Social Security "File and Suspend" going away

[geekette]

It's not mentioned much, but it's a strategy I've seen talked about here and there to increase social security payments for a spouse while allowing the higher income spouse's benefits to increase. 

It was rumored to be on the chopping block, and looks like the rumors were correct.

[BlueLesPaul]

I have heard similar rumors, including that President Obama had a veiled reference to its removal in his most recent budget., but I have not seen anything substantive that makes me think its demise is imminent.  It wasn't part of the most recent debt ceiling deal, was it?

[BlueLesPaul]

Nevermind, it looks like the demise of file and suspend is part of the most recent budget deal.

http://www.forbes.com/sites/jamiehopkins/2015/10/29/new-budget-deal-is-cutting-your-social-security-benefits-and-its-a-good-thing/

[geekette]

It's in the budget, which I believe will be signed.  All the news I see presents it as a done deal.

[sirdoug007]

Michael Kitces has a good post on this.  From what I understand, this passed as a part of the recent budget/debt ceiling deal.

Not too surprising they are closing this loophole. 

https://www.kitces.com/blog/congress-ends-file-and-suspend-restricted-application-and-other-voluntary-suspension-social-security-strategies/?utm_source=rss&utm_medium=rss&utm_campaign=congress-ends-file-and-suspend-restricted-application-and-other-voluntary-suspension-social-security-strategies&utm_source=Nerd%E2%80%99s+Eye+View+%7C+Kitces.com&utm_campaign=2100bb0459-NEV_MAILCHIMP_LIST&utm_medium=email&utm_term=0_4c81298299-2100bb0459-57027821

[BlueLesPaul]

Michael Kitces has a good post on this.  From what I understand, this passed as a part of the recent budget/debt ceiling deal.

Not too surprising they are closing this loophole. 

https://www.kitces.com/blog/congress-ends-file-and-suspend-restricted-application-and-other-voluntary-suspension-social-security-strategies/?utm_source=rss&utm_medium=rss&utm_campaign=congress-ends-file-and-suspend-restricted-application-and-other-voluntary-suspension-social-security-strategies&utm_source=Nerd%E2%80%99s+Eye+View+%7C+Kitces.com&utm_campaign=2100bb0459-NEV_MAILCHIMP_LIST&utm_medium=email&utm_term=0_4c81298299-2100bb0459-57027821

I just looked at this article and it looks like restricted application is also going away, so most of the more nuanced strategies will be gone unless you are 62 by the end of the year (for restricted application) or if you fail to file and suspended withint 6 months into 2016 (for file-and-suspend).

[a1smith]

Yes, both file-and-suspend and filing for a restricted claim of spousal benefits are gone.  It was part of budget legislation passed by the Senate on Friday.

InvestmentNews - Advisers rethink retirement plans amid Social Security changes

[Rezdent]

I'm not clear on the lump sum part of this.

If someone is 62 before May 2015 and they file/suspend, later to go back and claim at 64, will they get a lump sum for two years or only for six months?

[GizmoTX]

The file/suspend removal doesn't take effect for 6 months, likely to gauge how incensed people are. Those who file & suspend & claim the spousal benefit before May will be grandfathered if the removal stays.

I believe you have to be Full Retirement Age to file & suspend. This is 67 for those born after 1959, 66 for before.

[Rezdent]

Sorry, I was confused in my question above.
People who are 62 now are "grandfathered", but it isn't clear to me if they file/suspend at 65, then claim at 67, do they still get the full lump sum, in this case 2 years?
Or is the grandfather clause only giving them the right to file/suspend WRT their dependants still getting benefits, not extended to the lump sum?

[wenchsenior]

Dad called me the other day, very randomly to talk about this very strategy, which he and his wife benefited handsomely from for lo these many years. The best part is he 1) didn't actually understand very well what he had done, but wanted to tell tell me all about this SS 'trick' that almost no one in the world knows about, and only the head of the SS office in his area had any idea you could do it; and 2) even though he didn't really know how they'd done it, he still argued with me when I explained that I knew all about it, but it wouldn't work for me and spouse. Then at the end of the conversation, I had to break the news to him that it was made illegal the previous day.

We both found this amusing.