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Changes to Certain Social Security Filing Strategies

February 1, 2016
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Author: Mike Radoff, CPA & Partner

The recent passing of the Bipartisan Budget Act of 2015 ushered in sweeping changes to Social Security. Specifically, the legislation brings to an end some of the benefit-claiming strategies that have been foundational parts of many Americans’ retirement income planning.

 

Below are answers to the most frequently asked questions our clients are asking.

 

 

What is changing with the new legislation?

In a nutshell, the new legislation removes “file and suspend” and “filing a restricted application.” In the case of file and suspend, one spouse could file for but immediately suspend benefits, allowing the spouse to claim a spousal benefit. The added bonus was that the benefit that was suspended would continue to grow delayed retirement credits. With the new legislation, no spousal or other family benefit will be paid from a benefit in suspension.

The restricted application option is being removed for those who will reach age 62 in 2016 or later.

The option allowed a spouse to claim only a spousal benefit beginning at full retirement age, and later switch to their own retirement benefit that had accrued delayed retirement credits. This option will remain available to those who will have reached age 62 prior to the end of 2015.

 

My spouse and I were planning to file for benefits in the next few months – and we were going to use a file-and-suspend strategy. Are we out of luck?

Not completely. The legislation allows for a brief window in which to file and suspend. If you are or will turn age 66 by April 30, 2016 you need to act by that date.

 

 

Seek the services of a legal or tax adviser before implementing any ideas contained in this blog. To reach a financial advisor at Lane Gorman Trubitt PLLC, call (214) 871.7500 or email askus@lgt-cpa.com.

 

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