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Experts at Maximize My Social Security have answered more than 10,000 questions about Social Security over many years. Search for your questions and answers here.
October 29, 2016
Category:
Can I Avoid WEP & GPO If I Take A Lump-Sum In Lieu Of A Pension?
I am 62 and married. My husband wants to keep working 4 more years but I want to retire now from my public sector job where I did not pay FICA but rather I put money matched by my employer in a self directed retirement account. I had 15 years of earnings where I did pay FICA. I have the option to take my public retirement savings in a lump sum or in monthly retirement pension. Can I avoid WEP/GPO if I take the lump sum and put the after tax remains in a Roth IRA?
Hi,
No. If you receive a lump sum in lieu of a pension, Social Security will prorate the lump sum, and apply WEP (https://www.ssa.gov/pubs/EN-05-10045.pdf) and/or GPO (https://www.ssa.gov/pubs/EN-05-10007.pdf) based on a calculated monthly rate.
On the other hand, if you withdraw only your own contributions and interest before the becoming eligible for the non-covered pension, that would not result in a WEP or GPO reduction in Social Security benefits. For more detailed information, refer to these sections of Social Security's program operations manual: https://secure.ssa.gov/apps10/poms.nsf/lnx/0300605364 & https://secure.ssa.gov/apps10/poms.nsf/lnx/0202608400.
Best, Jerry