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UK state pension and USA social security

UK state pension and USA social security

Old Feb 16th 2016, 5:28 pm
  #1096  
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Default Re: UK state pension and USA social security

Originally Posted by CatSailor View Post

As a result of my reduced PIA my wife's claim for spousal Social Security using a 'restricted application' under the US system is also reduced as it's based on the same (my) PIA. However, when my US born wife (who has no earnings that have not been subject to Social Security taxes), claims her own benefits under her own earnings record and PIA I will, provided I'm 66+, be able to then claim excess spousal based on her PIA.

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Does this proviso have any bearing on what you intend to do?

Note:If you were born before January 2, 1954 and have already reached full retirement age, you can choose to receive only the spouse’s benefit and delay receiving your retirement benefit until a later date. If your birthday is January 2, 1954 or later, the option to take only one benefit at full retirement age no longer exists. If you file for one benefit, you will be effectively filing for all retirement or spousal benefits.
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Old Feb 16th 2016, 5:42 pm
  #1097  
 
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Default Re: UK state pension and USA social security

Originally Posted by CatSailor View Post
However, when my US born wife (who has no earnings that have not been subject to Social Security taxes), claims her own benefits under her own earnings record and PIA I will, provided I'm 66+, be able to then claim excess spousal based on her PIA.

My total Social Security payment will be somewhat reduced however, as part will be based on my reduced by WEP, PIA and part will be from excess spousal benefit based on my wife's PIA which is not subject to WEP. Whew! Have I got it figured right?
Everything I've seen on this says the amount you receive would be equal to the amount of the spouse benefit. As I don't recall anyone posting on BE who has had a pension worked out that way, and is also subject to WEP on their own portion, I guess this is one where to be 100% certain you will have to wait until you claim.
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Old Feb 16th 2016, 5:49 pm
  #1098  
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Default Re: UK state pension and USA social security

Nutmegger, thank you, I believe my wife and I are both 'grandfathered' in to still being able to file restricted applications as we were both already 62 before Jan 1st this year. Also and please correct me if I'm wrong but I think that 'grandfather' provision still allows us to file restricted applications at our respective FRAs, i.e. we don't have to have already reached FRA.
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Old Feb 16th 2016, 5:54 pm
  #1099  
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Default Re: UK state pension and USA social security

Cat SailorIf it helps, to get any sort of pension in the US it's necessary to work for 10 years, I'd done 13 years.Because I qualified for a full UK pension my US pension was basically cut in half PLUS the US taxed my UK pension which I'd deferred for a year. (They took about $1,500 out of my lump sum from the UK) and it's an ongoing thing, so my UK pension will be $900-$950 (subject to the exchange rate) less tax. Hope this helps.Some people have said they don't even declare their UK pension but that's a dangerous game.As you will know there's a lot of inter-agency information passed around and as I had already declared my UK pensionwhen I applied for my US Social Security, it may have raised a red flag if I hadn't declared it on my 2015 tax return.I also understand the penalties can be extremely HARSH if caught.

Last edited by rogerpenycate; Feb 16th 2016 at 5:58 pm.
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Old Feb 16th 2016, 6:43 pm
  #1100  
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Default Re: UK state pension and USA social security

Originally Posted by CatSailor View Post
Nutmegger, thank you, I believe my wife and I are both 'grandfathered' in to still being able to file restricted applications as we were both already 62 before Jan 1st this year. Also and please correct me if I'm wrong but I think that 'grandfather' provision still allows us to file restricted applications at our respective FRAs, i.e. we don't have to have already reached FRA.
Did you look at the "full retirement age" link in the text I pasted? I think one can collect at 62, but that means there will be a reduction in benefits. I'm under the impression that full retirement age is now 66.
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Old Feb 16th 2016, 7:29 pm
  #1101  
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Default Re: UK state pension and USA social security

rogerpenycate, I hear you, not only would I probably get caught anyway, but if not then my brutally honest wife would likely turn me in and refuse to visit me in jail all while collecting spousal in the US and my UK Pension!

Nutmegger, yes you are correct, if you take either your own benefit or/and spousal before 66 the amounts are reduced.

What I'm saying is that as far as I know, filing a restricted application has not gone away for us as we were both already 62 before Jan 1 this year. I think I can file now or in a couple of months and yes I'll receive a reduced benefit for filing early at 62, but my wife at her FRA later this year can still file a restricted application and just receive full spousal based on my not yet WEP reduced full PIA even though she is not yet at this very moment FRA. If you file early I believe you receive a reduced amount of the PIA you file on be it your own or your spouses, the amount of the PIA is unchanged but you get less of it. WEP actually reduces your PIA amount itself. Were she not already 62 she would you are right be deemed to be filing for all benefits, right now she can still file restricted when she's 66.
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Old Feb 25th 2016, 6:43 pm
  #1102  
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Default Re: UK state pension and USA social security

Does anyone have a recommendation of a tax accountant in the US who understands the US ( and UK) issues around Social Security in term of WEP and also the implications of UK Pension Pension plan payouts and WEP ?

I am in the Boston area and trying to assess whether to withdraw any / none of my UK Pension as i am over 55 old at this time. If withdrawals in the future would be counted against WEP that could impact my decision ... as will only likely have 20 years of US SS contributions by the time I retire. Thanks in advance.
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Old Feb 25th 2016, 7:09 pm
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Default Re: UK state pension and USA social security

Originally Posted by reltub View Post
Does anyone have a recommendation of a tax accountant in the US who understands the US ( and UK) issues around Social Security in term of WEP and also the implications of UK Pension Pension plan payouts and WEP ?

I am in the Boston area and trying to assess whether to withdraw any / none of my UK Pension as i am over 55 old at this time. If withdrawals in the future would be counted against WEP that could impact my decision ... as will only likely have 20 years of US SS contributions by the time I retire. Thanks in advance.
Not sure it is a tax account you want to consult, more a lawyer who specializes in Social Security issues.
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Old Feb 25th 2016, 7:27 pm
  #1104  
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Default Re: UK state pension and USA social security

Originally Posted by reltub View Post
Does anyone have a recommendation of a tax accountant in the US who understands the US ( and UK) issues around Social Security in term of WEP and also the implications of UK Pension Pension plan payouts and WEP ?
WEP only potentially affects US Social Security payments, not UK pensions
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Old Feb 25th 2016, 7:29 pm
  #1105  
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Default Re: UK state pension and USA social security

Originally Posted by reltub View Post
Does anyone have a recommendation of a tax accountant in the US who understands the US ( and UK) issues around Social Security in term of WEP and also the implications of UK Pension Pension plan payouts and WEP ?


I am in the Boston area and trying to assess whether to withdraw any / none of my UK Pension as i am over 55 old at this time. If withdrawals in the future would be counted against WEP that could impact my decision ... as will only likely have 20 years of US SS contributions by the time I retire. Thanks in advance.
You should start by reading the WEP section in the SSA website. Then look at their WEP calculator. Any UK private pension and UK state pension that is a result if wages that were not subject to FICA will be used in the WEP calculation which will reduce your SS payment.
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Old Feb 25th 2016, 7:49 pm
  #1106  
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Default Re: UK state pension and USA social security

Sorry - I phrased my question badly. My question is whether withdrawals from a UK private pension plan in the near term would cause WEP to come into effect and reduce my US Social security in thh future. From reading all 70+ pages of this thread there seems to be no consensus on this question and so I was looking to get a professional accountant ( or tax lawyer ? ) to advise on this for my specific instance.

If i withdraw a lump sum now ( and pay tax on it) and then claim SS in say 10 years time its unclear to me whether / how WEP is impacted and calculated.

Last edited by reltub; Feb 25th 2016 at 7:51 pm.
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Old Feb 25th 2016, 7:57 pm
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Default Re: UK state pension and USA social security

Originally Posted by reltub View Post
Sorry - I phrased my question badly. My question is whether withdrawals from a UK private pension plan in the near term would cause WEP to come into effect and reduce my US Social security in thh future. From reading all 70+ pages of this thread there seems to be no consensus on this question and so I was looking to get a professional accountant ( or tax lawyer ? ) to advise on this for my specific instance.

If i withdraw a lump sum now ( and pay tax on it) and then claim SS in say 10 years time its unclear to me whether / how WEP is impacted and calculated.
When I read through some doc on WEP on the ssa website I am pretty sure I read a bit about past pension distributions being counted in the wep calculation.
I'll look again in a bit.
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Old Feb 25th 2016, 7:59 pm
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Default Re: UK state pension and USA social security

Originally Posted by reltub View Post
If i withdraw a lump sum now ( and pay tax on it) and then claim SS in say 10 years time its unclear to me whether / how WEP is impacted and calculated.
I asked the hive mind this a couple of months ago, and no one seemed to know. With the change in UK pension rules, I was wondering what would happen if hubby withdrew his entire UK (small) company pension aged 55 - declared as income, tax paid, etc - and then claimed subject-to-WEP-due-to-UK-state-pension SS some 15 years later, aged 70.

In our case, it was an idle academic matter as we're only presently in our mid-40s. I imagine no one's tested it yet with the situation being so new, so I'm hoping it will be resolved some time in the next decade.

I expect it'll count - if not, what is all that FBARing for?
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Old Feb 25th 2016, 8:11 pm
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Default Re: UK state pension and USA social security

There is certainly a section on the form declaring foreign pensions that asks about lump sums, and the period that they cover. But no explanation as to how they figure in the calculations. In the online WEP calculator they only ask for the non SS pension monthly payment, and no mention of any lump sums.

Maybe a start would be to ask the SSA excepting that any answer is starting point which needs to be confirmed. But at least it might give some guide to future planning.
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Old Feb 25th 2016, 8:19 pm
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Default Re: UK state pension and USA social security

Originally Posted by kodokan View Post
I asked the hive mind this a couple of months ago, and no one seemed to know. With the change in UK pension rules, I was wondering what would happen if hubby withdrew his entire UK (small) company pension aged 55 - declared as income, tax paid, etc - and then claimed subject-to-WEP-due-to-UK-state-pension SS some 15 years later, aged 70.

In our case, it was an idle academic matter as we're only presently in our mid-40s. I imagine no one's tested it yet with the situation being so new, so I'm hoping it will be resolved some time in the next decade.

I expect it'll count - if not, what is all that FBARing for?
Bearing in mind that WEP was set up to catch those in the US who had pensions from a non SS source (Federal for one), and foreign types seem to have been swept up in it. The changes to UK pensions rules may not be worth making changes to WEP to cover them.
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