Windfall Elimination Provision Guide
Windfall Elimination Provision Guide — If you have a pension from a job where you didn’t pay Social Security taxes (a “non-covered” pension) and also worked in Social Security–covered employment, the WEP can reduce your own retirement benefit. This guide explains who’s affected, how the formula works, limits and exceptions, and ways to plan your filing strategy.
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Windfall Elimination Provision: the basics
- What WEP reduces: Your own worker Social Security retirement benefit (not spousal or survivor benefits).
- Why it exists: To adjust the benefit formula for people who have a pension from work not covered by Social Security and some years in covered employment.
- Who’s affected: Workers with a non-covered pension (e.g., certain teachers, police, firefighters, some state/local employees, CSRS), and with enough covered earnings to qualify for Social Security.
- What not to confuse with: The Government Pension Offset (GPO) reduces spousal/survivor benefits. WEP applies to your own worker benefit. See our Government Pension Offset explained.
How WEP is calculated (in plain English)
Social Security calculates your benefit (PIA) from your 35 highest years of indexed earnings using a three-tier formula with “bend points.” WEP only changes the first tier factor (the most generous part of the formula):
- Standard factor: 90% of AIME up to the first bend point.
- WEP factor: Reduced from 90% down to as low as 40% depending on your years of substantial earnings (YSE) in covered employment.
Years of substantial earnings & WEP factor
| YSE | WEP first-factor | Notes |
|---|---|---|
| 20 or fewer | 40% | Maximum WEP reduction applies (subject to limits) |
| 21 | 45% | Factor rises 5% per additional year |
| 22 | 50% | |
| 23 | 55% | |
| 24 | 60% | |
| 25 | 65% | |
| 26 | 70% | |
| 27 | 75% | |
| 28 | 80% | |
| 29 | 85% | |
| 30+ | 90% | No WEP (fully exempt) |
Important limits you should know
- Half-pension cap: The WEP reduction can never exceed one-half of your non-covered pension amount.
- Annual WEP maximum: SSA also sets a yearly maximum dollar reduction. The actual WEP applied is the lesser of (a) the formula reduction and (b) the year’s max, and (c) the half-pension cap.
- WEP doesn’t apply to survivors: Your surviving spouse’s benefit on your record is not reduced by WEP.
Examples: how WEP can change your benefit
Illustrative only—SSA updates bend points and yearly caps annually. We’ll run current-year numbers in your consult.
- Example A (20 YSE, large pension): Your non-covered pension is $2,000/month (half = $1,000). The formula reduction from WEP is calculated on the first bend point. If that computed reduction is $900, SSA applies $900 (less than the $1,000 cap). If the computed reduction were $1,200, SSA would cap it at $1,000.
- Example B (28 YSE): Your first-tier factor is 80% (not 90%). The reduction is much smaller than with 20 YSE and may be below the annual WEP maximum.
- Example C (30 YSE): No WEP applies; your PIA uses the standard 90% first-tier factor.
Who is commonly affected by WEP?
- State/local employees in non-covered systems (some teachers, police, firefighters)
- Federal employees with legacy CSRS pensions (FERS is generally covered)
- Workers with foreign pensions from countries without totalization coverage on those earnings
Planning around the Windfall Elimination Provision
- Verify your record: Create/visit your mySocialSecurity account and confirm your covered earnings history and any years of substantial earnings.
- Close in on 30 YSE: If you’re near 30 qualifying years, additional covered work can reduce or eliminate WEP.
- Coordinate timing: Consider filing age, Delayed Retirement Credits, and household needs. See Delayed Retirement Credits.
- Model spouse/survivor effects: WEP doesn’t hit survivor benefits; delaying the higher earner’s benefit can strengthen future survivor income. Review spousal rules and deemed filing rules.
- Taxes & Medicare: Coordinate with IRMAA brackets and benefit taxation. See How Medicare & Social Security Work Together.
- Backfill essential expenses: If WEP lowers your base benefit, consider predictable income sources for the gap—see Lifetime Income.
Helpful resources:
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FAQs: Windfall Elimination Provision guide
Does WEP affect spousal or survivor benefits?
No. WEP only affects your own worker benefit. Spousal and survivor benefits are not reduced by WEP (but GPO can affect those).
How do I know if my pension is “non-covered”?
Ask your HR/benefits office if your position paid Social Security taxes. If not, it’s a non-covered pension and WEP may apply if you also have covered earnings.
Can extra covered work reduce WEP?
Yes. Each additional year of substantial earnings in covered employment raises your WEP factor by 5% until 30 years, when WEP no longer applies.
Is there a maximum WEP reduction?
Yes. SSA publishes a yearly maximum. Also, the WEP reduction can’t exceed half of your non-covered pension amount.
Should I delay filing if WEP applies?
Delaying can earn Delayed Retirement Credits and may strengthen household and survivor income. We’ll model the trade-offs for your situation.
