Dear Rusty: I have a question in regard to the “windfall act.” I am receiving a pension from the State of Nevada. I retired from the State, and did not pay into Social Security, but I worked in the private sector before and am currently working in the private sector. My question is: How much “penalty” will I be subject to when I decide to finally hang it up? Signed: State Retiree
Dear State Retiree: The State of Nevada is one of 27 states which, for all or some employee categories, do not participate in the Federal Social Security (SS) program; rather their State pensions are designed to provide a retirement benefit in lieu of Social Security. Because you receive a Nevada state pension and have also worked in the private sector long enough to be entitled to a Social Security (SS) benefit, your SS retirement benefit, when you claim it, may be reduced by the Windfall Elimination Provision (WEP), with the amount of reduction based upon how many years of substantial SS-covered earnings you have. If you have 20 or fewer years of SS-covered employment, here’s how WEP will affect your Social Security benefit:
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