The Social Security Administration (SSA) has announced that it has distributed $7.5 billion in retroactive payments to over 1.1 million beneficiaries. These payments are part of the implementation of the Social Security Fairness Act, which was passed by Congress at the end of last year. The new legislation repeals two laws that reduced benefits for certain workers who receive pensions for non-covered employment.
The Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) affected over 3.2 million public sector workers, including firefighters, police officers, and teachers. Initially, the SSA had warned that processing the increased monthly payments and retroactive payments could take a year or longer. However, the agency has managed to expedite the process for the majority of beneficiaries.
More than a third have already received their retroactive lump-sum payments for benefits due in 2024. The average retroactive payment through March 4 is $6,710. The SSA will continue adjusting monthly payments throughout March, which should be reflected in April’s payment.
Beneficiaries can opt to receive email or text alerts when notices are available in their Message Center. Those who have not yet received their retroactive payments are advised to wait until April before contacting the SSA. Beneficiaries curious about their payment increases should wait to receive their April payment before inquiring further.
Retroactive payments expedite beneficiary support
The SSA will send out notices to those eligible for a benefit increase over the coming weeks. Up to 3.2 million people are affected by the new law, but only a small number will need to inform the SSA of their possible eligibility.
First-time filers should select “Family Benefits,” covering both retirement and Medicare benefits. Applications can be filed online or via phone at 1-800-772-1213 (M-F 9 am to 6 pm ET). When prompted by the system, say “Fairness Act” to be connected to a WEP-GPO trained representative.
The SSA has also warned of telephone scammers pretending to be government employees. Suspicious calls should be reported, and the advice is to hang up immediately if contacted by such scammers. A September 2024 report indicates that the legislation will increase monthly benefits by an average of $360 for those impacted by the WEP and between $700 and $1,190 for those affected by the GPO.
While the extra income is beneficial, financial advisers warn that it could also mean additional taxes for recipients. The extent of taxation on Social Security benefits depends on the recipient’s total income, including one-half of their Social Security benefits. Financial experts have some advice for beneficiaries looking to reduce their tax burden from the Social Security bump.
Checking Line 6c of the tax form for lump-sum retroactive payments, making Qualified Charitable Distributions (QCDs) from IRAs, reducing withdrawals from retirement accounts, and managing taxable income through tax-loss harvesting in brokerage accounts are potential strategies. For ongoing updates and further information, beneficiaries are encouraged to stay informed through official SSA channels.
Image Credits: Photo by Jp Valery on Unsplash
