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How Windfall Elimination Provision affects SSD benefits-Part I

Many Missourians depend on Social Security Disability Insurance benefits to meet their basic living expenses, which is why any potential reduction in benefits is of profound concern to any recipient. Little known to most but of big concern is a Social Security Administration rule governing wages paid in previous years to recipients who did not have federal taxes withheld.

According to the SSA, its Windfall Elimination Provision applies to people whose employers did not deduct Social Security taxes from their employment wages but which are now paying out pensions to their former employees. This is seen most often when a recipient was employed by a government agency or an employer based in another country. In such cases, the SSA considers the pension earnings to be untaxed and adjusts the recipient's monthly SSD benefits accordingly.

The SSA may also apply the provision if a person was disabled after 1985 and he or she started receiving a pension without ever paying Social Security taxes. The Windfall Elimination Provision may also be applicable to those who served under the Civil Service Retirement Scheme after 1956. Anyone whose federal employment was covered by the Federal Employees' Retirement System, however, will see no deductions because SSDI taxes were already deducted.

Other exceptions exist. For instance, an SSDI benefits recipient who began working as a federal employee after December 31, 1983 is not subject to the provision. Similarly, someone who worked for a not-for-profit organization that only began deducting Social Security taxes after December 31, 1983, is also exempt.

The rules are designed to ensure that no recipient receives more than he or she is legally entitled to. Because the formulations used to calculate benefits can be complicated, however, many recipients are better off consulting a legal professional who understands the details of Social Security law.

Source: SocialSecurity.gov, "Windfall Elimination Provision," Accessed on June 11, 2015

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Alan E. DeWoskin, P.C.
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