If you work for more than one employer in your career, including both employers that do not withhold Social Security payroll taxes and employers that do withhold SS payroll taxes, the pension you receive from the employer who doesn’t withhold payroll taxes may reduce your overall  Social Security Retirement benefits.

Many people do not become aware of the windfall reduction until they apply for their Social Security Retirement benefits and SSA learns that the applicant is also entitled to a “private” pension from a non-withholding employer.

Social Security utilizes a formula to determine the reduction to the retiree’s benefits.  In 2014, the maximum reduction is $408.  There is a limit to the reduction for retirees with a small pension.  If you are entitled to a pension from a non-withholding employer, contact your local SSA office to discuss the implications that the pension will have on your Social Security Retirement benefit before you retire.

If you have questions about what you are entitled to, contact Stark & Stark today