How does a 10 year transfer payout annuity in lieu of a lump sum affect GPO and WEP? (Educator in Louisiana). Do the penalties go away at the end of the 10 year period? Also, is the initial lump sum estimated from the day you quit working, the day you are eligible to draw a pension, or the day you actually start withdrawals? I bought your software a few years ago but couldn't get it to match these questions. Thanks!

Hi,

I'm not familiar with the specific plan you refer to, but assuming the transfer payout annuity is optional I assume that it would be treated by Social Security the same as a lump sum. If that's true, the total payout amount would be converted to a monthly amount using the proration formula described in the following section of Social Security's operations manual: https://secure.ssa.gov/apps10/poms.nsf/lnx/0202608400#d.

When lump sum prorations apply for purposes of the WEP and GPO provisions, the proration starts with the date that the person becomes entitled to the pension. 'Entitled to' means that a person has applied for benefits and has proven his or her rights to them for a given period.

Local Social Security offices sometimes maintain precedent files on the various payment options for pension plans common in their jurisdictional area. If you haven't already done so, you may want to try checking with the Social Security office that services the office that administers your pension plan.

Best, Jerry