I am subject to WEP. I am drawing teacher retirement. I have 21 years of substantial earnings (stopped teaching at age 46--worked as CPA for over 20 years) I wish to start my SS benefits this November. I will be 68. I will continue to report substantial earnings for 2-3 more years. Will the SSA recalculate my increase in substantial earnings related to WEP, or do I need to ask them to do that. I know they will recalculate for a new PIA if that applies and it probably should. I understand that SSA does its recalculations to be effective in January each year. Thank you.

Hi,

The short answer is yes. Social Security automatically recalculates Social Security retirement benefit rates to consider both additional years of earnings, and additional substantial earnings years for Windfall Elimination Provision (WEP) purposes (https://www.ssa.gov/pubs/EN-05-10045.pdf).

It sounds like the increases in your benefit rate that would result from additional years of earnings would be twofold. Social Security retirement benefits are calculated based on an average of a person's highest 35 years of wage-indexed Social Security covered earnings, so if you have less than 35 such years you'll be replacing zero earnings years with your additional earnings. And, on top of that increase, if you have additional years of earnings that are defined as substantial for purposes of the WEP provision and if you currently have between 20 and 30 such years, then the amount of WEP reduction applied to your benefit rate would likely decrease by 5% for each additional substantial year up to 30 years. If you reach 30 substantial Social Security covered earnings years, then no WEP reduction would apply.

The only way that an additional year of substantial Social Security covered earnings might not increase your benefit rate if you currently have between 20 and 30 substantial earnings years is if the amount of your WEP reduction is being calculated based on the WEP guarantee provision. The WEP guarantee provision limits the amount of WEP reduction to no more than 50% of the full amount of a person's non-covered pension. The WEP guarantee normally only applies if a person's non-covered monthly pension amount is less than roughly $800.

Bottom line, both types of increases described above should be done automatically with no action required on your part. However, such recalculations aren't processed immediately. Social Security usually processes those types of recalculations in the fall of the year following the additional year of earnings, but any resulting rate increases are retroactive to the person's payment for January of that year.

Best, Jerry