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Social Security Changes - Chicago CPA Firm

Social Security Changes

Retirees planning on using two popular Social Security benefit-boosting strategies could soon be out of luck. The budget bill the House passed eliminated the strategies, described as “unintended loopholes” from a 15-year old law.

Here is a look at what is changing:

File and Suspend Method of Claiming Social Security Benefits to Be Eliminated:  The Bipartisan Budget Act of 2015 (H.R. 1314—the Act), signed by President Obama on 11/2/15, eliminates the file and suspend method, a popular strategy used by married couples to maximize their lifetime Social Security benefits. Under this approach, a higher earning spouse claims benefits at his or her full retirement age (currently age 66) but suspends the benefits until a later date (e.g., at age 70 or sooner, if desired), allowing the Social Security credits to continue to grow. The lower earning spouse claims benefits based on the higher earning spouse’s earning record, which are more than the benefits based on his or her own earnings record. In a provision labeled “closure of unintended loopholes,” the Act effectively eliminates this opportunity for claims filed after 4/30/16 (180 days after enactment).

[ Editor’s Note: Those who’ve been using this method or other eligible individuals who file to claim benefits under this method within the next 180 days should not be affected.] [Bipartisan Budget Act of 2015, Section 831(b).]

Restricted Application Method of Claiming Social Security Benefits to Be Eliminated:  The Bipartisan Budget Act of 2015 (the Act) also eliminates the restricted application method (sometimes called the claim some now, claim more later method ) for claiming Social Security benefits by married couples. Under this strategy, a spouse reaching full retirement age who is eligible for both a spousal benefit (based on his or her spouse’s earnings) and a retirement benefit (based on his or her own earnings) could file a restricted application for spousal benefits only, then delay applying for retirement benefits based on his or her own earnings record (up until age 70). This would allow the Social Security credits to continue to grow. For those who turn 62 after 2015, the Act eliminates the ability to file a restricted application for only spousal benefits.

[ Editor’s Note: Individuals who are age 62 or older in 2015 should still be able to use the restricted application method for spousal benefits only upon reaching full retirement age.] [Bipartisan Budget Act of 2015, Section 831(a) .]

If you have any questions please contact Warady & Davis LLP at 847-267-9600.

Source: Thomson Reuters PPC