If you are receiving a “non-covered” pension — one in which you did not pay into the U.S. Social Security system via payroll taxes — your Social Security payments may be subject to the Windfall Elimination Provision (WEP), which could reduce your retirement benefits.
Whether the WEP applies to your foreign pension may depend on:
- If the foreign employer withheld U.S. Social Security taxes from your pay.
- If the foreign employer’s country and the United States have what’s called a “totalization agreement.” These pacts prevent Americans working abroad, and foreign nationals working in the United States, from having to pay into both countries’ retirement systems on the same income.
To determine if your foreign pension will trigger the WEP, use Social Security’s online screening tool. Social Security’s WEP fact sheet can help explain how the law could affect your retirement benefits.
Keep in mind
By law, the WEP cannot reduce your Social Security retirement benefit by more than 50 percent of the amount of your non-covered pension and cannot wipe your benefit out entirely.
Published October 10, 2018
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