FEDweek

Key Social Security Figures Rising

The Social Security withholding “FICA” tax of 6.2 percent will apply in 2018 to salary up to $128,700, up from $127,200 this year. That tax is paid by those under FERS and CSRS Offset (under the latter, full retirement contributions continue above that level, however, with the excess going into the civil service retirement fund).

The annual earnings test threshold applying to Social Security beneficiaries aged 62 through “full retirement age”–remaining 66–will rise from $16,920 to $17,040. Those beneficiaries lose $1 in Social Security benefits for every $2 in earnings through employment or self-employment above the limit. A separate earnings test applies only to earnings for months in the year an individual reaches full retirement age prior to hitting that age. One dollar in benefits will be withheld for every $3 in earnings above $45,360, up from $44,880. There is no limit on earnings after full retirement age.

Meanwhile, the “substantial earnings” threshold under the windfall elimination provision will be $23,850, up from $23,625. The WEP mainly applies to CSRS-covered persons who later qualify for a Social Security benefit due to outside earnings covered by that system; the reduction is phased out if Social Security-covered earnings are above the annual threshold for at least 20 years and eliminated above 30 years.