Monday, February 2, 2009
Help Me Howard: Two Social Securities
Here is a question for you. If you were born in another country or worked there for many years before coming to the U.S., can you draw a pension from that country and the U.S.? One man was stunned by the answer and found out when his social security checks were suspended. Can the U.S. government do that? It's why he called Help Me Howard with Patrick Fraser.
WSVN -- You have heard of a man with no country. Now meet Roy Williams, a man with two countries.
Roy Williams: "I always have my little American flag there because I'm both American and Dominican."
Roy was born in Dominica, a small island in the Caribbean, not to be confused with the Dominican Republic.
Roy Williams: "We have a population of just about 70,000 people in comparison to the Dominican Republic, which probably has 1.2 million people."
As a young man in Dominica, Roy got into politics, but when his party got tossed out of office, he saw the handwriting on the wall.
Roy Williams: "We take our politics personal, so had I not left there, it would have been very difficult."
In 1980 Roy came to America, and a few years later became an American citizen.
Patrick Fraser: "Do you consider yourself Dominican or American?"
Roy Williams: "Both, both, but I'm very grateful for what America has done for me."
Fast forward to today. After working for 27 years in the U.S., Roy got married again, had his ninth child, retired and started drawing social security.
Roy Williams: "I received about $860 from the U.S. government."
And since he was born and worked in Dominica, he gets a pension from that government.
Roy Williams: "It is equivalent to $156. "
Two pensions, worth about 1,000 dollars from two countries. Great, Roy thought. Not so fast, said Uncle Sam.
Roy Williams: "The problems started when my social security was suspended."
Suspended, social security said, because he had been getting a pension from Dominica. To get his checks flowing again, he had to repay Uncle Sam over $2,100.
Patrick Fraser: "You worked in two countries for many years, why can't you get benefits from both countries?"
Roy Williams: "I wish this was something you could ask them."
Social Security told Roy he can draw both pensions, but under the U.S. formula, that will lower his social security benefits from the U.S.
But Roy said he earned both those pensions, and one should not affect the other.
Roy Williams: "We run our own country, America runs its own country. We can't tell Mr. Obama what to do, and Mr. Obama can't tell us what to do."
But can the U.S. lower your social security benefits if you draw a pension from another country, Howard?
Howard Finkelstein: "The answer is, sometimes. Social Security can enact what's called a windfall elimination provision. In other words, deduct a portion from your benefit check if you are getting money from a government or private company that did not take out U.S. Social Security taxes from your payroll checks. There are exceptions for some governments, but Dominica is not one of the countries."
You can draw a pension from these six countries, and it won't affect your U.S. social security benefits: Australia, Denmark, Finland, Netherlands, Norway, Sweden.
To help Roy repay Uncle Sam, the Social Security Administration reinstated his benefits and will deduct $75 a month until he repays the $2,100 he owes Uncle Sam.
Roy doesn't like the government's decision, but as an American, he has no choice. Instead he will do what he learned on the island, laugh about it and move on. Because after all, he has a new baby to bring up.
Now if you are thinking, wait, I have a pension with my company, I have a 401K, will that lower my social security benefits if I make it to retirement?
The answer is no. If you paid into Social Security while you were working, your pension and 401K won't be affected. Of course, that's assuming Social Security is around when we retire.
Tired of paying with no benefit? Want to feel socially secure? Check with us, our legal advice is good in one or two countries, we think.
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