A totalization agreement allows individuals who have worked in both the United States and a foreign country to combine their Social Security credits and receive benefits from both countries. This type of agreement is important for individuals who have spent time working in multiple countries, as it enables them to avoid double taxation and maximize their retirement benefits.
The United States currently has totalization agreements with 30 countries, including Canada, Japan, and the United Kingdom. These agreements generally follow the same principles: if an individual has worked in both the United States and the partner country, they can totalize their earnings and receive benefits from both countries.
To be eligible for benefits, individuals must typically have earned a minimum number of credits or worked for a specific period in each country. These eligibility requirements vary depending on the specific agreement, so it`s important to review the details of each agreement to understand what is required.
In addition to retirement benefits, totalization agreements can also provide disability and survivor benefits for individuals who meet the eligibility criteria. These benefits can be particularly important for individuals who have a disability or have lost a spouse who worked in a foreign country.
Totalization agreements also benefit employers by simplifying the payroll process for employees who work in multiple countries. Employers only need to pay into the Social Security system for the country where the employee is working, rather than having to pay into multiple systems.
Overall, totalization agreements provide a valuable benefit to individuals who have worked in multiple countries, as well as their employers. By allowing individuals to combine their Social Security credits, these agreements help to ensure that workers receive the benefits they have earned, regardless of where they have worked.