Is a 403b Plan Without a Pension Subject to the Windfall Elimination Provision (WEP)?

My client, Beth, worked 20+ years in a Social Security-covered job but has spent the last 10 years with a non-profit affiliated with Ohio State University, with no Social Security withholding. The employer does not offer a pension plan and is not part of the Ohio Public Employees Retirement System. They offer a 403b plan with matching and profit-sharing. Beth recently applied for Social Security, but SSA is questioning her earnings record and suggested her benefits may be subject to the Windfall Elimination Provision (WEP), despite having no non-covered pension. They have asked for details on her 403b and IRAs. I believe she is not subject to WEP and that SSA shouldn't require this information. Are there statutory provisions I can reference to clarify this with SSA, or should we provide a declaration from her employer confirming no pension plan? Have you encountered this before?

Beth's situation is somewhat unique, and it’s understandable that there may be confusion about how her earnings and retirement plans affect her Social Security benefits. However, based on the details provided, it appears that the Windfall Elimination Provision (WEP) should not apply to her Social Security benefits for several reasons.

Why WEP Should Not Apply:

1. Social Security-Covered Work: Beth has 20+ years of work in a job covered by Social Security, which means she has been contributing to Social Security during that time. The WEP generally applies to those who receive a pension from work not covered by Social Security, which isn’t the case here.

2. No Pension from Non-Covered Work: WEP applies when a person receives a pension from a non-Social Security-covered job, and that pension impacts their Social Security benefits. In Beth’s case, she does not have a pension from her non-profit job associated with Ohio State University; instead, she has a 403(b) retirement plan. Importantly, a 403(b) plan is a defined contribution plan and not a pension, so WEP should not apply.

3. Statutory References:

   • WEP Applicability: The Windfall Elimination Provision is designed to reduce Social Security benefits for those who receive a pension from non-Social Security-covered employment (42 U.S.C. § 415(a)(7)).
   • 403(b) Plans: The 403(b) plan is a tax-advantaged retirement savings plan and not a pension. Since Beth’s non-profit employer does not offer a pension, but rather a 403(b), WEP should not apply as per the statute.

Steps to Take:

1. Provide Employer Documentation: It may be helpful to provide SSA with a letter from Beth’s employer confirming that no pension plan is offered and that the 403(b) is a defined contribution plan with no employer-sponsored pension.

2. Cite POMS and Statutory References: When communicating with SSA, reference POMS RS 00605.364, which discusses WEP, and emphasize that a 403(b) plan does not meet the definition of a pension subject to WEP. Also, cite 42 U.S.C. § 415(a)(7) regarding WEP’s applicability to non-covered pension plans.

3. Follow Up with SSA: Sometimes SSA may request additional documentation as part of their standard procedure. Providing the requested information and clarifying the nature of Beth’s retirement plan should resolve the issue.

Beth should not be subject to WEP because her 403(b) plan is not a pension and does not fit the criteria that typically triggers WEP. With proper documentation and clear communication with SSA, this situation should be resolved in her favor. If issues persist, consider seeking further assistance, such as from an  attorney specializing in retirement benefits.