WEP 75% Reduction

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

Moderator: Mark T Serbinski CA CPA

bc075259
Posts: 10
Joined: Wed Feb 13, 2019 12:36 am

WEP 75% Reduction

Post by bc075259 »

I just applied for Social Security (with 20 years substantial earnings) and indicated that I am also receiving QPP. Speaking with the SS agent, he indicated that my $555 USD QPP would reduce my SS benefit by $422 (~76%). I informed about the 50% max reduction that is listed on on the SS WEP webpage but he said this guarantee is only applicable to people with lower benefits.

Since I have not seen this indicated anywhere wondering if anyone else encountered this?
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: WEP 75% Reduction

Post by nelsona »

Do not accept this determination. Ask for a review and a detailed calculation.

WEP is clearly limited to 50%. There may be other factors that are lowering your expected ammount, but they can't be WEP.

Are you 67, or are you younger? That also has an impact.

What office are you dealing with?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
bc075259
Posts: 10
Joined: Wed Feb 13, 2019 12:36 am

Re: WEP 75% Reduction

Post by bc075259 »

Thanks for the reply. I'm 69 and dealing with a representative in Auburn Washington. He was pretty easy to deal with and ran the numbers multiple times with the same result. I also ran the numbers with the downloadable SSA calculator (anypia) and got exact same result as he did. So if it's incorrect so is their calculator. There was another thread here from 2019, "Case Studies: Social Security, WEP, and CPP", where the OP, appeared to have the same experience. The method of calculation seems a little bizarre to me, since they ask for the QPP amount I get today then apply the 50% rule to the full SS amount at my full retirement age.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: WEP 75% Reduction

Post by nelsona »

WEP calculations are supposed to be done based on FRA, then they adjust based on age.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
bc075259
Posts: 10
Joined: Wed Feb 13, 2019 12:36 am

Re: WEP 75% Reduction

Post by bc075259 »

nelsona wrote:
> WEP calculations are supposed to be done based on FRA, then they adjust
> based on age.
yes, that looks like what the calculator does. when I run the numbers using my FRA of 66, the PIA gets reduced by 50% of QPP, the issue is when you run the numbers using age 69, it also reduces the FRA amount (age 66) by 50% (of QPP) then does the delayed retirement increases using the reduced PIA. I guess one argument could be they should use my QPP amount when I was 66, however due to the changing exchange rate, the QPP amount 4 years ago is almost the same as it is today
GabrielledeCastella
Posts: 2
Joined: Fri Mar 17, 2023 11:07 am

Re: WEP 75% Reduction

Post by GabrielledeCastella »

If you are interested in learning about the local cuisine, a guided food tour can be an excellent way to try out http://mahoosuc.com/ some new dishes and learn about the culture behind the food.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: WEP 75% Reduction

Post by nelsona »

The calculator is just the first step.

But, IN ALL CASES, WEP is limited to 50% of the uncovered pension amount. The SSA admits that their calculation get overridden by this clause:

"*Important: This is for estimate purposes only. The WEP reduction is limited to 1/2 of your pension from non-covered employment.

The amounts in the chart do not reflect the effect of cost-of-living adjustments (COLA), early retirement, delayed retirement, or other factors."
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
bc075259
Posts: 10
Joined: Wed Feb 13, 2019 12:36 am

Re: WEP 75% Reduction

Post by bc075259 »

nelsona wrote:
> The calculator is just the first step.
>
> But, IN ALL CASES, WEP is limited to 50% of the uncovered pension amount.
> The SSA admits that their calculation get overridden by this clause:
>
> "*Important: This is for estimate purposes only. The WEP reduction is
> limited to 1/2 of your pension from non-covered employment.
>
> The amounts in the chart do not reflect the effect of cost-of-living
> adjustments (COLA), early retirement, delayed retirement, or other
> factors."

When I get the official decision, guess I'll try an appeal and let you know what happens. Thanks!
bc075259
Posts: 10
Joined: Wed Feb 13, 2019 12:36 am

Re: WEP 75% Reduction

Post by bc075259 »

A little update on this case. I filed an online "Request for Reconsideration SSA-561" on April 5, I have called about a dozen times but I still have not received an official written response. Someone in my local office said it can take 6 or more months these days. If this request is denied, then the next option is to do an official Appeal HA-501 which brings the case before a judge.

I have been reviewing all the numbers and it's even worse than I originally thought.

As previously indicated, my delayed benefit was reduced by 76% of what I get from QPP but since the process reduces my PIA and my wife will claim based on my SSA, her benefit is also reduced, as in, her benefit will be 1/2 of what my new reduced PIA is. Her reduction combined with mine equals 107% of my QPP, so that is to say, we'll actually get about $50 less than if I was not collecting QPP at all. Of course, I started collecting QPP 4 years ago, so that is still a gain.

Has anyone filed a SSA Appeal? Just wondering about that process. Apparently it can take years. :-(
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: WEP 75% Reduction

Post by nelsona »

Your experience is slightly different than mine. Worked with the Baltimore office.

My WEP is reducing my SS by 35% (20 years of contributions, confirmed in writing to start in December) and it was confirmed that my spouse's "half" will be AFTER MY WEP (like you) but that her amount is not affected by HER WEP at all.

Good luck with that appeal; seems gruesome.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: WEP 75% Reduction

Post by nelsona »

One difference in my case is that I'm applying early (62). It looks like you were incorrectly penalized by waiting.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
bc075259
Posts: 10
Joined: Wed Feb 13, 2019 12:36 am

Re: WEP 75% Reduction

Post by bc075259 »

nelsona wrote:
> One difference in my case is that I'm applying early (62). It looks like
> you were incorrectly penalized by waiting.

When I use SSA anypia app calculator, I get the exact same result as the SSA agent did. It looks like it reduces my FRA PIA, then adds the delayed credits to that new PIA, so delayed benefit is significantly less. I'm hoping that they agree that the 50% max guarantee should be applied.

My wife has not yet applied for QPP. Would you know if QPP would affect her SSA if her SSA benefit is based on 1/2 mine? Thanks!
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: WEP 75% Reduction

Post by nelsona »

As I posted earlier, the spousal "half" is not affected by HER WEP. It will be essentially half of what you are getting at that time.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
MaggieA
Posts: 150
Joined: Sun Oct 31, 2004 4:06 pm

Re: WEP 75% Reduction

Post by MaggieA »

I noticed this thread right after I had coincidentally posted a note on the related thread viewtopic.php?f=2&t=16807 "Case Studies: Social Security, WEP, and CPP".

As explained by exPenn back in 2019 on the other thread, the 50% limitation is applied to your theoretical pension in the year you turned 62, and then it's carried forward to the current year. I know this sounds crazy and unfair, but it is what they do. Especially after the big COLA bump for 2022, this is apt to result in a reduction of considerably more than 50% of the non-covered pension (CPP or QPP) in the current year.

If you download SSA's detailed calculator from https://www.ssa.gov/OACT/anypia/anypia.html - note, you need the current version which is only available for Windows - and enter all your earnings history, and your QPP, I'm afraid you'll likely come up with the number SSA is telling you. And you can review the calculator output to see why that is. My reduction is considerably more than half my CPP as well, and as in your case, it then hits my spouse's SS entitlement too, so it's a double downer.

If you read this page https://www.ssa.gov/benefits/retirement ... r/wep.html very carefully you can see it confirms the calculation explained by exPenn on the other thread.
MaggieA
Posts: 150
Joined: Sun Oct 31, 2004 4:06 pm

Re: WEP 75% Reduction

Post by MaggieA »

Sorry, after adding my comment I noticed that the OP, bc07529, already confirmed with the AnyPIA calculator.

The point is, WEP is not calculated based on FRA, but on ELY. SSA says so (on the page I linked in previous post) and the calculator confirms it.

So those intelligently claiming SS at age 62 see a reduction of SS equal to at most 50% of their CPP/QPP as they expect. But those claiming at FRA or later, like OP or me, are apt to be dinged a lot more, because we lose all the COLA increases on the reduction amount, for all years since ELY.
Post Reply