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Recently the Social Security Administration provided some guidance regarding how the end of file & suspend will be handled, in light of the changes that were brought about by the passage of the Bipartisan Budget Act of 2015 (BBA15).
If you’ll recall, the option to suspend your Social Security benefit (part of File & Suspend) allowed one member of a couple to establish a filing date which would then provide the other member of the couple with the eligibility to file for a spousal benefit. The first member of the couple (who suspended benefits) is allowing his or her benefit to accrue the delay credits while the second member receives benefits. This provision was eliminated 180 days after the passage of BBA15.
Below is how the Social Security Administration will handle the suspension of benefits going forward:
- For individuals who are FRA or older, if a request for suspension of benefits has been submitted before April 30, 2016:
- The suspension will be treated as in the past (even if it has not been processed by that date, as long as it was submitted timely). This means that auxiliary benefits (such as spousal or dependent’s benefits) can continue to be paid based upon that suspended record while it is suspended.
- In addition, the numberholder (NH) who requests a suspension prior to April 30, 2016 can in the future ask that benefits are reinstated as of any date after the suspension request, up to the present date (this is known as a lump-sum retroactive payment).
- During the period that the NH benefit is suspended, he or she can collect excess spousal benefits based on a spouse’s record. An excess spousal benefit is the amount of spousal benefit that is “excess”, or greater, than the NH own benefit.
- For individuals who submit a request for suspension of benefits on or after April 30, 2016:
- No auxiliary benefits (spousal, child’s, or other, including benefits that have been received in the past) can be paid on the NH record while the benefit is suspended – EXCEPT for ex-spouse benefits. This is a significant exception, as had the rules been applied exactly as written, a NH could control benefits to an ex-spouse. With this exception, that is not going to be the case.
- In addition, when removing the suspension, benefits will resume in the month following the month that the request was received (or later). In other words, no lump-sum retroactive benefits will be available.
- No excess spousal benefits can be paid to the NH while the primary benefit is suspended.
The other significant item is that the date has been set at April 30, 2016 – but it’s not as significant as it seems. Anyone born on or before April 30, 1950 (actually May 1, 1950) is considered to be FRA during the entire month of April, 2016, so even if born on May 1, 1950 the NH should be in good shape if they want to use this provision.