Social Security Tips – July 2018

Social Security’s Online Retirement Planner is the place to go for you and your clients when you need details on the changes to the claiming strategies from the Bipartisan Budget Act of 2015.

“Closure of Unintended Loopholes” is the title of the section of the law that made several changes to basically close two complex loopholes (deemed filing and voluntary suspension), used primarily by married couples. This link will explain what has changed and how it may affect someone: https://www.ssa.gov/planners/retire/claiming.html

There are new rules for deemed filing effective for individuals who turn 62 on or after January 2, 2016. Deemed filing means that when someone files for either retirement or spouse’s benefits, they are also required or “deemed” to file for the other benefit as well. These rules used to only apply to those filing before their full retirement age. The Bipartisan Budget Act extends deemed filing to apply at any point one files: early, at full retirement age and beyond. This link provides details and Q&As: https://www.ssa.gov/planners/retire/deemedfaq.html

Voluntary suspension of retirement benefits to earn delayed retirement credits is still an option. However, after April 30, 2016, anyone receiving benefits (excluding divorced spouses) on the suspended record are also suspended for the same months. Also, payments are suspended the month after the month in which the request was made and ending with the earlier of the month before attainment of age 70 or the month following the month of the request to resume benefits. Voluntary suspension FAQs are at this link: https://www.ssa.gov/planners/retire/suspendfaq.html

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The Q&A for the month:

Question: My client, (age 63), is a retired cop who did not pay into social security for his primary job (he did have second jobs that he paid into ss). He is receiving a small pension amount of $450/month. His ex-wife recently passed away. He has not remarried and was married to his ex-wife for more than 10 years. He was advised that he cannot collect under his ex-wife’s social security, because of the Windfall Elimination Provision (WEP).  Is he able to collect under his ex-wife’s social security?

Answer: Because he is receiving a non-covered pension, his Social Security benefits are affected, regardless of the type of benefit that he files for. So, if he files for Social Security retirement or disability, he is subject to the Windfall Elimination Provision (WEP) and if he files for Social Security spouses or survivors (including divorced spouses and divorced widower’s) benefits, he is subject to the Government Pension Offset (GPO): https://www.ssa.gov/planners/retire/gpo.html

He absolutely can file for divorced widowers benefits. Unlike WEP, which simply reduces benefits, GPO can result in wiping out the benefit completely, it just depends on the amount of the non-covered pension. You could use the GPO Calculator to see if a benefit may be payable:  https://www.ssa.gov/planners/retire/gpo-calc.html

Because he is only 63, the widowers benefit will also be reduced based on his age. https://www.ssa.gov/planners/survivors/survivorchartred.html

 

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