Hi Larry:
I am 68 and started receiving my SSA benefit this year. My wife is 66 and was denied SSA spousal benefits. The reason for denial provided by SSA is she cashed out a Colorado PERA retirement account in 1993 (she rolled it into an IRA and has not touched it since). After 1993 when we were married she worked at various jobs, but her SSA benefit alone is well below the spousal benefit amount. We are about to appeal the SSA denial decision, but wanted your insights first. Thank you. Regards, Bill

Hi Bill. It certainly couldn't hurt to file an appeal request. Application of the Government Pension Offset (GPO) provision can be complex, particularly if something other than a standard monthly pension is involved. Filing an appeal will assure that your wife's claim gets reviewed by someone not involved in the original decision on her claim, and will protect her right to file further appeals if her first appeal isn't successful.

As for the merits of the appeal, I can't really give you a good opinion. Collecting a pension, or a lump sum in lieu of a pension, based on governmental work in the U.S. that was exempt from Social Security taxes can cause spousal benefits to be fully or partially offset due to the Government Pension Offset (GPO) provision (https://www.ssa.gov/pubs/EN-05-10007.pdf). Whether or not GPO should be applied in your wife's case depends on the details involved, though.

Basically, withdrawals from a pension or defined benefit plan are not pensions for GPO purposes if only the employee's contributions plus interest are withdrawn and if the employee forfeits all rights to a future pension. However, any other type of separation payment, withdrawal, or refund that consists of both employer and employee contributions from a pension or defined benefit plan is a pension subject to GPO.

If the distribution that your wife rolled over counts as a lump-sum distribution in lieu of a pension for GPO purposes, then the second issue is whether or not the offset calculation is accurate. Lump sum withdrawals are prorated into a monthly rate by Social Security based on a specific formula (https://secure.ssa.gov/apps10/poms.nsf/lnx/0202608400#d), and that monthly rate is then used to determine how much if any GPO offset applies.

Therefore, based on the complexities involved, it may be a good idea to ask for a reconsideration of the determination on your wife's claim.

Best, Jerry