whatever benefit the employee has acquired under the DB plan, based on earlier years of service.

A DROP may or may not be a pension plan separate from the non-covered employer's DB plan. WEP may or may not apply to a worker's DROP payment if they meet the eligibility-before-1986 exception for that payment, including based on early-out or discontinued service, as described in RS 00605.362D.1. in this section.

a.

If an individual receives a DROP payment, take the following actions:

•

Search the legal precedent opinions in PR POMS - Title II Office of the General Counsel (OGC) Precedents, to determine how to treat that particular DROP.

•

If a legal opinion has not been rendered on the DROP in question, request an OGC determination on whether the DROP is a separate pension plan or is part of the DB retirement plan; and
•

Forward the request and copies of the pertinent material to the Assistant Regional Commissioner (ARC), Management and Operations Support (MOS) that has jurisdiction of the state that provides the DROP in question. For additional information about legal opinions, see GN 01010.815.

b. After OGC renders a determination on how to treat the DROP plan, follow instructions to apply the eligibility-before-1986 exemption for that payment as follows:

•

If the DROP is a separate pension plan, the exemption will apply only to the pension plan that the worker was eligible to receive before 1986.

•

If the DROP is a part of the DB retirement plan and not separate, payments from both plans are considered one pension for WEP purposes and the eligibility-before-1986 exemption will apply to the combined payments. To determine the combined pension amount, see RS 00605.364C.3.

•

If there is no eligibility to either the DB retirement plan or the DROP prior to 1986, WEP would apply to the combined payments.

EXAMPLE: If the worker was eligible to receive a retirement or disability payment from the defined benefit plan before 1986 and eligible to receive the DROP payment after 1985, WEP would apply based only to the DROP payment.

3. Reopening prior DROP determinations

If WEP was previously applied based on the prior policy that all DROPs were pension plans separate from the defined benefit plan and the DROP is part of the defined benefit plan, you may reopen the determination to apply WEP under the rules of administrative finality in GN 04001.000.

E. References

•

MS 02004.002 Windfall Elimination Exclusion (WEPX)
•

RS 00605.360 Windfall Elimination Provision

To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0300605362

RS 00605.362 - Windfall Elimination Provision Exceptions - 01/16/2024
Batch run: 01/16/2024
Rev:01/16/2024

Program Operations Manual System (POMS)