Confirmed- IRS Has Issued Retroactive Payments to Over 3.2 Million Americans

In a significant development, more than 1 million Americans have received retroactive IRS payments, according to the Social Security Administration (SSA).

The payments stem from changes brought about by the Social Security Equity Act, a bill passed earlier this year, which will repeal provisions that previously restricted retirement benefits for specific workers, including teachers, police officers, firefighters, public employees, and their spouses.

Retroactive Payments to Over 3 Million Americans

The IRS has begun issuing retroactive payments to millions of Americans, with over $7.5 billion distributed to 1.1 million individuals impacted by the legislative shift. These payments are part of a broader initiative aimed at correcting past payment restrictions. The average retroactive payment amounts to approximately $6,710.

In addition to these retroactive payments, former President Joe Biden signed a law that will permanently boost Social Security benefits for over 2.8 million individuals.

While the retroactive payments are already underway, it may take up to a year for the processing and updating of benefit amounts, as informed by the SSA. These payments were backdated to January 2024, providing much-needed relief to the affected workers and retirees.

Key Provisions of the Social Security Equity Act

The Social Security Equity Act marks a pivotal moment in ensuring fairness for workers in public sector jobs, particularly those who were previously impacted by the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP).

Both of these provisions had been in place since the Reagan administration and negatively impacted retirees receiving pensions from public sector jobs that did not require Social Security contributions.

With the elimination of the WEP and GPO, retirees who had worked in public sector jobs such as state and federal employees, and whose spouses were similarly impacted, will now see an increase in their Social Security benefits.

These changes will benefit an estimated 3.2 million Americans. Starting in April, updated benefit amounts will apply to those whose benefits have increased due to the repeal of the WEP and GPO.

Provision	Impact
WEP	Eliminated restrictions for public sector retirees contributing to Social Security
GPO	Eliminated penalties affecting spousal or survivor benefits
Retroactive Payments	$7.5 billion in payments distributed to over 1 million individuals

Lee Dudek, the Acting Social Security Commissioner, expressed enthusiasm about the quick implementation of the Social Security Fairness Act, stressing its importance in providing much-needed relief to the affected individuals.

John Hatton, Vice President for Policy and Programs at the National Association of Active and Retired Federal Employees, also praised the SSA’s swift action, noting that many have waited decades for these changes.

IRS Plans for Significant Workforce Reductions

In a separate but related issue, the IRS is planning to cut its workforce by up to half. This reduction, which could impact over 90,000 employees, is being driven by a combination of layoffs, buyout incentives, and furloughs.

Efforts to streamline government operations, such as closing agencies and offering buyout incentives, are part of the Trump administration’s initiative to rapidly cut government staff through the Department of Government Efficiency, a program spearheaded by Elon Musk.

The planned workforce reduction at the IRS could have significant consequences. According to former IRS Commissioner John Koskinen, cutting tens of thousands of IRS employees could render the agency dysfunctional.

The IRS currently employs around 90,000 workers, with 65% of them being women and 56% being people of color. The agency has already laid off nearly 7,000 probationary employees who had been with the agency for less than a year.

FAQs

Who will benefit from the Social Security Equity Act?

The Act benefits public sector workers, including teachers, police officers, and firefighters, who were previously penalized under the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). Over 3.2 million Americans are expected to see improvements in their Social Security benefits.

How much money has been allocated for retroactive payments?

The SSA has confirmed that more than $7.5 billion in retroactive payments has been distributed to 1.1 million people, with an average payment of $6,710.

When will new benefits begin for affected individuals?

Updated benefit amounts will begin to take effect in April for those whose benefits increased due to the passage of the Social Security Equity Act.

How many IRS workers will be laid off?

The IRS plans to reduce its workforce by up to half, potentially affecting over 90,000 employees through layoffs, buyouts, and furloughs.