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Ask Bob: Should I Be Subject to WEP?

After more than 38 years of employment, some as a part-time public employee, a reader is wondering if the Windfall Elimination Provision is reducing his Social Security benefits.

Question

I have worked full time as a private attorney for 38+ years. During those years, I served part time as Solicitor General of the State Court of Jefferson County, Georgia for 16 years.

The salary that I received as Solicitor General varied each year. Jefferson County did not withhold taxes, Social Security or FICA. When I inquired about the lack of withholding, I was told that Jefferson County wasn't required to withhold taxes nor pay Social Security and FICA. Jefferson County did withhold and paid into the retirement fund for Solicitor Generals. The amounts paid into the retirement fund were deducted from my gross salary.

The Solicitor's salary and all other fees that I earned were deposited into my General Account. Each year I paid Income taxes, Social Security and FICA on all fees and the salary that I received as Solicitor.

I stopped being the part-time Solicitor several years ago and now draw a retirement income.

Currently, I don't draw Social Security benefits but intend to start after my 69th birthday.

About a year ago I checked my online Social Security statement and it stated that I was entitled to approximately $3,100.00 per month in benefits. Shortly thereafter I stopped by a Social Security office and asked what would be my monthly benefit and was told $2,744.00 per month.

Upon looking at everything I assume that the difference is the WEP (Windfall Elimination Provision)

QUESTIONS:

  1. Since all of my income during the 16 years that I served as Solicitor were included in my gross income for tax purposes, should I be subject to the WEP?
  2. During the 16 years of service as Solicitor my income exceeded the Social Security cap in 15 of those years. Does this have any impact?
  3. How do I appeal the Social Security Administration’s ruling if I'm penalized for all 16 years?

Answer

I cannot imagine that he is subject to the Windfall Elimination Provision (WEP) as a result of his work as a Solicitor, says Kurt Czarnowski, principal, Czarnowski Consulting. The WEP calculation is only applied if someone has fewer than 30 years of "substantial earnings" under the Social Security system. “If he has had 38+ years as a private attorney, I cannot imagine that he has not qualified for an exception to the WEP,” he says, “although, I couldn't guarantee that this is the case without actually seeing his Social Security Statement and reviewing his earnings record.”

In addition, Czarnowski adds, it appears that he has paid Social Security taxes on his Solicitor's pay--albeit as a self-employed individual at the time he filed his federal income tax return. ”I am guessing that he received a 1099 form at the end of each year, instead of a W-2, and he then completed a Schedule C and a Schedule SE to determine his tax liability,” he explains.

Read the WEP Fact Sheet for more information.

“As far as the reason for the difference in the two benefit estimates,” notes Czarnowski, “one thought that I had was that his Statement would have shown his estimate at age 70, while the one he got from the local SSA office may have been at age 69, which would not have factored in an additional 8% Delayed Retirement Credit (DRC) increase by deferring collection for one more year.” He adds, “The other thought that occurred to me was that he might have given the folks at SSA a lower estimate of his future earnings than the projection that was used in the Statement. The estimate shown on the Statement assumes continued earnings at the same level as the most recent year that is shown. If he has cut back a bit, that would also account for a current estimate that differs from what was shown a couple of years ago.”

“If neither one of these is the case,” says Czarnowski, “my only suggestion would be for him to get back in touch with the folks at the local Social Security office and ask for an explanation.”

Got questions? Get answers!

Email Robert.Powell@maven.io

Question

I have worked full time as a private attorney for 38+ years. During those years, I served part time as Solicitor General of the State Court of Jefferson County, Georgia for 16 years.

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