Q: From 1968 through September 1978 I worked in the private sector and paid Social Security. My taxed Social Security earnings for those 11 years were $40,520. According to the Social Security Administration, seven of those years were “substantial earnings years.” Beginning in October 1978, I entered federal civil service as a federal law enforcement officer and paid no Social Security. In June of 1983, I left federal service and re-entered the private sector. From June 1983 through August 1985, I remained in the private sector. My total taxed Social Security earnings for those three years were $74,650. According to the Social Security Administration, all three of those years were “substantial earnings years.”
Beginning in September 1985, I re-entered federal civil service as a federal law enforcement officer and remained until my retirement in August of 2006. From January 1, 1986, through December 31, 2006, (my CSRS Offset years) my total taxed Social Security earnings were $1,355,031. According to the Social Security Administration, all 21of those years were “substantial earnings years.” Hence, according to the Social Security Administration, I have31“substantial earnings years,” and there will be no windfall elimination provision applied to me. However, I am still subject to the CSRS Offset.
From March 1988 through June 2004, I was a member of the military reserve. As such, Social Security taxes were withheld from my military drill paychecks. ALSO, beginning in 1989, I was granted permission to maintain outside employment as an attorney. As such, I maintained a solo practice during the entire time of my CSRS Offset service (starting in April 1989 and continuing through my retirement date in August 2006). SO, during 19 of the 21 years under CSRS Offset, I was paying Social Security taxes on my federal salary, my military salary, and my sole proprietorship, all of which are reported on my annual Social Security statement. I am not sure if it makes a difference, but I did make a deposit for my post 1956 military service.
Having said all of this, here are my questions. When I reach age 62 and become eligible for Social Security, how will OPM be able to determine what amounts of my taxable Social Security income relate to my CSRS Offset salary? Will OPM only apply its formula to those amounts, or will it take all amounts into consideration in its formula? Is there any way for me to determine what the offset amount will be?
A: Only the Social Security benefit you earned while covered by CSRS Offset will be used in adjusting the amount of your CSRS annuity. The net result will be that you get the same amount of money, but from two difference places: OPM and Social Security. Any additional Social Security benefit you are entitled to based on other Social Security-covered work won’t be affected by this. For a quick and dirty estimate of what the offset will be, take the Social Security benefit amount provided by the Social Security Administration, multiply it by your number of years covered by CSRS Offset rounded up to the next higher number, and divide the product by 40. You can get a more precise estimate by using the software found at www.FEDbens.us.
