I have 14 U.S. Social Security credits and 24 years of contributions (or 96 quarters) to CPP in Canada. This represents a total of 110 credits, or 27.5 years. I live in the United States. If I continue to work for 2.5 years and earn another 10 social security credits and use the totalization agreement to reach 30 years or 120 quarters together, can I avoid the reduction of the WFP? I already have a small teacher`s pension from Canada and the CPC and I am very concerned about WFP. Section 404.213 (e) (8) of the Social Security Regulation states that “for benefits due for months after December 1994, the calculations in paragraph (c) [the WFP calculation] do not apply to persons entitled to social security benefits under a totalization agreement between the United States and another country.” Workers are required to contribute to one of the professional pension schemes of the liberal professions that are part of the structural pension system in the Federal Republic of Germany. Occupational pension schemes offer benefits as a mandatory systemic system under the first pillar of the social security system in Germany, and professionals are therefore exempt from compulsory affiliation with public social security, of which all workers normally must be members. Since these occupational pension plans are not covered by the Canada-Germany Social Security Agreement, they are treated as employer-sponsored pension plans. Your social security will not be lowered by the WFP until you use your PPP or other Canadian annuities.
For example, if you activate your type of social security in the United States at age 62, but delay the ignition of your CPC until a later year, you will receive your benefit at the full age of 62 until you activate the CPC. In this regard, social security and P3 planning is very important. Is it wise, for example, to activate social security at age 62 and to postpone CPCs and other Canadian pensions? In this way, you can receive an unreduced social security benefit for up to 8 years before you receive the WEP discount. Or does it make sense to turn on the CPC from the age of 60? Your PPP will be lower and will therefore have less impact on your social security benefits. And you thought that only American Social Security planning was confusing! I wrote this article on social security strategies if you have a CPC. As a general rule, the Income Tax Act allows a deduction for contributions made by or on behalf of an individual to a Canada-registered retirement plan and a tax credit for contributions to the Canada Pension Plan or the Quebec Retirement Plan. The Income Tax Act does not set a similar allowance for contributions to a foreign pension plan or foreign social insurance.