There is a great deal of confusion surrounding the new Social Security rules that were put into place with the Bipartisan Budget Act of 2015 (BBA15). The part that is bothering folks the most right now is the deadline that is coming up, on April 30, 2016.
What’s important about April 30, 2016? What must I do before April 30, 2016?
The rule changes in BBA15 indicated that the suspension of Social Security benefits would be treated differently beginning 180 days after passage of the law. The law was passed on or about November 2, 2015, and so 180 days after that is April 30, 2016.
What’s the change?
First of all, in order to suspend your benefits, you must be at or older than Full Retirement Age (FRA). For folks who will be eligible to take advantage of the old suspend rule, that means you must be 66 before April 30, 2016, so you must have been born before April 30, 1950.
Previously, when someone suspended his or her Social Security benefits, his or her spouse or children could receive benefits based upon his or her record. This is still the case if you suspend your benefit prior to April 30, 2016.
After April 30, 2016, when someone suspends his or her Social Security benefits, all benefits based on his or her record will also be suspended. This means that his or her spouse or child cannot receive benefits based on his or her record while suspended.
Why would you want to suspend benefits in the first place?
For every month after your FRA that you delay receiving Social Security benefits, you accrue a delay credit of 2/3% – a total of 8% for every year of delay. This only happens if you are not receiving benefits, and it only happens after your FRA.
You can earn these delay credits by doing nothing – there is no requirement for you to do anything at all. The simple fact that you are not receiving benefits allows you to accrue this credit. You can accrue the delay credit up until the age of 70 – at that point your Social Security benefit is maximized.
On the other hand, if you file for your benefits, your dependents can receive benefits based on your record. Your spouse can receive up to 50% of your benefit amount, and your children under age 18 (19 if a full-time student, or any age if disabled) can also be eligible for 50% of your benefit amount.
“File & Suspend” gives you the ability to do both things – earn the delay credits AND provide benefits for your spouse or children. But this is only available if you file and suspend prior to April 30, 2016.
So what has to happen before April 30, 2016?
There is only one thing that must happen before April 30, 2016 if you want to take advantage of this rule before it changes: If you’re at or older than age 66 (your FRA) you must file and suspend your benefits at some point before April 30.
To do this, you have 4 choices:
- Go online to www.SocialSecurity.gov and apply online. When you do this, you fill out the application as if you will be receiving benefits, and then in the “Comment” section at the end of the application, write: I wish to immediately suspend my benefit to earn delay credits.
- You can file a paper application (form available online as well). Do the exact same thing as #1 above – fill it out as if you were going to receive benefits, and then indicate that you wish to suspend.
- Call 1-800-772-1213 to apply by phone. Tell the representative that you wish to file for benefits and immediately suspend them to earn the delay credits.
- Visit your local Social Security Administration office. Tell your representative that you wish to file for benefits and immediately suspend them to earn delay credits.
That’s all you have to do. Nothing else needs to be done before April 30.
Your dependent doesn’t have to start taking spousal or dependent’s benefits immediately or even before April 30. Since you have filed for benefits, your dependent (spouse or child) is eligible to take benefits based on your record, whenever they happen to file.
Sterling Raskie, MSFS, CFP®, ChFC®
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I am the husband and will be 66 FRA, on Oct. 23, 2017. I have the full 40 quarters earned on my work record, but my wife has no work record as we have filed jointly over the many many years. She will be FRA Oct. 1, 2017, age 66 . Can wife use restricted application using my work record at her FRA?
Yes, that strategy will work.
Should we wait untill Nov 1st. 2017 to start this procedure which is after the month of both birthdays are past? Who should file first, the husband with work record or the wife which is older without a work record?
No, I believe October, 2017 will be your date of filing if you want to file at FRA.
Actually, upon further review, since you said your wife has no benefits available on her record at all there’s no reason to complicate things with a restricted application. She can just file for all available benefits when you file for your benefits, all at the same time.
I will be 70 in Oct, 2018 and plan to wait until then to file. My wife will reach 66 (FRA) in Nov, 2018. Our understanding is that since I will already be receiving benefits prior to her FRA, she will be to file a restricted application even without me having gone through the “file and suspend” process.
Similarly, I understand that if I need to file before age 70 for financial reasons she will still be able to file a restricted application since I will be receiving benefits.
Given either case, we see no value to “file and suspend” by Apr 29.
Is our logic sound?
Thanks
Yes that sounds like a great plan, and you have the facts correct.
Hi Jim
I will be 68 in June 2016 and my wife will be 50 in June 2016. My plan is to file at age 70 in 2018 or sooner depending on my circumstances. Should I bother to file and suspend prior to Apr 29 so that my wife can file for spousal benefits when she reaches her FRA or does this new law not apply to us since I am already beyond age 62?
Thanks
There’s really no point in your filing and suspending, it won’t change your wife’s situation at all since you’ll have filed long before she reaches an age that she could take advantage of the spousal benefit. The only way it might matter is if you have young children (under age 18) who could take advantage of filing on your record prior to your actual filing at age 70.
I filed on line and asked to suspend, as described. Social Security told me I couldn’t do that on line (by letter). When I spoke to a woman at my local social security office by phone, she told me I should NOT file and suspend because my wife would not be eligible for spousal benefits as her FRA was not until after 4/30.
I stuck to my guns of file and suspend, but still have to go into the office to do it.
There is a lot of misinformation out there by the government employees!
Agreed! You don’t know how many cases I see just like this.
The point is that your wife’s age has nothing to do with your ability to file and suspend. And further, April 30 has nothing to do with her eligibility for a restricted application.
Good for you for sticking to your guns.
The last part of your statement is what the SS rep informed me, too. She said your wife cannot file a restricted application. Instead of arguing, I went and filed and suspended and finally received notification although nothing on the paperwork has the words file and suspend. I called SS and was informed the letter I received was basically my suspension of the SS benefit until a later date. This SS rep on the phone said my wife can file the restricted application at FRA so it sounds like he knew what he was talking about.
Jim,
You wrote: “Since you have filed for benefits, your dependent (spouse or child) is eligible to take benefits based on your record, whenever they happen to file.”
Didn’t you write in another blog that the spouse would have to be FRA to file the restricted application? I am asking as my wife will be 65 at the time my file and suspend becomes active.
Thanks,
Jeff
Yes, she must be at FRA to file a restricted application. However, she is eligible to file for a spousal benefit any time after age 62 (reduced) by virtue of the fact that you have filed and suspended (if you have).
Thank you, Jim. That clarifies the answer for me. She plans on waiting until FRA and then filing the restricted application.