Special Memo 288

To: Authorized Agents of employers with IMRF members who do not participate in Social Security
Re: Notification requirement for new employees who do not participate in Social Security

December 6, 2004

If you did not receive this memo, according to our records all of your IMRF members participate in Social Security.

While Social Security coverage for IMRF members is required by an agreement between the state of Illinois and the Social Security Administration under Section 218 of the Social Security Act, there are a limited number of exceptions. Our records indicate you have IMRF members who fall under one of these exceptions and do not participate in Social Security.

New requirement for employees not covered by Social Security
The Social Security Protection Act (SSPA) of 2004 (Public Law 108-203) was signed into law on March 2, 2004. The provision of this Act applicable to local government employers takes effect on January 1, 2005, and applies only to employers with employees who do not participate in Social Security. Employees who work in positions that are covered by Social Security and who pay Social Security taxes through an employer are not affected.

If you hire an employee after January 1, 2005, into a position that does not participate in Social Security, you are now required to give that employee a notice that explains the effect of not participating in Social Security. The notice must explain the effect on any separate employment the employee currently holds that is covered by Social Security and any position the employee previously held which was covered by Social Security.

You can download a copy of the notice from the Social Security Administration website at www.socialsecurity.gov/form1945/ (this hyperlink is no longer active) or from the employer forms area of the IMRF web site (www.imrf.org). You can also call an IMRF Member Service Representative at 1-800-ASK-IMRF (1-800-275-4673).

The employee is required to sign the notice before beginning work. You must then send the signed notice IMRF.

Employee’s Social Security benefits may be reduced
The notice is intended to make the employee aware that working in a position that is not covered by Social Security may make him or her subject to the Government Pension Offset (GPO), the Windfall Elimination Provision (WEP), or both. These federal provisions reduce the amount of an individual’s Social Security benefits unless the individual qualifies for an exemption.

• Government Pension Offset (GPO)
  Under the GPO, if an individual receives a state or local government pension based on employment where he or she did not pay Social Security taxes, and the individual is entitled to Social Security retirement benefits based on his or her spouse’s Social Security record, the Social Security benefits may be reduced by two-thirds of the individual’s state or local government pension.
• Windfall Elimination Provision (WEP)
  The WEP applies to the individual’s own Social Security benefits. If an individual receives a state or local government pension based on work where he or she did not pay Social Security taxes, Social Security calculates its monthly benefit using a modified formula. Under the modified formula, the individual receives a lower Social Security benefit.

Questions
If you have any questions regarding the notice, call an IMRF Member Service Representative at 1-800-ASK-IMRF (1-800-275-4673) Monday through Friday, 7:30 a.m. to 5:30 p.m. Visit the Social Security Website at www.socialsecurity.gov/gpo-wep/ for more information on the Government Pension Offset and the Windfall Elimination Provision.

Download Form SSA-1945

Information about Social Security Form SSA-1945,
Statement Concerning Your Employment in a Job Not Covered by Social Security

New legislation [Section 419(c) of Public Law 108-203, the Social Security Protection Act of 2004] requires State and local government employers to provide a statement to employees hired January 1, 2005 or later in a job not covered under Social Security. The statement explains how a pension from that job could affect future Social Security benefits to which they may become entitled.

Form SSA-1945, Statement Concerning Your Employment in a Job Not Covered by Social Security, is the document that employers should use to meet the requirements of the law. The SSA-1945 explains the potential effects of two provisions in the Social Security law for workers who also receive a pension based on their work in a job not covered by Social Security. The Windfall Elimination Provision can affect the amount of a worker’s Social Security retirement or disability benefit. The Government Pension Offset Provision can affect any possible Social Security benefit entitlement as a spouse or an ex-spouse.

Employers must:

• Give the statement to the employee prior to the start of employment;
• Get the employee’s signature on the form; and
• Submit a copy of the signed form to the pension paying agency.

Social Security will not be setting any additional guidelines for the use of this form. Copies of the SSA-1945 are available online at the Social Security website, www.socialsecurity.gov/form1945. Paper copies can be requested by email at oplm.oswm.rqct.orders@ssa.gov or by fax at 410-965-2037. The request must include the name, complete address and telephone number of the employer. Forms will not be sent to a post office box. Also, if appropriate, include the name of the person to whom the forms are to be delivered. The forms are available in packages of 25. Please refer to Inventory Control Number (ICN) 276950 when ordering.