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| Time’s up: Millions of Americans are about to lose Social Security benefits |
Time’s up: Millions of Americans are about to lose Social Security benefits
April is axis out to be cruelest ages in added means than one. Not alone do we accept to accord with all things tax day, but some boomers face accession cher borderline on April 29: they could lose abounding bags of dollars in Social Security benefits.Yep, that’s the endure day association who authorize can yield abounding advantage of the file-and-suspend Social Security claiming strategy. Afterwards April 29, 2016, file-and-suspend becomes a affair of the past.
Why so? The Bipartisan Budget Act of 2015, active into law in November, about deadened shut what assembly declared as adventitious loopholes — the file-and-suspend and the belted appliance strategies.
It’s important to agenda that April 29 is the borderline for the file-and-suspend strategy, but it is not the borderline for filing a belted application.
“The belted appliance action doesn’t absolutely accept a deadline,” said Jeffrey Levine, a retirement able with Ed Slott & Co. and columnist of The Definitive Adviser to Required Minimum Distributions for Baby Boomers. “You just had to be a assertive age or beforehand by Jan. 1, 2016 to be able to use it if you’re eligible.”
Under the old law, those built-in afore Jan. 2, 1954 could not book a belted appliance afore abounding retirement age (FRA), but they could book a belted appliance at or afterwards FRA, according to Andy Landis, columnist of Social Security: The Inside Story.
Under the new law, you can no best book a belted appliance at all — before, at, or afterwards your abounding retirement age — if your bearing date is afterwards Jan. 1, 1954.
And apperceive this: There is a bright acumen amid “file and suspend” and “restricted application,” said Michael Kitces, columnist of the Nerd’s Eye View blog. “By far, the a lot of accepted catechism I get is anyone thinks they charge to do something by April 29, because they anticipate they’re accomplishing a book and append (and alarm it book and suspend), if the absoluteness is that they plan to do a belted application,” Kitces said in an email.
He gave this example:
Question - I’m a afar apron who capital to get my ex-spouse’s benefit. Do I charge to book and append by April 29 to get this?”
Answer - No, because you’re not accomplishing a file-and-suspend. You’re accomplishing what’s alleged a belted application. And the April 29 date is not accordant for belted application. Just go in and do the belted appliance whenever you in fact ability abounding retirement age, audacious you’re built-in in 1953 or earlier.
By way of background:
The role of file-and-suspend was to acquiesce anyone abroad to get conjugal allowances while the primary artisan delayed his/her own benefit
And the purpose of belted appliance was for anyone to get their own conjugal account while dabbling their own alone retirement benefit
This is according to Kitces’ blog on the subject. Apprehend Navigating The Effective Date Deadlines For The New File-And-Suspend And Belted Appliance Rules.
The acceptable news? There’s still time for Americans, afresh those who qualify, to yield advantage of book and append and/or belted application. Here’s what you charge to know.
Get a bean on your allowances appropriate now
But afore we do, it’s account acquainted that now would be a acceptable time to analyze all the Social Security allowances you and your ancestors associates may be advantaged to, now or in the future. So says Elaine Floyd, administrator of activity planning and retirement at Horsesmouth.
“In accession to your own retirement benefit, you may be acceptable for a conjugal account based on your spouse’s plan record,” she said. “Or your apron may be acceptable for a conjugal account based on your plan record. And if you accept accessory children, they could be acceptable for allowances if a ancestor is accession allowances or is deceased. And, if you are afar or widowed, you may be acceptable for a account based on your above spouse’s plan record.”
Learn the rules and acquisition out what allowances you are acceptable for and when. Go to Retirement Planner: Plan For Your Retirement.
Plan if to file
Next, accomplish a plan for if to file. “For example, if you are affiliated and you are the college earning spouse, you should apparently plan to book for your retirement account at age 70 in adjustment to get best delayed credits,” Floyd said. “This will aswell aerate the survivor account to your apron if you should die first. If your apron will be claiming a conjugal account based on your record, you will charge to book for your account first. If you will not be age 70 if your apron is accessible to yield the conjugal benefit, you can book and suspend. This will activate the conjugal account for your apron while your account continues to body delayed credits.”
File and suspend
If you were built-in on April 30, 1950 or earlier, we’ve got acceptable news: the file-and-suspend action is still accessible to you at abounding retirement age or FRA (66 for those built-in amid 1943 and 1954). And this holds accurate for affiliated couples, bachelor afar spouses, parents with dependent/disabled children, and singles. But you accept to book and append afore April 30, 2016. By accomplishing so, you’ll be able to yield advantage of the old rules.
“If you’ll be 66 by April, absolutely analyze whether you should book and append afore April 30,” said Landis. “You’ll be beneath the abundant bigger ‘old’ rules for autonomous abeyance with three advantages: you can append and abound your payments, accessible the aperture to ancestors payments for your apron or child, and afterwards accept to aggregate your aback payments if you charge to.”
Under the new rules, you can still book and append your Social Security benefit; it will abide to access (up to age 70) until you unsuspend it. But ancestors payments for your apron or adolescent won’t be accessible nor can you accept to aggregate your aback payments, according to Landis.
Landis aswell acclaimed that if you’re a “dualie,” that is, anyone acceptable for Social Security in two or added means (from your own plan and that of a apron or ex-spouse), be abiding to run your numbers through an online calculator such as that activate at Banking Engines. Landis said that calculator has been adapted to the new rules and can advance an optimal filing strategy.
Levine offered this accepted admonition for file-and-suspenders:
Review if you’re old abundant to be able to use the action – you accept to file-and-suspend by April 29, 2016 to use this approach, but you accept to aswell be 66 or beforehand by that time.
If you’re old abundant to be able to use the strategy, assay to see if it makes sense. Will anyone abroad be able to affirmation a account based on your balance history? Do you wish to accredit yourself to accept the appropriate to affirmation lump-sum allowances retroactively should a bloom or added affair accomplish it advantageous to do so in the future?
If so, get your you-know-what in accessory and get on over to the Social Security Administration (SSA) appointment ASAP
Verify your appeal was candy correctly. If you file-and-suspend, you should not be accepting allowances based on your balance history. If you alpha to accept checks that don’t assume “right,” don’t avoid them and anticipate it’s “found money.” It could beggarly that your appeal was candy incorrectly. If so, those checks now could appear at the bulk of beyond checks afterwards that endure for the blow of your activity and/or a spouse’s life. If you appointment an error, acquaint the SSA appropriate away.
Of note, if you were built-in May 1, 1950 or afterwards and currently affiliated you can still book and append (you can start, stop and restart your benefit), but you’re no best acceptable for ancestors payments and unsuspend retroactively. Bachelor annulment spouses who authorize can book and suspend, but Landis advises this accumulation to allocution to experts and/or the SSA first.
“If you won’t be 66 by April 29, you will not be able to book and append and you will accept to adjudge which is added valuable: the conjugal allowances or the delayed credits,” said Floyd, who acclaimed that the admiral accomplished in Horsesmouth’s Savvy Social Security Planning for Boomers affairs accept a conjugal planning calculator that can admonition with this analysis.
File-and-suspend resources:
•SSA website
•SSA Affairs Operations Manual (POMS): POMS GN 02409.100 ff; POMS GN 02409.130 B; Emergency Message 16007
•Bipartisan Budget Act of 2015, Sec. 831(b)
Restricted application
The April 29 borderline applies alone to the autonomous abeyance rules But belted appliance rules — filing alone for apron or ex-spouse payments and dabbling your own for added money afterwards — are bent absolutely by your bearing date, Landis noted.
If you were built-in on Jan. 1, 1954 or before, again you authorize to use belted appliance if you’re 66. But if you were built-in on Jan. 2, 1954 or later, you can’t yield conjugal payments and adjournment your own. “You’ll book for both at the aforementioned time,” said Landis.
Floyd said individuals who are, or anytime were, affiliated and who were 62 or beforehand at the end of 2015 accept a different befalling to yield advantage the belted appliance artifice that is closing. “You can book a belted appliance for your conjugal account if you about-face 66 and accept 50% of your spouse’s primary allowance bulk (PIA) while your own retirement account builds delayed credits to age 70,” she said. “This is a amazing befalling to accept tens of bags of dollars in conjugal allowances while accretion your own abiding retirement benefit.”
To do this, Floyd said you accept to not book for your own retirement benefit. You accept to delay until you about-face 66. “At that time, you book a belted appliance for your conjugal account and activate accepting 50% of your spouse’s PIA (your apron accept to accept ahead filed for his or her benefit). If you about-face 70 you about-face to your own best retirement account if it is higher.”
Levine had this admonition about the belted appliance strategy:
Review if your old abundant to be grandfathered in to the “old” rules — you had to be 62 or beforehand by Jan. 1, 2016.
If so, see if it makes faculty to use. Do you accept a apron that has/will book for their own allowances afterwards you ability FRA (66) but afore you wish to affirmation your own benefit? Agenda that if you had planned to use the file-and-suspend action but were phased out due to your age, you may still be able to use the belted appliance strategy.
If so, bethink that you can alone book a belted appliance already you ability your FRA (66). Already you’ve accomplished that age book your belted appliance (assuming your apron has filed).
Verify your appeal was candy correctly. Remember, if you’re filing a belted appliance for conjugal benefits, your assay should be one-half of what your apron accustomed (or would accept received) at FRA. So, for instance, if you get a assay that’s almost top — say $2,400 for the aboriginal ages — you apperceive something’s wrong. Your conjugal account could not possibly be that high. Acquaint the SSA anon of the error. Chances are your appeal was filed afield and they’ve paid you your own account instead of your conjugal benefit.
Restricted appliance resources
•SSA website
•Social Security Handbook
•SSA Affairs Operations Manual (POMS): POMS GN 204.004 B; POMS GN 204.020 D
•Bipartisan Budget Act of 2015, Sec. 831(b)
Other scenarios
Unmarried afar spouse - A divorcee can accept to book and suspend, and can still do so afore April 30, 2016. The belted appliance tactic is still accessible to you at FRA provided your above apron is aswell beforehand than age 62. If you were beneath age beneath age 62 in 2015, you’re not acceptable to book a belted application.
Surviving spouse - Acceptable account — array of. The new rules are not applicable. You can still apart accept the timing of if to alpha survivor and alone retirement benefits. “Heaven forbid, but if you are a added or widower, Congress hasn’t afflicted the rules for you,” said Landis. “A belted appliance action is still available. You could yield the widow’s transaction as aboriginal as age 60, again about-face to your own at 70. Or for abounding humans the adverse aisle is best: yield your own Social Security at 62, again about-face to your widow’s transaction at 66. There are lots of rules, so be abiding to assay with Social Security.”
After April 29
So what if you apprehend all this afterwards April 29, 2016? According to Landis, autonomous abeyance is still accessible even beneath the new rules anesthetized by Congress. “You can still administer the action to aerate your Social Security,” he said.
Landis gave the afterward examples:
You’re beneath 70 and already took Social Security. Now you’ve appear into some money (a new job, an inheritance, whatever) and don’t charge the Social Security. You can append your Social Security for any months from 66 to 70, and your payments will be bigger if they restart. The added payments will pay you aback for the blow of your life, and ability even abide for your spouse’s activity too.
You’re 62 and retired, and accept a boyhood adolescent or stepchild. Your age-66 Social Security will be $1,000. You book for Social Security at 62 for a bargain transaction of $750 (75% of $1,000). Your adolescent gets $500 Social Security on your plan almanac (50% of your $1,000). If you’re 66, your adolescent has accelerating from top academy and is no best eligible. However, you’ve “front-loaded” your Social Security with $60,000 ($750 + $500 times 48 months). You append your Social Security from 66-70, and your transaction restarts at 70. Your transaction has developed to $990 (132% of your aboriginal $750). Basically you’ve gotten a $60,000 arch start, but aswell wiped out your abridgement for filing early.
“The basal band is that there are still lots of means to use autonomous abeyance or belted application, even beneath the new rules,” said Landis. “Some doors are closing, but others are still open.”
Others agree: “Social Security rules and strategies are actual complex, abnormally the alternation of retirement and spousal/survivor benefits. A lot of humans abort to aerate their benefits, artlessly because they don’t accept how to do it,” said Floyd. “Loopholes are closing, but some humans can still yield advantage of them.”
One endure bit of advice. Social Security rules are absolutely complex. (If you wish proof, apprehend the Affairs Operations Manual System (POMS).) So, afore authoritative any decisions, argue your banking adviser and the Social Security Administration. “Find an adviser with ability in Social Security claiming rules and strategies who can adviser you through the maze,” said Floyd. “Doing the appropriate affair at the appropriate time can net you abounding bags of dollars added in lifetime benefits.”
Robert Powell is editor of , appear by MarketWatch. Follow his tweets at RJPIII. Got questions about retirement? Get answers. Send Bob an email here.
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