File-and-Suspend and Restricted Application Strategies Eliminated Soon

[NOTE: Our software has been updated to reflect the new claiming rules, so reports are now available.]

Legislation  that has worked its way through Congress as part of the bill to raise the Federal debt ceiling would eliminate two claiming strategies used by many seniors: 1) file and suspend, and 2) restricted application. See Section 831 of the bill.

The President signed the bill into law on 11/2/15. It will go into effect on April 29, 2016 (unless the SSA chooses to extend this deadline).

In its current form (as of 11/2/15), the law will have the following effects:

File and Suspend

This strategy allows a spouse, who has reached full retirement age, to file for retirement benefits and then suspend them so that they continue to earn delayed retirement credits. The principal purpose for filing and suspending is to allow the other spouse to claim spousal benefits.

Those who are currently using this strategy, and those who employ it by April 29, 2016 are unaffected by the legislation.

Those who file and suspend after about early May 2016 will also have all auxiliary benefits suspended. The principal implication is that suspending one’s retirement benefits will also cause a suspension of spousal or other dependent benefits.

Restricted Application

This strategy is presently employed by people who have reached their full retirement age and their spouse has already claimed a retirement benefit. They can claim a spousal benefit while letting their own retirement benefit continue to grow.

Under the proposed legislation, those born prior to 1954 can continue to use this strategy.

Those born in 1954 or later will not be able to use this strategy. People in this category who claim a spousal benefit, even after they have reached their full retirement age, will be forced to also start their own retirement benefit.

We are monitoring this important development and will use this space to keep you informed.


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