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Social Security last-day exemption ended
June 30, 2004
Changes in Social Security law surrounding the Government Pension Offset (GPO) became effective on April 1, 2004, and on June 30, 2004, a long-time exemption allowing Texas school employees to avoid a steep reduction of their spousal Social Security benefits ended. The elimination of the one-day exemption was included in changes to U.S. Social Security laws surrounding the Government Pension Offset (GPO). Additional information on the GPO is available from the Social Security Web site, but the following are among the common questions received by TCTA:
Q I am not eligible for spousal benefits, but have earned Social Security benefits through my own previous employment in the private sector. Will passage of HR 743 affect me?
A No, the changes made in Section 418 of HR 743 apply only to spousal benefits. No changes were made to the Windfall Elimination Provision, the law providing for a reduction in one’s own Social Security benefits.
Q I am already receiving my spousal Social Security benefits. Am I affected by the new law as well?
A HR 743 provides an exception for a school employee who applied for Social Security benefits prior to April 1, 2004. For someone already receiving benefits, as long as the application for those benefits was made prior to April 1, you can utilize the last-day exemption even if you retire years from now. The new 60-month provision will not apply to individuals in this situation.
Q I plan to retire several years from now. Is there any way I can receive my full spousal Social Security benefits?
A There are a few options for people who were unable or unwilling to take advantage of the one-day exemption by June 30, 2004.
One option is, upon leaving teaching, to simply withdraw your TRS funds rather than retiring and receiving a pension. This is not a good option for many employees, but may work for some. Because the GPO is triggered by receiving a TRS pension, leaving without receiving a pension allows the employee to avoid the offset.
Another option is to meet the 60-month requirement. For those retiring within the next five years, previous service in a school district or other entity paying into both TRS and Social Security can be applied toward those 60 months. An employee in this situation must still work at least his/her last month in an entity paying into both prior to retirement. For an employee whose last day of employment is after March 2, 2009, previous service will not count. The employee’s last 60 months must be in an entity paying into both TRS and Social Security.
Q I worked for four years in a district paying into Social Security. Does four years equal 48 months, for purposes of the 60-month rules?
A We don’t know the answer to this question yet. The Social Security Administration is still in the process of developing rules and policies to implement HR 743, and this issue has not yet been addressed.
Q I worked for four years in a district paying into Social Security. Does four years equal 48 months, for purposes of the 60-month rules?
A Apparently Social Security only counts the months under contract, so if you had the typical teacher contract of 10 months, those four years would count as 40 months toward the 60-month requirement. If you had a 12-month contract, the four years would count as 48 months.
Watch the TCTA Web site for updates on this new legislation as specifics for implementation unfold.
While TCTA strives to provide accurate information to our members, we are not qualified financial advisors, nor can we claim to represent either TRS or the Social Security Administration. We recommend that school employees contact both government agencies and consult with a reputable financial advisor familiar with these Social Security issues for help in assessing individual situations.
