Much has been written and discussed regarding the option to file a Restricted Application for Social Security spousal benefits, but there are still many, many questions. This article is an attempt at covering all of the bases for you with regard to restricted application.
The topic of restricted application is so popular these days because it’s being eliminated as a result of the Bipartisan Budget Act of 2015 (BBA15). In fact, if you were born on or after January 2, 1954, the changes to the rules have eliminated the option to file a restricted application for you altogether.
So – unless you were born on or before January 1, 1954, you might as well stop reading, because restricted application is not available to you. Period.
Restricted Application Rules
Okay, if you’re continuing to read, you (or your client, if you’re an advisor) must have been born early enough to be eligible for a restricted application. There are a few rules that you must be aware of for filing a restricted application:
- THERE IS NO DEADLINE FOR FILING A RESTRICTED APPLICATION OTHER THAN YOUR AGE 70. In other words, the upcoming deadline of April 30, 2016 has nothing to do with restricted application eligibility.
- You must be at or older than Full Retirement Age (FRA) to file a restricted application.
- You must not have filed for your own Social Security benefit previously. This includes File & Suspend.
- You may have previously received Social Security benefits as a young parent of a child under age 16, or as a child yourself under age 18. These benefits do not eliminate your eligibility for a restricted application.
- You cannot be actively receiving disability benefits. If you previously received disability benefits that were terminated some time in the past because the disability (or your eligibility) ceased, you may still be eligible for a restricted application.
- Your spouse must have filed for his or her own benefits. May also have suspended benefits, if the suspense was completed before April 30, 2016. But if the suspense was after April 30, 2016 you will not be eligible for spousal benefits until the suspense is lifted.
- If you are divorced and the divorce was finalized more than 2 years prior, your ex-spouse must only be at or older than 62 years of age, and is not required have filed for benefits. (*This is the exception to the rule in #6.)
- Only one member of a married couple may file a restricted application (doesn’t include ex-spouses).
Why Would You Want to File a Restricted Application?
A restricted application allows you to receive spousal benefits while delaying your own benefit, in order to accrue the delayed retirement credits (DRCs).
For example, Jeff and Cindy are both at FRA, age 66 this year. Jeff has filed for his benefits, in the amount of $2,000 per month. Cindy’s own benefit could be $900 if she filed now, but she wants to delay her benefit until age 70, when the DRCs will have increased her benefit to $1,188 (DRCs are 8% per year of delay).
Since Jeff has already filed for his benefit, and Cindy is at FRA in 2016 (therefore having been born before January 2, 1954), Cindy is eligible to file a restricted application for spousal benefits. She’ll receive a spousal benefit of $1,000 (50% of Jeff’s benefit at his age 66) and then her own benefit will accrue the DRCs since she has not filed for her own benefit.
For another example, Simon is 67 years of age and his wife Patty is 63 this year. Simon’s age 66 benefit would have been $1,500, and Patty’s would be $1,000. Patty has just retired from her job, and is filing for her own Social Security benefit. She’ll receive a reduced benefit in the amount of $800 since she filed early. Simon has not filed for Social Security benefits prior to this, as he intends to delay his filing until age 70.
Since Patty has filed for her own benefit and Simon is older than FRA in 2016 (therefore having been born before January 2, 1954), he is eligible to file a restricted application for spousal benefits. Simon will receive $500 per month for the coming three years, and then at age 70 he will file for his own benefit, which has increased to $1,980 with the DRCs.
So you can see, there may be much to be gained by filing a restricted application in the right circumstances.
How to File a Restricted Application
In order to accomplish the filing of a restricted application, you have four options to choose from. These options are listed below:
- Go to www.SocialSecurity.gov and apply using the online application. When you do this, fill out the application as if you will be receiving ordinary benefits, and there’s a question on the application which asks: If you are eligible for both retirement benefits and spouse’s benefits, do you want to delay receipt of retirement benefits? Answer this question “Yes”, and continue to complete the application. You have now filed a restricted application.
- You can file a paper application (Form SSA-1-BK is available online as well). Fill it out as if you were going to receive benefits, and then indicate in the REMARKS section “I want to restrict the scope of this application to spousal benefits only. I wish to delay filing for my own benefit to age 70.”
- Call 1-800-772-1213 to apply by phone. Tell the representative that you wish to file for benefits and restrict the application to spousal benefits only, and that you wish to delay filing for your own benefits to age 70 in order to earn the delay credits.
- Visit your local Social Security Administration office. Tell your representative that you wish to file for benefits and restrict the application to spousal benefits only, and that you wish to delay filing for your own benefits to age 70 in order to earn the delay credits.
That’s it. You don’t need to do anything else. It’s not necessary for your spouse to file & suspend (only to file), so the April 30, 2016 deadline for file & suspend doesn’t necessarily have anything to do with this.
And whoever is filing the restricted application definitely does not file & suspend – see the 3rd rule earlier in this article. File & suspend would actually derail your plan to file a restricted application.