Government Pension Offset – GPO and Social Security

Government Pension Offset (GPO) Social Security Reduction

If you retire from the federal service under CSRS and also are eligible for Social Security benefits as a spouse, former spouse or survivor, your Social Security benefit will be reduced according to the Government Pension Offset.

It will be reduced because you are receiving a pension from the government based on earnings that were not covered by Social Security. For every $3 you receive from your CSRS annuity, your Social Security benefit will be reduced by $2.

Note: In some cases, you can lose the entire Social Security benefit.

The GPO does not apply to those covered by CSRS Offset because they are paying Social Security taxes. It also does not apply to certain retired military reservists and National Guard members or those first hired into the government under FERS.

It does apply to those who transferred from CSRS to FERS unless they have five continuous years of coverage under that retirement system. However, under Social Security law, anyone eligible for both benefits under Social Security can only get the larger of the two—the earned benefit or the spousal benefit. In almost all cases, the individual’s own earned benefit would exceed the spousal benefit.

Earnings Test

The Social Security Earnings Test is a reduction in an individual’s Social Security payments made when he or she continues to work after benefits begin and earns over an allowable amount ($17,440 in 2019).

For every $2 earned over this amount, the individual will give up $1 in benefits between age 62 and their full retirement age until 2020, 66, phasing up afterward to 67). In the year you reach your full retirement age, you can earn up to a separate limit ($46,920 in 2019) in the months before you reach your full retirement age with no reduction in benefits; for every $3 you earn over that limit in that period, $1 is withheld from benefits. There is no earnings test after full retirement age.

The only money that is counted for earnings test purposes is money which you receive for work you perform, whether as an employee or a self-employed person; it does not apply to other forms of income such as an annuity.

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