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It's the type of pension agreement. I have a small gov't pension, same state/city/county as DH. Our pensions were different (as negotiated by the unions). I paid SS, DH did not. His is worth wayyyyyyy more than mine.
But you’re talking pension, not SS WEP. Federal law is the same in every state. There is no WEP if your employer, who provides a pension deducted SS taxes from your pay check.
I worked for two gov’t agencies and I am collecting pensions from both. Since they both also deducted money from my paycheck towards SS I suffered no WEP to my SS benefit. So it’s not about having a pension. It’s about whether you payed SS taxes while working for the employer who provides the pension.
What he said. You can get a pension from anybody and there's no harm or foul. The WEP penalty is applied on a sliding scale, depending on how many years you worked in jobs that didn't pay into SS. From my work experience, it's the employer who chooses to pay into SS or not and the employee doesn't get to choose. In hindsight, I wish I had put more into a deferred comp account but a divorce took care of that anyway.
For example, I worked for the state of Florida for 10 years and part of my pay went to FICA and when I moved north and worked for a state institution in IL they did not collect FICA taxes (i.e., I didn't pay into Social Security) for the two years I worked for the state.
Some think it's good not to pay into Social Security so you have more take home pay but then I think of all those people who worked for the state of IL and the state pension plan has been in shambles in recent years, thereby decreasing your social security benefits or if you worked for the state of IL all your life you haven't contributed to social security at all, and therefore won't get any SS benefits.
But ironically, IL is one of 13 states which don't tax social security retirement income.
My guess is that it has to do with the state's retirement benefits. You can't pay into SS in some states, because the state provides a retirement benefit to you. You can't collect both. But some states don't have a state retirement plan for its workers, or it's voluntary or too small to be considered worthwhile, so those employees pay into the federal system of SS.
But you’re talking pension, not SS WEP. Federal law is the same in every state. There is no WEP if your employer, who provides a pension deducted SS taxes from your pay check.
I'm not disagreeing with that.
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My guess is that it has to do with the state's retirement benefits. You can't pay into SS in some states, because the state provides a retirement benefit to you. You can't collect both. But some states don't have a state retirement plan for its workers, or it's voluntary or too small to be considered worthwhile, so those employees pay into the federal system of SS.
I disagree; it’s up to the agency whether to pay into SS. My first gov’ment employer asked us to vote whether to opt out of paying into SS. Happily people were smart and not short sighted and voted to stay in the SS system. It has nothing to to with “can’t”, but it’s a choice by one’s employer or union members to not participate in the SS system. Federal SS law is the same in every state.
My workplace - municipal government - opted out of Social Security in the mid 1980s. They took that money and put it toward the state pension plan.
I had well over the 40 credits required for Social Security when I started here. Did the WEP calculations - and still will have a substantial Social Security check.
However, I do feel for my coworkers who have not worked anywhere else. As they come close to retirement they are looking for side jobs just to get the credits.
For example, I worked for the state of Florida for 10 years and part of my pay went to FICA and when I moved north and worked for a state institution in IL they did not collect FICA taxes (i.e., I didn't pay into Social Security) for the two years I worked for the state.
Some think it's good not to pay into Social Security so you have more take home pay but then I think of all those people who worked for the state of IL and the state pension plan has been in shambles in recent years, thereby decreasing your social security benefits or if you worked for the state of IL all your life you haven't contributed to social security at all, and therefore won't get any SS benefits.
But ironically, IL is one of 13 states which don't tax social security retirement income.
Keep in mind that if you don't pay into SS, then you can't take out SS disability.
My mother paid into SS for years, took a job with the state of FL for two years and had back problems but was disqualified from SS disability because she hadn't paid in for two years. What ba mess!
ORIGINAL QUSTION? Why do some states don't allow you to pay into Social Security?
I think that it is because if they deduct some money from your payroll for a pension, then DEFER the State's (or City or County, or church) share of your pension the State (or City or County or church) has less immediate cost for you as an employee.
If the State was paying into social security for you, then the State (or City or County or church) would have to pay the employer share immediately...not defer it 30+ years.
And many of these employees will not remain employed long enough to ever qualify for a pension, letting the employer off the hook for their share of the pension cost. With SS, the employer would have had to pay the money upfront, no refunds if it is not used...and it likely would be used as it transports to all regular employers.
NO. The 6.2% that was required to be contributed to FICA had to be contributed to a qualified retirement program in order to opt out. So the money was not "saved" - rather it was put elsewhere.
Railroad emplyees also had a program separate from Social Security.
Rail Road retirement works in conjunction with Social Security. For example, if you have a split career containing both SS payments and railroad credits, and you become vested in RR benefits, then RR credits your SS towards RR Tier 1. The two are combined so that you get the same total benefit with any combination of RR and SS benefits. But RR also offers a Tier 2 benefit separate from SS or RR Tier 1. Tier 2 has its own payroll contribution tax.
If you fail to be vested in RR then the RR payroll taxes are rolled into SS.
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