Q: I just heard that despite the fact that I never paid into Social Security during my federal government career, I now qualify for benefits based on my spouse’s work record. I always thought I would get nothing, so I never filed for Social Security. But, I have now! What exactly did I miss along the way?
A: Your situation is a great opportunity to make a public service announcement.
For decades, there were two Social Security rules – the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) – that effectively reduced or completely erased Social Security benefits for people who earned government pensions. But, back in late 2024, Congress passed a law to repeal both of these rules. A lot of federal pensioners who were once locked out of Social Security, suddenly became entitled to some benefits.
In your case, the elimination of GPO is the reason for your new Social Security spousal benefit. Since your spouse receives Social Security, you are now eligible to get a spousal benefit of up to 50% of their full-retirement-age benefit. And, if your spouse dies first, you will now also receive a survivor benefit. That is, you’ll get to keep 100% of their current benefit.
But, there is a small nuance that might make you feel a little bit of regret.
Social Security technically requires you to file to receive any benefits. People who had previously filed – and automatically had their benefits reduced or eliminated by these now-defunct rules – have received retroactive payments going all the way back to January 2024.
But, since you never actually filed for Social Security – presumably because you rightly assumed you weren’t eligible – you are now only able to receive up to six months of retroactive benefits, not all the way back to the start of 2024. It feels a bit wrong, but it’s way better than nothing, I suppose.
Q: I’m 57 and just received a notice from my 401(k) provider saying I’ve reached my $24,500 pre-tax contribution maximum limit. I normally make a pre-tax age-50 catch-up contribution, too. They are now telling me that my remaining 401(k) contributions have to go into a new Roth side of my 401(k). What changed?
A: There is a new rule in effect that started this year, even though Congress passed the law in late 2022. It took this long to formally implement the change.
First, some background will help for other readers. In 401(k) plans, the basic employee contribution limit is currently set at $24,500. But, because you’re over age 50, you also get to do a “catch-up” contribution of another $8,000. So, your total maximum contribution for 2026 is actually $32,500.
But, here’s the big change this year.
If your wages were over $150,000 last year, your age-50 catch-up contribution now has to be made as a Roth contribution. That means you won’t receive a tax deduction today on that extra $8,000. Of course, your first $24,500 can still be contributed on a pre-tax basis.
Now, this forced Roth contribution might not be all that bad. Today’s 22% and 24% federal tax brackets span a really wide range of income. As a high earner, the fact that you’re building a pool of Roth money that can grow tax-free for the rest of your life, might work out to be a good thing. Sometimes Congress takes away a tax break today and accidentally gives you a pretty good tax break tomorrow.
