Dear fellow practitioners, CPAs, attorneys, and other professionals, Welcome to the fifteenth edition of our “Dreidel” newsletter about planning and investment issues of US citizens living overseas.
This month, Mike Reed talks about all about the repeal of the Windfall Elimination Provision (WEP), and how it that could benefit retirees.
Late last year, Congress passed the Social Security Fairness Act, officially putting an end to the Windfall Elimination Provision (WEP). WEP was designed to reduce Social Security benefits for those who had worked in jobs with pensions not covered by Social Security.
WEP prevented high-income earners from appearing as low-income workers when receiving their benefits. With its repeal, many retirees can now access the full Social Security benefits that they have earned.
With the change in the law, there are three important areas to focus on:
- If your benefits were previously reduced by WEP, that will no longer be the case. You will begin to see an increase starting in 2025. The Social Security Administration has not yet finalized all the changes or their exact implementation dates, but you can check ssa.gov for updates. Social Security has stated that monthly increases could range from a few dollars to over $1,000.
- If you were affected by WEP in 2024, Social Security will retroactively compensate you. While it has not yet been decided how this will be done, an update will be provided once the details are finalized. You do not need to take any action or apply to receive your additional benefit for 2024.
- Lastly, one of the most significant impacts may be for those who never applied for Social Security in the first place because of WEP reductions so substantial that it did not make sense to apply. Now, with the repeal, it may make sense to apply. This change does not only affect the person receiving the benefits, but also their spouses or surviving spouses. Survivor benefits in particular, could now become substantial for many who previously chose not to apply due to their late spouse being affected by WEP. Now, they may be eligible to collect their full benefit by applying either in person or over the phone.
Social Security estimates that about 3.2 million recipients were affected by WEP, so this change will certainly effect a lot of people. To learn more, please join us on Tuesday April 3rd at 7pm Israel time/12 PM EST for a comprehensive webinar on the topic of WEP with Social Security expert Tom Clark! The link to sign up is below:
