Windfall Elimination Provision

bruce · Post by **bruce** » Thu Aug 20, 2009 6:03 pm

I have been reading up on the Social Security Windfall Elimination Provision and trying to determine its potential impact on me.

What kind of Canadian income would be subject to the WEP? From what I can tell, CPP is subject to the WEP but OAS is not. What about pension income from a Canadian company? Or government pension income from working in the Canadian public service? Or RRSP/RRIF withdawals?

(In case it makes any difference, this is for a US citizen in Canada.)

Thanks!

nelsona · Post by **nelsona** » Fri Aug 21, 2009 3:05 am

Supposedly, all pension income (not RRSP/RRIF and not OAS) from work not covered by Social security would impact WEP. But, as you are aware, many are able to use the totalization agreement to get around this, while others are not.

One thing for ceratin is that if you have not worked 40 quarters in US, you won't be subject to WEP, but your SS will be small in any event.

I don't think there is any pont trying to work this out now, nor worrying about it.

bruce · Post by **bruce** » Fri Aug 21, 2009 6:24 am

Yes, I do have the necessary quarters/credits to collect Social Security.

Given that there seems to be a good chance I will be subject to WEP (unless the Totalization Agreement saves the day), Canadian jobs that have a pension plan will be less attractive to me compared to those that might pay slightly more with no plan. WEP could also impact the decision of what to do with a pension when you leave a company.

Can I assume that a "locked in" retirement account is an RRSP and, therefore, not subject to WEP? If that's the case, it seems to make sense that when leaving a company with a traditional pension plan, those of us that have paid substantial amounts into SS would be smart to roll the money into a locked in account. That way there is no chance of WEP clawing back up to half of the money.

nelsona · Post by **nelsona** » Fri Aug 21, 2009 7:12 am

Like i said, I wouldn't do anything based on this. Your CPP alone will likely fulfill the limit for WEP, so if you are subject to any clawback, you will already have the maximum clawed back based on CPP.

JohnSt · Post by **JohnSt** » Tue Sep 15, 2009 7:40 am

nelsona -- upthread you wrote,

"One thing for ceratin is that if you have not worked 40 quarters in US, you won't be subject to WEP, but your SS will be small in any event."

This would be good news for me, but I could not find a reference to this on the SS site. The "exceptions" noted there do not address people with less than 40 quarters. I have 32.

nelsona · Post by **nelsona** » Tue Sep 15, 2009 7:48 am

WEP does not apply to those with less than 40 quarters as their eligibility for SS is covered by the Totalization agreeement. Their SS will already be severely reduced by not having met the 40 quarter minimum and their SS calculation is a separate one (figure roughly, that one would get 8/10ths of 8/10ths ~64% of what someone with 40 quarters would get).

It is not subject to further reduction.

JohnSt · Post by **JohnSt** » Tue Sep 15, 2009 7:57 am

That's good news, thanks. Time will tell how solvent Social Security is when I need it.

JohnSt · Post by **JohnSt** » Tue Sep 15, 2009 7:58 am

Just re-read that. 64% is not really good nows...

nelsona · Post by **nelsona** » Tue Sep 15, 2009 8:27 am

Yup. The totalization agreement is great for someone who works 1-2 years in US, but once you are getting up to the 10 year mark, actaully getting the 40 quarters is so much more beneficial. You are entitled to medicare at that point, and even your spouse is entitled to some SS of his/her own.

AZKira · Post by **AZKira** » Wed Sep 16, 2009 5:22 pm

I have a variation of this question. I am Canadian, living in the U.S. with my American husband. I will get the full CPP/OAS.

I will qualify for a SS spousal pension but haven't worked long enough in the U.S. to qualify for any SS on my own record.

Will my spousal SS be subject to WEP?

nelsona · Post by **nelsona** » Wed Sep 16, 2009 7:51 pm

You will get CPP based only on what YOU contributed. Nothing from your US history will add or subtract to it.

For OAS, you will only X/40th of full OAS based on the number of years after age 18 you lived in canada. Those years plus your US quarters must add to 20 years.

You may qualify for your own SS based on your working years in canafa plus your quarters in US (these need to add to 10 years).

But this will likely be less than your 'spousal' SS pension based on your husbands full US work history.

AZKira · Post by **AZKira** » Wed Sep 16, 2009 9:47 pm

Thanks, Nelsona - what you said agrees with what I've heard before.

My question, though - will WEP apply to the spousal Social Security that I will get based on my American husband's record?

nelsona · Post by **nelsona** » Thu Sep 17, 2009 2:24 am

No. They will only apply to SS that you qualify for on your own with 40 quarters in US. If you get less than 40 quarters, it does not apply.

Your SS cannot be less than 1/2 your spouse's.