Confused about WEP, teacher pension, and Social Security spousal benefits - need help with 4 questions

Let me try to help clear up some of this confusion: 1. Since your husband is past his FRA (which is 66 and 4 months for someone born in 1958), he can earn unlimited income without any reduction in his Social Security benefits. The earnings test no longer applies once you reach FRA. 2. You're correct that withdrawals from retirement accounts like a 401k/TSP are NOT considered earned income for Social Security purposes. Only wages and self-employment income count toward the earnings test. 3. For the New Zealand retirement fund, those withdrawals should also not be considered earned income. They're treated similar to any other investment/retirement distribution. 4. This is where it gets tricky - since you receive a STRS pension from work not covered by Social Security, the Government Pension Offset (GPO) will likely reduce your potential spousal benefit. The reduction is typically 2/3 of your government pension amount. So if your teacher pension is $3,000/month, your spousal benefit would be reduced by $2,000. If the spousal benefit would have been $1,500, you'd only get $0 after the offset.

hi there, my wife was a teacher too and we learned the hard way about that GPO thing. its totally unfair but there's no getting around it! if your getting a teacher pension forget about getting any spousal benefits. they basically take away $2 for every $3 of your pension. my wifes pension is $3800 and she gets zero from my SS even though i paid in for 45 years!!! its a ripoff but thats how it is

Your 1st two questions are easy - 1) At FRA, there's no limit on earnings while collecting SS and 2) 401k withdrawals don't count as earnings for SS purposes. The other two questions I'm not sure about, especially with foreign retirement accounts.

I can provide some accurate information on your questions: 1. Since your husband has reached his Full Retirement Age, he can earn unlimited income without any reduction in his Social Security benefits. This is one of the advantages of waiting until FRA to claim. 2. Withdrawals from retirement accounts (401k, TSP, IRA, etc.) are not considered earned income for Social Security purposes. Only wages from employment or self-employment income would count. 3. For the New Zealand KiwiSaver, the SSA generally treats foreign retirement accounts similar to US retirement accounts - distributions aren't considered earned income. However, there could be tax implications depending on the US-New Zealand tax treaty. 4. Unfortunately, as a teacher receiving a pension from work not covered by Social Security, you'll be subject to the Government Pension Offset (GPO). This will reduce your spousal benefit by 2/3 of your teacher pension amount. Given the pension amount you mentioned in your follow-up comment ($4,225), the GPO would completely eliminate any spousal benefit you might receive. The GPO exists because Social Security benefits are designed to replace a percentage of pre-retirement earnings. The formula was created with the assumption that workers and their spouses were paying into Social Security throughout their careers. The GPO adjusts for situations where someone receives a pension from work not covered by Social Security.

Try calling SSA directly to verify everything. I tried for THREE DAYS last month trying to get through to someone who could answer my questions about WEP and spousal benefits. Got disconnected 5 times and spent over 4 hours on hold. Finally I found this service called Claimyr (claimyr.com) that got me connected to an agent in 20 minutes! They have a video showing how it works here: https://youtu.be/Z-BRbJw3puU The SSA agent I spoke with was actually really helpful and gave me personalized info about my situation. Sometimes you just need to talk to an official source instead of getting conflicting advice from financial advisors who might not specialize in these complicated SSA rules.

UGH the whole WEP/GPO thing is SO UNFAIR to teachers!!! I worked as a teacher for 28 years and then in the private sector for 8 years and I get PENALIZED for my service!!!! My husband worked 40+ years paying into SS and I can barely get ANY of his SS when he passes away because of this stupid rule. Congress needs to REPEAL this discrimination against public servants!!!!

Has your husband considered delaying his filing past FRA? Since he's still working and doesn't need the income yet, each year he delays past FRA until age 70 adds 8% to his monthly benefit. That's a guaranteed return you won't find anywhere else! This would also increase any potential survivor benefits you might receive in the future (GPO affects those differently than spousal benefits).

To answer your follow-up question about survivor benefits - yes, the GPO affects survivor benefits the same way as spousal benefits (reduction by 2/3 of your non-covered pension). However, survivor benefits are higher (up to 100% of your husband's benefit compared to 50% for spousal), so even after GPO you might receive something. If your husband delays to age 70, his benefit would increase by about 28% from his FRA amount. So if his FRA benefit is $3,100, at age 70 it would be around $3,968. As a survivor, you'd potentially be entitled to the full $3,968, reduced by 2/3 of your pension ($2,817). That would leave you with approximately $1,151 in survivor benefits. This is why many financial advisors recommend the higher-earning spouse delay benefits until 70, especially in situations involving GPO.

one thing nobody mentioned - you should check if you have enough quarters to get SOME ss benefit on your own. even a tiny benefit can sometimes help with the WEP/GPO stuff. you said you worked as a nurse for 12 years? did you pay into SS during that time? if so you might be close to the 40 quarters (10 years) needed.

My friend was in a similar situation with an overseas pension from Canada and SS made him fill out some special form about it. I think they had to do some calculation with the exchange rate or something. Might want to ask specifically about that.

I'm a newcomer here but wanted to share what I've learned from my own research on this topic. For your New Zealand KiwiSaver question (#3), you're right to ask about this specifically. The SSA does have special procedures for foreign pensions and retirement accounts. From what I understand, they typically want documentation showing the nature of the account (whether it's government-sponsored, employer-contributed, etc.) and may require you to provide statements or other proof of the account balance and withdrawal amounts. The key is that like domestic retirement accounts, distributions from KiwiSaver shouldn't count as "earned income" for Social Security earnings test purposes. However, there could be complexity around how the SSA views the employer contribution portion versus your own contributions, especially since KiwiSaver has that mandatory employer contribution component. I'd definitely recommend having documentation ready about the account structure when you speak with SSA directly. Also, don't forget to check if there are any tax treaty implications between the US and New Zealand for those distributions - that's separate from the SSA rules but still important for your overall planning.