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An individual works for an employer that does not withhold Social Security taxes. This may lead to a possible reduction in their benefits under which provision?
Dual eligibility rules.
Social Security earnings limitation.
Windfall elimination provision.
Government pension offset rules.
The correct answer is: Windfall elimination provision.
The Windfall Elimination Provision (WEP) affects how Social Security benefits are calculated for individuals who have worked in both Social Security-covered employment and non-covered employment, such as certain government jobs. When an individual is employed in a job that does not withhold Social Security taxes, it reduces their overall earnings that contribute to the Social Security system. As a result, when they later claim Social Security benefits, their earned benefits will be adjusted downward due to the WEP formula. The WEP formula was created to ensure that people who have substantial earnings from non-covered employment do not receive disproportionately high benefits from Social Security, despite not having contributed sufficiently through payroll taxes. This can particularly impact individuals who have both government pensions and Social Security benefits, as it modifies the benefit calculation to reflect their work history more accurately. In the context of the other options, dual eligibility rules refer to situations where a person might qualify for benefits from more than one program, such as Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), but do not directly address the tax withholding issue. Social Security earnings limitation pertains to how much an individual can earn while receiving Social Security retirement benefits without reducing their payout, and government pension offset rules deal with how a government pension can