With the passage of the Social Security Fairness Act (SSFA), the US Social Security Administration made significant policy changes.
This measure repeals the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), two rules that reduced Social Security payments for millions of retirees who worked in public jobs not covered by the program.
As a result, retroactive payments and an increase in monthly benefits for affected individuals have been approved.
These changes will directly benefit 3.2 million people, including 28% of state and local employees. Prior to the repeal of these provisions, those who received a benefit for work not covered by Social Security had their benefits reduced, even if they had contributed to the program through other jobs.
These retirees will now be able to recover some of the withheld funds and receive an increase in their monthly pension.
The adjustment has already begun to be applied in the form of retroactive payments, which were sent out for the first time in February and will continue throughout March and April.
Beneficiaries will receive an official notification by mail with details of the amount and the date on which they will receive the payment in their bank accounts registered with Social Security. In addition, from April 2025, those affected will start to receive their new updated monthly amount.
Who qualifies for SSA retroactive payment
Retroactive payments are intended for retirees who receive benefits from non-Social Security employment and, as a result, did not pay Social Security taxes during their years of service.
Teachers, firefighters, police officers, and other public service employees who contribute to the Civil Service Retirement System will benefit the most. These workers will be able to recover a portion of the money that was previously deducted from them by using the WEP and GPO.
We continue sending payments owed due to the Social Security Fairness Act. Social Security is issuing 263,636 payments totaling $1,259,759,476.27 today. This makes 1,875,484 payments so far totaling $11,226,404,498.40. Stay tuned!
— SocialSecurity_Press (@SSAPress) March 6, 2025
It is important to note that the new regulations do not provide benefits to individuals who have never paid Social Security taxes. Only contributors who were affected by the eliminated provisions will receive these payments.
Beneficiaries should keep an eye out for official notifications and confirm information through official Social Security channels to avoid fraud or confusion.
Tax implications of additional payments
Although this reform provides financial relief to many retirees, it may also have significant tax implications. Social Security benefits are subject to federal taxes based on the beneficiary’s total income.
This means that those who receive retroactive payments may see an increase in their taxable income, resulting in a higher tax liability when they file their return.
To avoid inconvenience, retirees should consult with a tax advisor before using the money they receive. This will allow them to better plan their financial situation and avoid surprises when it comes to paying taxes.
Furthermore, it is advisable to investigate whether there are any exemptions or tax strategies that can help reduce the impact of these additional payments.