A formula exists in the world of Social Security called the WEP, or Windfall Elimination Provision. The formula can cut your checks by hundreds of dollars.
The formula impacts those who retire and receive an extra pension from a non-covered job.
This is a pension paid by an employer that doesn’t withhold social security taxes from your salary.
1.9 million recipients were impacted in Dec. 2020.
Using the WEP formula
Social security is first figured out by using someone’s income over the span of their lifetime and years worked.
The WEP is used to determine a person’s eligibility year benefit amount. After that it’s reduced or increased from early or late retirement and COLA.
Is anyone exempt from it?
- Anyone who has paid taxes for 30 years of substantial employment. $26,550 is substantial for the tear 2021.
- Anyone who was eligible to accept pension payments from a non-eligible job before 1986.
- Federal employees whose employment and social security coverage began before Jan. 1 1984.
- Railroad pension recipients.