Ruggiero Law Blog

Monday, April 11, 2016

Who may “Claim & Suspend” Social Security in the Aftermath of the Bipartisan Budget Act of 2015?

 

Who may “Claim & Suspend” Social Security in the Aftermath of the Bipartisan Budget Act of 2015?

“File and suspend” (or “claim and suspend” as it is sometimes called) is a strategy that, until recently, permitted an individual at or after reaching full retirement age — currently age 66, but gradually increasing to age 67, starting with individuals born on or after Jan. 2, 1955 — to claim a benefit and then immediately suspend the claim. 

Key items in new legislation under BBA 2015

Under the new legislation, a worker is still able to suspend a benefit. However, once suspended, no one else may collect a benefit on that worker’s account during the time the benefit is suspended. Under BBA 2015, the new law applies “with respect to requests for benefit suspension submitted beginning at least 180 days after the date of the enactment of this Act.” [emphasis added] PubL 114-74, §831(b)(3).

So, the limiting factor under the new legislation is when the request for suspension is submitted, and only indirectly is the applicant’s age a factor. This is because the only benefits that may be suspended are benefits paid beginning with the month one attains full retirement age. 20 CFR §404.313. The legislation became law on November 2, 2015. The 180th day after enactment is April 30, 2016. Thus, any request for benefit suspension submitted prior to April 30, 2016, is governed by the old rules.

Given that there is a legitimate basis for individuals born on May 2, 1950, through September 1, 1950, to exercise claim and suspend, so long as the application and request for suspension is submitted prior to April 30, 2016, and is not more than four months prior to the month in which full retirement age is attained, it may be most beneficial to do so.

What Should a Client Do Who Wants to Claim and Suspend?

Anyone born on May 2, 1950, through September 1, 1950, attempting to exercise claim and suspend, should hand deliver a letter to the local Social Security field office stating the request. The claimant should keep a time-stamped copy along with a signed receipt. The letter should include one’s name, address, and Social Security number, and that the applicant wants to file for his or her Social Security retirement benefits to begin with the month full retirement age is reached. This should be done no more than four months prior to the month in which the applicant attains age 66 (as explained above, one attains a given age on the day before the anniversary of one’s birth). In the request to suspend benefits, the applicant should also state that he or she wants to suspend the benefit as of the month for which benefit payments would otherwise begin, making clear that no benefit should be paid at that time. The applicant should keep a copy of the letter and make sure that the copy being kept is date stamped by the field office staff as having been received. If the request is denied, the applicant has a right to appeal the denial, all the way to federal district court, if necessary. 

The decision to claim and suspend for the above population needs to be made in the very near future. We highly recommend that you seek the guidance of your financial advisor, CPA and/or Ruggiero Law Offices LLC. 

 



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