By now if you’re of a certain age, you have probably heard about the end of the file & suspend option for Social Security benefits. If not, click on this link to learn more about this option and the April 30 deadline due to changes made by the Bipartisan Budget Act of 2015.
However, as my email inbox indicates, you have lots of questions about file & suspend. This article is my effort to cover all the bases with regard to everything you need to know about file & suspend and the April 30 deadline.
For starters, if you and your spouse were born after April 30, 1950, this article does not apply to you, so you can stop reading. If one of you was born before April 30, 1950, the file & suspend option only applies to that individual, not to both of you. Of course, if both of you were born before April 30, 1950, then file & suspend could apply to either of you – but only one of you would actually file & suspend.
The ground rules for file & suspend are as follows:
- You must be at least at Full Retirement Age (66) in order to file & suspend.
- There is an April 30 deadline to enact this option (April 30, 2016, and never after that date).
- You would only file & suspend if you wish to delay filing your own benefit (or stop receiving your benefit) until some age later than FRA, and one of the following (and perhaps both):
- You wish to enable someone else (spouse or child) to receive benefits based on your record.
- You wish to preserve the opportunity to file for a lump sum retroactive benefit at some later age, before you reach age 70.
- While your benefits are suspended, you will not receive benefits based on your own record, and you will not be eligible for spousal benefits via restricted application or otherwise (*see below for a technical exception).
If you were born after April 30, 1950, file & suspend (under the old rules) is not for you, so you can stop reading.
Further, if you have already filed for your own benefit and you want to continue receiving your benefit, you would not want to file & suspend.
Once you have filed and suspended, your spouse can file for spousal benefits (or your eligible child can file for child’s benefits) as soon as eligible. For example, if your spouse is already (or has just reached) age 62, he or she will be eligible for spousal benefits upon filing for his or her own benefit.
If you have filed and suspended, your spouse born before 1954 will be eligible to file a restricted application for spousal benefits upon reaching FRA – as long as he or she has not already filed for benefits based on his or her own record.
How to Do It
In order to file & suspend, just the same as filing for any other benefit, you have three options for filing:
- Online – you file for benefits at www.SocialSecurity.gov as if you wanted to begin receiving the benefits immediately; at the end of the application there is a “Remarks” section – in this section you will enter the following: I wish to immediately suspend my benefits after filing in order to earn delay credits.
- Paper application – using form SSA-BK-1 you do just as described in #1 above, filing out the form as if you wish to receive the benefit immediately, then putting the following line in the Remarks section at the end: I wish to immediately suspend my benefits after filing in order to earn delay credits.
- On the phone – call 1-800-772-1213 and tell the representative that you wish to file for your benefit and immediately suspend the benefit in order to earn delay credits.
- In person – visit your local Social Security Administration office and tell your representative that you wish to file for your benefit and immediately suspend the benefit in order to earn delay credits.
*Technical Exception to the suspended benefits rule
Earlier in the Ground Rules I mentioned a technical exception to the rule about not being eligible to receive spousal benefits when you have suspended your own benefit. The exception works like this:
Joe has a benefit of $600 available to him if he files at Full Retirement Age. Joe’s wife Barbara, age 67, is already collecting her benefit of $1,500 per month. When Joe reaches Full Retirement Age, he files and suspends his benefit. Joe is still eligible for a restricted application for spousal benefits based upon his wife’s record – but the benefit he will receive is not going to be 50% of Barbara’s benefit. Joe will receive only the excess spousal benefit.
The excess spousal benefit is calculated as 50% of Barbara’s benefit minus Joe’s age 66 benefit – $1,500 / 2 = $750, minus Joe’s benefit of $600 equals $150. So Joe can receive $150 until he decides to unsuspend his benefit, at which point he will be eligible to receive the larger of either the full 50% of Barbara’s benefit or his own benefit, increased by delay credits. If Joe has delayed to age 70, his DRC-enhanced benefit would be $792.
If the above example seems a bit odd, it’s because there are very few plausible situations where this exception might be applied.