Changes to SS regulations in new funding bill...

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Changes to SS regulations in new funding bill...

Post by loves2read » Wed Oct 28, 2015 6:51 am

Has anyone read about the language to amend SS regulations for file-and-suspend and other aspects of SS program?
Will it be retroactive to current recipients who have done file and suspend to start spousal benefits for one partner while the other's benefit amount grows or only effect new filers who attempt it?

OK, we'll keep this open for now. But under the same conditions as the consolidated medicare part b thread. All the rules except speculating on legislative action apply here: any partisan political posts, personal attacks or other violations will result in a warning and the removal of the post. Also, please keep posts to the facts of the situation (as far as we know them) rather than general comments on the desirability of various policies. - admin alex

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Re: Changes to SS regulations in new funding bill...

Post by JDCarpenter » Wed Oct 28, 2015 7:28 am

In before the lock.

Proposal you mention is probably a proposed change to the law, not to the regs, which is apparently in section 831 of the House budget bill. (all of which is non-actionable!)

No one can know much about it, as just unveiled. Much fear by some, but will it pass? For a discussion of what appears to be the very aggressive proposal, see Kotlikoff, here: http://www.pbs.org/newshour/making-sens ... -benefits/

[Edited to clarify]
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Re: Changes to SS regulations in new funding bill...

Post by earlyout » Wed Oct 28, 2015 7:35 am

The moderators have are allowing discussion of this topic about proposed legislation but only under a consolidated thread. See

viewtopic.php?f=2&t=176472&newpost=2669805

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Re: Changes to SS regulations in new funding bill...

Post by beardsworth » Wed Oct 28, 2015 7:48 am

earlyout wrote:The moderators have are allowing discussion of this topic about proposed legislation but only under a consolidated thread. See

viewtopic.php?f=2&t=176472&newpost=2669805
That consolidated thread is about the possibility of increased Medicare Part B premiums for certain persons who are paying those premiums directly because they are not yet drawing Social Security, from which Medicare premiums would otherwise be deducted.

That is not what the OP is talking about here.

As the OP notes, the draft legislation contains language which could rescind the ability of a person to "file and suspend" his or her own Social Security retirement income benefit and continue to earn delayed retirement credits while simultaneously enabling the spouse to begin claiming a current spousal benefit based on the suspending person's record.

However, that same section of the legislation also contains a grandfathering clause based on the age of prospective file-and-suspend recipients relative to the time of the legislation's enactment.

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Re: Changes to SS regulations in new funding bill...

Post by The Wizard » Wed Oct 28, 2015 8:08 am

beardsworth wrote: As the OP notes, the draft legislation contains language which could rescind the ability of a person to "file and suspend" his or her own Social Security retirement income benefit and continue to earn delayed retirement credits while simultaneously enabling the spouse to begin claiming a current spousal benefit based on the suspending person's record.
So this is a different speculative thread on draft legislation.
The mods will have to decide whether to leave this one open as well...
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Re: Changes to SS regulations in new funding bill...

Post by bengal22 » Wed Oct 28, 2015 8:10 am

Is there any change to "file and restrict." For instance, my plan was to file at FRA and restrict it to spousal benefit only. The plan was for my benefits to grow until I claim at 69 and then my wife could switch to spousal benefits. I read the legislature but it appears to be in a foreign language.
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Re: Changes to SS regulations in new funding bill...

Post by beardsworth » Wed Oct 28, 2015 8:13 am

The Wizard wrote: So this is a different speculative thread on draft legislation.
The mods will have to decide whether to leave this one open as well...
Yes, they will. And the stated moderator reason for leaving the other thread open is that, although it's technically off-limits as a discussion of pending legislation, there is such widespread interest in it that the moderators have decided to make a limited exception by leaving it open, provided that participants don't engage in "political" debates about the legislation itself.

The number of threads and individual posts on the forum about the "file and suspend" strategy suggests that the moderators may do the same here, i.e., allow non-political discussion of the subject as it may be changed by the new legislation. I hope they will, but that decision is up to the moderators.

The purposes of my own post above were (1) to provide a brief answer to the question of the OP here and (2) to point out that the separate thread linked by earlyout above is not on-point about the specific subject raised by the OP here.
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Re: Changes to SS regulations in new funding bill...

Post by The Wizard » Wed Oct 28, 2015 8:17 am

The PBS link by Kotlikoff gives a concise description of the devastation that this bill would cause, so I'm speculating this bill has no chance of passing. It would affect me directly...
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Re: Changes to SS regulations in new funding bill...

Post by The Wizard » Wed Oct 28, 2015 8:18 am

bengal22 wrote:Is there any change to "file and restrict." For instance, my plan was to file at FRA and restrict it to spousal benefit only. The plan was for my benefits to grow until I claim at 69 and then my wife could switch to spousal benefits. I read the legislature but it appears to be in a foreign language.
The proposed change is simply to eliminate that option.
Read the PBS link...
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Re: Changes to SS regulations in new funding bill...

Post by nisiprius » Wed Oct 28, 2015 8:20 am

Kotlikoff is the senior author of a book entitled (pun intentional) Get What's Yours: The Secrets to Maxing Out Your Social Security, and has been extraordinarily shrill in the past, in his columns, about any behavior on the part of SSA that impairs the effectiveness of any technique he's been recommending. It's a matter of judgement what's a "loophole" and "what's yours" and he usually comes down on the latter side. Rhetoric like "outrageous," "rip-off," "draconian", "you can’t trust what Social Security says" flow from his pen, along with a host of hypothetical horribles like "a short Social Security horror story that I made up but that could happen to you." Now add "radical," "devastating," and "draconian."

And when he isn't being shrill about Social Security, he's being shrill about SIPC: "Close Your Brokerage Account!" "Wall Street uses the SIPC to further defraud people who have already been defrauded," and a "swindle," again--like a movie "based on a true story," "Here’s how the swindle can work (based largely on a real case)."

I don't know if that's his personality in real life or whether he just has an eye on what sells, but he always has the volume turned up. And his goes to 11.
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Re: Changes to SS regulations in new funding bill...

Post by JDCarpenter » Wed Oct 28, 2015 8:23 am

The Wizard wrote:The PBS link by Kotlikoff gives a concise description of the devastation that this bill would cause, so I'm speculating this bill has no chance of passing. It would affect me directly...
Problem is that this particular section is just one ornament on the giant Christmas tree that is the proposed Budget and deficit ceiling increase. Even if this little bitty piece of the bill might not be attractive, it may not sway the larger vote one way or the other.

As noted by nisiprius, kotlikoff may be [should be?!] seen as non-objective. Here is the actual bill: http://docs.house.gov/billsthisweek/201 ... BUDGET.pdf The section in question is on page 74.
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Re: Changes to SS regulations in new funding bill...

Post by loves2read » Wed Oct 28, 2015 8:24 am

Link to bill's language
Section on closing loopholes is SS applicable
http://docs.house.gov/billsthisweek/201 ... BUDGET.pdf

This is summary link in layman terms

http://docs.house.gov/meetings/RU/RU00/ ... 0-D001.pdf

This section seems to illustrate changes are meant to prevent newly elligible from using file/suspend and other strategies to enhance benefits

The PBS site has article which strongly suggests all recipients now receiving benefits under a file/ suspend strategy will lose benefits until person who suspended his/her benefits lifts the suspension and requests benefits.
http://www.pbs.org/newshour/making-sens ... -benefits/

This aspect is totally separate and IMO much more caustic than the Medicare premium issue which might be only for one year if it remains unchanged.
It all depends on if the bill is retroactive which PBS LK's article states or applies to new applicants which 2 nd link I posted suggests.

Like most proposed hurridly cobbled legislation
There is confusion and conflicting interps

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Re: Changes to SS regulations in new funding bill...

Post by The Wizard » Wed Oct 28, 2015 8:28 am

beardsworth wrote: ...The purposes of my own post above were (1) to provide a brief answer to the question of the OP here and (2) to point out that the separate thread linked by earlyout above is not on-point about the specific subject raised by the OP here.
The other thread is primarily about the Medicare situation, yes, but does diverge to touch on this topic as well.
Would be better to separate these two topics and maintain this thread, IMO...
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Re: Changes to SS regulations in new funding bill...

Post by loves2read » Wed Oct 28, 2015 8:58 am

Ok
I stand corrected on numbers that might object
There r other sections that might make more lower income recipients care
Will restrict a caregiver of child over 16 to ineligible I think vs 18
So impacts parent of kids in high school vs those out

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Re: Changes to SS regulations in new funding bill...

Post by Johno » Wed Oct 28, 2015 9:08 am

loves2read wrote:Link to bill's language

This is summary link in layman terms

This section seems to illustrate changes are meant to prevent newly elligible from using file/suspend and other strategies to enhance benefits

The PBS site has article which strongly suggests all recipients now receiving benefits under a file/ suspend strategy will lose benefits until person who suspended his/her benefits lifts the suspension and requests benefits.

Like most proposed hurridly cobbled legislation
There is confusion and conflicting interps
I read the bill's actual language (as best I can in a foreign language :D ) as in fact saying that eg. a spousal benefit being received by the spouse of one who 'filed and suspended' at FRA stops being received 6 months after the bill's passage, not depending when the file and suspect election was made or the ages of the spouses. However I also read in a "Hill" article that this apparent non-grandfathering of a SS benefit reduction, which Kotlikoff is correct would be unusual, was a candidate for further last minute amendment.

That's the problem of course with discussing even highly likely but still to be passed legislation. OTOH the amount of careful analysis in the media is woefully little. The Kotlikoff article (or similar ones by him at PBS and Forbes sites) is the only one I saw attempting to explain each feature, though I agree his purple prose tends to create doubt about his objectivity and I'd like to see a similar analysis from someone else to compare. Anyway when media detailed coverage of an important financial topic is so sparse, it seems to me useful for people to be able to put their heads together so to speak here and try to figure it out.

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Re: Changes to SS regulations in new funding bill...

Post by Quidnam » Wed Oct 28, 2015 9:18 am

nisiprius wrote:Kotlikoff is the senior author of a book entitled (pun intentional) Get What's Yours: The Secrets to Maxing Out Your Social Security, and has been extraordinarily shrill in the past, in his columns, about any behavior on the part of SSA that impairs the effectiveness of any technique he's been recommending. It's a matter of judgement what's a "loophole" and "what's yours" and he usually comes down on the latter side. Rhetoric like "outrageous," "rip-off," "draconian", "you can’t trust what Social Security says" flow from his pen, along with a host of hypothetical horribles like "a short Social Security horror story that I made up but that could happen to you." Now add "radical," "devastating," and "draconian."
On the bright side, at least Kotlikoff will be able to sell a revised edition of his book, with a rehash of his column and "New Strategies for 2016 Law Changes"...

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Re: Changes to SS regulations in new funding bill...

Post by tfb » Wed Oct 28, 2015 9:28 am

Johno wrote:That's the problem of course with discussing even highly likely but still to be passed legislation. OTOH the amount of careful analysis in the media is woefully little. The Kotlikoff article (or similar ones by him at PBS and Forbes sites) is the only one I saw attempting to explain each feature, though I agree his purple prose tends to create doubt about his objectivity and I'd like to see a similar analysis from someone else to compare. Anyway when media detailed coverage of an important financial topic is so sparse, it seems to me useful for people to be able to put their heads together so to speak here and try to figure it out.
The summary link loves2read posted is pretty clear and concise.
Closes several loopholes in Social Security’s rules about deemed filing, dual entitlement, and benefit suspension in order to prevent individuals from obtaining larger benefits than Congress intended. (Effective for individuals who attain age 62 after 2015, with respect to dual entitlement and deemed filing; and effective for benefits payable beginning 6 months after enactment, with respect to benefit suspension.)
The first one says if you are already 62, you can still file restricted application for spousal at FRA and earn credit for delaying your own benefits. If you are not yet there, you won't be able to do that. However, if your spouse's retirement benefits are suspended, beginning 6 months after enactment, your spousal is also suspended. In order to get your spousal, your spouse has to unsuspend. Those already 62 end up earning one delay credit instead of two if they want their spousal.
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Re: Changes to SS regulations in new funding bill...

Post by ObliviousInvestor » Wed Oct 28, 2015 9:40 am

My reading is that it would change several things.

It essentially makes the restricted application strategy dead in the water (for some people), via changes to deemed filing. Specifically, deemed currently only applies prior to full retirement age. If this bill passes, it would apply regardless of age.

A second interesting change regarding deemed filing is that the bill would make it applicable immediately and automatically once somebody becomes eligible for a benefit requiring deemed filing. Currently, deemed filing only applies when you're actually filing for something. (That is, they check whether, at that time, you're required to file for something else as well.)

Of note, these changes would only apply to people turning 62 in 2016 or later. So for people who turn 62 this year or who are already 62, the restricted application strategy is still an option.

Regarding voluntary suspension of benefits, the bill would make three changes:
1) There would be no option for retroactive unsuspension.
2) When a person has his/her benefit suspended, nobody else would be able to receive benefits on his/her work record.
3) When a person has his/her benefit suspended, he/she would not be able to receive benefits on anybody else's work record.

Changes #1 and #2 would pretty much kill the file and suspend strategy as it exists now. Of note, these changes would have a different effective date. It sounds like 6-7 months from the date the bill gets passed, if it gets passed.
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Re: Changes to SS regulations in new funding bill...

Post by 22twain » Wed Oct 28, 2015 9:48 am

tfb wrote:The summary link loves2read posted is pretty clear and concise.
(Effective for individuals who attain age 62 after 2015, with respect to dual entitlement and deemed filing;
The first one says if you are already 62, you can still file restricted application for spousal at FRA and earn credit for delaying your own benefits. If you are not yet there, you won't be able to do that.
Ugh. I would miss the cutoff by five days. It would make a difference of about $50K total during ages 66-69. :annoyed
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Re: Changes to SS regulations in new funding bill...

Post by loves2read » Wed Oct 28, 2015 9:55 am

Ok--
Just because you are quicker and likely as accurate as calling SS

I am over FRA -- my spouse is also over FRA
I am eligible for personal SSA as well as spousal SSA but have not filed because of taxation of benefits

Does my husband --higher earner--- need to file for his personal benefit still for me to file for spousal on his or can I just file a restricted application for spousal alone...
My personal is subject to Windfall Elimination provision
My spousal is protected from the government pension offset penalty...
Unless this new bill will eradicate the loophole provision I retired early to achieve

Found this article poster months ago on investment form's website
Not my investment company
But illustrates that this intention and language for reform was out there in public forum for some time but was not investigated/examined in any detail (at least that I saw/read)
http://www.bedrockcapital.com/blog/elim ... n-matters/

And points out the problem of not considering consequences of past legislation/policies as well as any new changes made trying to clear up past problems...
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Re: Changes to SS regulations in new funding bill...

Post by ObliviousInvestor » Wed Oct 28, 2015 9:58 am

loves2read wrote:Ok--
Just because you are quicker and likely as accurate as calling SS

I am over FRA -- my spouse is also over FRA
I am eligible for personal SSA as well as spousal SSA but have not filed because of taxation of benefits

Does my husband --higher earner--- need to file for his personal benefit still for me to file for spousal on his or can I just file a restricted application for spousal alone...
My personal is subject to Windfall Elimination provision
My spousal is protected from the government pension offset penalty...
Unless this new bill will eradicate the loophole provision I retired early to achieve
Yes, he must still have filed for his retirement benefit in order for you to be eligible for spousal benefits based on his work record. The bill would not change that at all.

What it would change is that he would no longer have the option of filing and suspending in order to allow you to be eligible for spousal benefits on his work record while his own retirement benefit continues growing.
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Re: Changes to SS regulations in new funding bill...

Post by loves2read » Wed Oct 28, 2015 10:08 am

The last link I posted illustrates the problem with eliminating filing/suspending in toto across the board when there might be reasons outside the spousal aspect it might be warranted...

Thanks for the response to my personal query

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Re: Changes to SS regulations in new funding bill...

Post by bengal22 » Wed Oct 28, 2015 10:50 am

ObliviousInvestor wrote:My reading is that it would change several things.

It essentially makes the restricted application strategy dead in the water (for some people), via changes to deemed filing. Specifically, deemed currently only applies prior to full retirement age. If this bill passes, it would apply regardless of age.

A second interesting change regarding deemed filing is that the bill would make it applicable immediately and automatically once somebody becomes eligible for a benefit requiring deemed filing. Currently, deemed filing only applies when you're actually filing for something. (That is, they check whether, at that time, you're required to file for something else as well.)

Of note, these changes would only apply to people turning 62 in 2016 or later. So for people who turn 62 this year or who are already 62, the restricted application strategy is still an option.

Regarding voluntary suspension of benefits, the bill would make three changes:
1) There would be no option for retroactive unsuspension.
2) When a person has his/her benefit suspended, nobody else would be able to receive benefits on his/her work record.
3) When a person has his/her benefit suspended, he/she would not be able to receive benefits on anybody else's work record.

Changes #1 and #2 would pretty much kill the file and suspend strategy as it exists now. Of note, these changes would have a different effective date. It sounds like 6-7 months from the date the bill gets passed, if it gets passed.
so are you saying none of these changes apply if you and spouse are 62 by the end of this year.
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Re: Changes to SS regulations in new funding bill...

Post by ObliviousInvestor » Wed Oct 28, 2015 10:59 am

bengal22 wrote:
ObliviousInvestor wrote:My reading is that it would change several things.

It essentially makes the restricted application strategy dead in the water (for some people), via changes to deemed filing. Specifically, deemed currently only applies prior to full retirement age. If this bill passes, it would apply regardless of age.

A second interesting change regarding deemed filing is that the bill would make it applicable immediately and automatically once somebody becomes eligible for a benefit requiring deemed filing. Currently, deemed filing only applies when you're actually filing for something. (That is, they check whether, at that time, you're required to file for something else as well.)

Of note, these changes would only apply to people turning 62 in 2016 or later. So for people who turn 62 this year or who are already 62, the restricted application strategy is still an option.

Regarding voluntary suspension of benefits, the bill would make three changes:
1) There would be no option for retroactive unsuspension.
2) When a person has his/her benefit suspended, nobody else would be able to receive benefits on his/her work record.
3) When a person has his/her benefit suspended, he/she would not be able to receive benefits on anybody else's work record.

Changes #1 and #2 would pretty much kill the file and suspend strategy as it exists now. Of note, these changes would have a different effective date. It sounds like 6-7 months from the date the bill gets passed, if it gets passed.
so are you saying none of these changes apply if you and spouse are 62 by the end of this year.
No.

If the bill passes, the deemed filing changes would apply based on whether you are 62 or not by the end of this year. The changes regarding voluntary suspension, however, would apply to everybody, starting "with respect to benefits payable for months beginning at least 180 days after the date of the enactment of this Act."
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Re: Changes to SS regulations in new funding bill...

Post by Lee Saage » Wed Oct 28, 2015 11:36 am

I just wanted to say that I find this a useful and collegial discussion and I am grateful to the moderators for allowing it happen. A good example of thoughtful oversight.
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Re: Changes to SS regulations in new funding bill...

Post by Dulocracy » Wed Oct 28, 2015 11:52 am

The Wizard wrote: It would affect me directly...
For the record, this is a large part of the reason future legislation gets locked. People get emotional about what might affect them, and their opinion is often less about what is good or bad for a nation than their individual situation. Also, I am not stating this is the case for this poster, and I am not stating that this matter is good or bad, as I have not read it yet, and I do not yet understand precisely what it is doing (until after I read this post with lots of great comments!).

This is just a request not to go into whether or how something like this affects you personally, as the moderators are very kind to let us discuss some pending issues.

Best!
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Re: Changes to SS regulations in new funding bill...

Post by Dulocracy » Wed Oct 28, 2015 12:03 pm

After having read the post, I will say that this does not surprise me. Social Security has been changed over the years to expand benefits without correlating increases in withdrawal from paychecks. I have been reading up on Social Security strategies, and this just convinces me that I should hold off on researching too much, as I am just approaching 40 at present. While inconvenient for some, it is not shocking to me that this is one of the things they plan to do to save Social Security for later generations.

Edited to remove some (I think) poignant insight into future changes along the same lines which would inevitably cause moderators more work and violate a different part of the reminder I just posted above.
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Re: Changes to SS regulations in new funding bill...

Post by Alex Frakt » Wed Oct 28, 2015 12:27 pm

OK, we'll keep this open for now. But under the same conditions as the consolidated medicare part b thread. All the rules except speculating on legislative action apply here: any partisan political posts, personal attacks or other violations will result in a warning and the removal of the post. Also, please keep posts to the facts of the situation (as far as we know them) rather than general comments on the desirability of various policies.

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Re: Changes to SS regulations in new funding bill...

Post by rkhusky » Wed Oct 28, 2015 12:30 pm

One benefit from removing the file and suspend option is that now my brain doesn't need to ache trying to figure out the best strategy for my wife and me to take our SS.

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Re: Changes to SS regulations in new funding bill...

Post by dowse » Wed Oct 28, 2015 12:51 pm

As I understand it, if the bill passes as is, the strategy known as "restricted application" would still be available to those who have attained age 62 by the end of this calendar year, but the "file and suspend" strategy would be eliminated 180 days after enactment of the bill, even for those who have already suspended. Do I have that right?

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Re: Changes to SS regulations in new funding bill...

Post by englishgirl » Wed Oct 28, 2015 12:53 pm

ObliviousInvestor wrote:My reading is that it would change several things.

<snip>
A second interesting change regarding deemed filing is that the bill would make it applicable immediately and automatically once somebody becomes eligible for a benefit requiring deemed filing. Currently, deemed filing only applies when you're actually filing for something. (That is, they check whether, at that time, you're required to file for something else as well.)

<snip>.
Mike, I don't understand this at all. Let's say we have two earners, A and their spouse B. Both have earnings on their own records, but A has sufficiently higher earnings that a spousal benefit on A's record is more than B's earnings on B's own record. Let's also say they are the same age. So, they decide that B files for social security at FRA, and A waits until age 70 to get their maximum benefit.

When B files for social security at FRA, as far as I understand the proposal, there's now no chance for him/her to get spousal benefit because A has not yet filed and can't file and suspend. [If my understanding is correctly, previously, B would have been deemed to have filed for both their own benefit and spousal benefit, right?] But what do you mean about the deemed filing becomes immediately applicable? Does the fact that B has filed, mean that A is automatically *deemed* to have filed because B would be entitled to a higher benefit if B claimed a spousal benefit as well? Or am I totally mangling things? Or is it that at age 70, when A files, would B automatically switch to the higher spousal benefit, because B would have been deemed to have filed for that too? I'm a bit lost...
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Re: Changes to SS regulations in new funding bill...

Post by ObliviousInvestor » Wed Oct 28, 2015 12:55 pm

dowse wrote:As I understand it, if the bill passes as is, the strategy known as "restricted application" would still be available to those who have attained age 62 by the end of this calendar year, but the "file and suspend" strategy would be eliminated 180 days after enactment of the bill, even for those who have already suspended. Do I have that right?
Yes.

People who have suspended would be allowed to continue collecting DRCs until age 70. But nobody else (such as spouses or dependent children) would be able to collect benefits on their work record while the suspension is still active.
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Re: Changes to SS regulations in new funding bill...

Post by ObliviousInvestor » Wed Oct 28, 2015 1:02 pm

englishgirl wrote:
ObliviousInvestor wrote:My reading is that it would change several things.

<snip>
A second interesting change regarding deemed filing is that the bill would make it applicable immediately and automatically once somebody becomes eligible for a benefit requiring deemed filing. Currently, deemed filing only applies when you're actually filing for something. (That is, they check whether, at that time, you're required to file for something else as well.)

<snip>.
Mike, I don't understand this at all. Let's say we have two earners, A and their spouse B. Both have earnings on their own records, but A has sufficiently higher earnings that a spousal benefit on A's record is more than B's earnings on B's own record. Let's also say they are the same age. So, they decide that B files for social security at FRA, and A waits until age 70 to get their maximum benefit.

When B files for social security at FRA, as far as I understand the proposal, there's now no chance for him/her to get spousal benefit because A has not yet filed and can't file and suspend. [If my understanding is correctly, previously, B would have been deemed to have filed for both their own benefit and spousal benefit, right?] But what do you mean about the deemed filing becomes immediately applicable? Does the fact that B has filed, mean that A is automatically *deemed* to have filed because B would be entitled to a higher benefit if B claimed a spousal benefit as well? Or am I totally mangling things? Or is it that at age 70, when A files, would B automatically switch to the higher spousal benefit, because B would have been deemed to have filed for that too? I'm a bit lost...
Spouse A is the higher earner. Spouse B is the lower earner.

If Spouse B files for retirement benefits at FRA (or at any other point) when Spouse A has not yet filed for retirement benefits, then there will be no deemed filing because Spouse B isn't yet eligible for a spousal benefit. That is, Spouse B will have only filed for retirement benefits. That is true under current law, and would still be true if this bill gets passed.

What this bill would change is that, if Spouse A later files for retirement benefits, Spouse B will automatically at that time be deemed to have filed for spousal benefits as well.*

*Obvious exception: If Spouse B isn't eligible for a spousal benefit due to his/her PIA being greater than or equal to 50% of Spouse A's PIA, there would be no deemed filing, since there is no eligibility in the first place.

Please let me know if that answers your question(s) or if there's any remaining confusion.
Mike Piper, author/blogger

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Re: Changes to SS regulations in new funding bill...

Post by pshonore » Wed Oct 28, 2015 1:03 pm

Dulocracy wrote:After having read the post, I will say that this does not surprise me. Social Security has been changed over the years to expand benefits without correlating increases in withdrawal from paychecks.
I may be showing my age but when I started working, the SS Tax was 3% (on a max of $4800 for a grand total of $144) and there was no Medicare. From 1937 to 1950, the maximum tax was $45/year (1.5% of $3000). Withdrawals from paychecks have increased substantially (but so have benefits).

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Re: Changes to SS regulations in new funding bill...

Post by englishgirl » Wed Oct 28, 2015 1:06 pm

ObliviousInvestor wrote:
englishgirl wrote:
ObliviousInvestor wrote:My reading is that it would change several things.

<snip>
A second interesting change regarding deemed filing is that the bill would make it applicable immediately and automatically once somebody becomes eligible for a benefit requiring deemed filing. Currently, deemed filing only applies when you're actually filing for something. (That is, they check whether, at that time, you're required to file for something else as well.)

<snip>.
Mike, I don't understand this at all. Let's say we have two earners, A and their spouse B. Both have earnings on their own records, but A has sufficiently higher earnings that a spousal benefit on A's record is more than B's earnings on B's own record. Let's also say they are the same age. So, they decide that B files for social security at FRA, and A waits until age 70 to get their maximum benefit.

When B files for social security at FRA, as far as I understand the proposal, there's now no chance for him/her to get spousal benefit because A has not yet filed and can't file and suspend. [If my understanding is correctly, previously, B would have been deemed to have filed for both their own benefit and spousal benefit, right?] But what do you mean about the deemed filing becomes immediately applicable? Does the fact that B has filed, mean that A is automatically *deemed* to have filed because B would be entitled to a higher benefit if B claimed a spousal benefit as well? Or am I totally mangling things? Or is it that at age 70, when A files, would B automatically switch to the higher spousal benefit, because B would have been deemed to have filed for that too? I'm a bit lost...
Spouse A is the higher earner. Spouse B is the lower earner.

If Spouse B files for retirement benefits at FRA (or at any other point) when Spouse A has not yet filed for retirement benefits, then there will be no deemed filing because Spouse B isn't yet eligible for a spousal benefit. That is, Spouse B will have only filed for retirement benefits. That is true under current law, and would still be true if this bill gets passed.

What this bill would change is that, if Spouse A later files for retirement benefits, Spouse B will automatically at that time be deemed to have filed for spousal benefits as well.*

*Obvious exception: If Spouse B isn't eligible for a spousal benefit due to his/her PIA being greater than or equal to 50% of Spouse A's PIA, there would be no deemed filing, since there is no eligibility in the first place.

Please let me know if that answers your question(s) or if there's any remaining confusion.
Great, thanks, that clarifies it!
Sarah

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Re: Changes to SS regulations in new funding bill...

Post by AZMax » Wed Oct 28, 2015 1:09 pm

Good article on this topic:
"Under this week’s two-year budget agreement between Congressional leaders and the White House, Congress will close these loopholes in the Social Security rules."

http://www.financial-planning.com/news/ ... 615-1.html

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Re: Changes to SS regulations in new funding bill...

Post by MathWizard » Wed Oct 28, 2015 1:20 pm

I'll not comment on the proposed legislation, except to than the author for the information and the
link to the PBS article.

Since SS will be a significant (if not the majority) of my retirement income, and
it seems clear to me that some changes will come to SS (nothing ever stays the same),
I find it useful to know what some in government propose if only for alternate planning.

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Re: Changes to SS regulations in new funding bill...

Post by wolf359 » Wed Oct 28, 2015 1:24 pm

I can see why Congress considers this a "loophole." Only informed or wealthier constituents were taking advantage of it. Even Kotlikoff notes in his book that one of the unfair aspects of Social Security is that only people who know the rules benefit from the rules. This leaves everybody on the same playing field (nobody gets to benefit -- everybody loses.)

I see two ironies: 1) This doesn't actually save the Social Security program much money, because the vast majority of eligible recipients claim before FRA (only 2% or less wait until 70); and 2) the big issue in Social Security (according to the SSA 2015 Trustee's report) is that the disability trust fund runs out of money and starts reducing benefits at the end of 2016. All this political capital will be spent on this "loophole" issue that doesn't affect SS viability, and they still have to revisit Social Security this or next year.

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Re: Changes to SS regulations in new funding bill...

Post by supersharpie » Wed Oct 28, 2015 1:37 pm

wolf359 wrote:I can see why Congress considers this a "loophole." Only informed or wealthier constituents were taking advantage of it. Even Kotlikoff notes in his book that one of the unfair aspects of Social Security is that only people who know the rules benefit from the rules. This leaves everybody on the same playing field (nobody gets to benefit -- everybody loses.)

I see two ironies: 1) This doesn't actually save the Social Security program much money, because the vast majority of eligible recipients claim before FRA (only 2% or less wait until 70); and 2) the big issue in Social Security (according to the SSA 2015 Trustee's report) is that the disability trust fund runs out of money and starts reducing benefits at the end of 2016. All this political capital will be spent on this "loophole" issue that doesn't affect SS viability, and they still have to revisit Social Security this or next year.
The pending legislation does in fact include a reallocation of trust fund income that will keep the disability program solvent through 2022.

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Re: Changes to SS regulations in new funding bill...

Post by Jack FFR1846 » Wed Oct 28, 2015 1:55 pm

This is very interesting and an article from a deleted made the original legislation which unintentionally created this loophole and the proposed legislation very clear.

The previous legislation introduced the ability to suspend in case one retired and filed and collected benefits but some time later decided to go back to work (for example) and suspend payments, going back to acrual.

We all know the loophole that was created.

Under the new legislation, if one files and a spouce files, the spouce files for all benefits, so would not add to their "wait time credits". If the primary were to suspend, spousal benefits, if being paid stop and the spouce continues with their own benefit from their own employment record.

I see the bill as reverting to what was intended all along.
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Re: Changes to SS regulations in new funding bill...

Post by Johno » Wed Oct 28, 2015 2:15 pm

tfb wrote:
Johno wrote:That's the problem of course with discussing even highly likely but still to be passed legislation. OTOH the amount of careful analysis in the media is woefully little. The Kotlikoff article (or similar ones by him at PBS and Forbes sites) is the only one I saw attempting to explain each feature,
The summary link loves2read posted is pretty clear and concise.
Closes several loopholes in Social Security’s rules about deemed filing, dual entitlement, and benefit suspension in order to prevent individuals from obtaining larger benefits than Congress intended. (Effective for individuals who attain age 62 after 2015, with respect to dual entitlement and deemed filing; and effective for benefits payable beginning 6 months after enactment, with respect to benefit suspension.)
The first one says if you are already 62, you can still file restricted application for spousal at FRA and earn credit for delaying your own benefits. If you are not yet there, you won't be able to do that. However, if your spouse's retirement benefits are suspended, beginning 6 months after enactment, your spousal is also suspended. In order to get your spousal, your spouse has to unsuspend. Those already 62 end up earning one delay credit instead of two if they want their spousal.
I agree both raw wording and 'plain language' summary seem to say a person now receiving a check off the work record of a 'suspended' recipient will actually stop receiving that check six months after the bill passes. Whatever the 'fairness' merits and (certainly fairly small) impact on overall finances of the SS system, it's relatively unusual for Congress to risk riling even small numbers of people by actually interrupting a check they are already receiving, as opposed to telling those who haven't actually benefitted from something that now they won't be able to. Hence I think this particular feature, on the file and suspend, is something to watch for last minute changes, which again one article I read said was being mentioned, to perhaps also grandfathering those who already made the 'file and suspend' play. But we'll see.

Also of two articles from last 24 yrs returned earlier in a search of news for 'file and suspend', one was Koltikoffs, the other mistakenly said the current draft of the law only prevented the 'file and suspend' play going forward.

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Re: Changes to SS regulations in new funding bill...

Post by orlandoman » Wed Oct 28, 2015 2:36 pm

This Bill is being voted on, at approximately 5pm EST today, so the offical House vote status will be known shortly.
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Re: Changes to SS regulations in new funding bill...

Post by dcdowden » Wed Oct 28, 2015 3:31 pm

My wife and I are both 63, retired and have similar earned Social Security benefits from our working lives.
We decided to hedge our bets on Social Security, so I started to receive benefits when I turned 62.
We were concerned that other possible future changes in Social Security might affect higher income retirees even more, since
taking RMD's at age 70 will push us into higher tax brackets.

Our plan had been for my wife to apply for spousal benefits at her FRA of 66 when she would receive half of what I would have received at FRA. She would collect that until she turned 70 when she would apply for her own benefit that would be much larger because she had delayed applying for it.

From what I have read, it appears that this plan should still work for us despite the proposed changes in the law because
1) I did not file and suspend my benefit - I just filed and am collecting it now.
2) We both qualify for the grandfather clause because we are over 62.

But I'm not quite sure what the discussion of 'deemed application' is all about, so I am not sure.

Doug

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Re: Changes to SS regulations in new funding bill...

Post by tfb » Wed Oct 28, 2015 4:18 pm

dcdowden wrote:But I'm not quite sure what the discussion of 'deemed application' is all about, so I am not sure.
Good thing is because you are grandfathered you don't have to understand that part. 'Deemed' only affects people who aren't 62 by the end of 2015.
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Re: Changes to SS regulations in new funding bill...

Post by jwa » Wed Oct 28, 2015 4:22 pm

This just in from Bloomberg News:

An original version of the budget deal ended file and suspend in six months for everyone using the strategy. That would have abruptly cut off checks to thousands of retirees, or many more. Today the deal was amended so it affects only retirees who file for benefits in the future, and the change wouldn't go into effect for six months. That means older workers who want to use the strategy could still do so until early next year.

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Re: Changes to SS regulations in new funding bill...

Post by BigSaver » Wed Oct 28, 2015 4:25 pm

dcdowden wrote:Our plan had been for my wife to apply for spousal benefits at her FRA of 66 when she would receive half of what I would have received at FRA. She would collect that until she turned 70 when she would apply for her own benefit that would be much larger because she had delayed applying for it.
Under current SS rules, I believe your wife's spousal benefit at her FRA would be less than half of your FRA benefit since you started your benefit early. There is a calculator on this page that allows you to estimate the reduced spousal benefit if you take (or took) early retirement.
https://www.ssa.gov/OACT/quickcalc/spouse.html

Letting her benefit under her work record grow, while she collects the spousal benefit, is exactly what we are planning to do, too, under current law. It remains to be seen whether that option survives the current legislative changes.

In my opinion, this proposed bill ought to be getting much more coverage in the press. Social Security claiming strategies are part of any good retirement plan.

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Re: Changes to SS regulations in new funding bill...

Post by orlandoman » Wed Oct 28, 2015 4:26 pm

FYI, the House passed the bill on a 266 to 167 vote late Wednesday and Senate leaders have promised to quickly move it through the upper chamber.
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Re: Changes to SS regulations in new funding bill...

Post by One Ping » Wed Oct 28, 2015 4:28 pm

jwa wrote:This just in from Bloomberg News:

An original version of the budget deal ended file and suspend in six months for everyone using the strategy. That would have abruptly cut off checks to thousands of retirees, or many more. Today the deal was amended so it affects only retirees who file for benefits in the future, and the change wouldn't go into effect for six months. That means older workers who want to use the strategy could still do so until early next year.
However, IIRC you cannot (could not have?) filed and suspended if you were younger than FRA. So if you are younger than 65½ today (or whenever the senate passes this ammended bill), you are out of luck WRT file and suspend anymore. Is that how you all understand it now? :( :?
Last edited by One Ping on Wed Oct 28, 2015 4:29 pm, edited 1 time in total.
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Re: Changes to SS regulations in new funding bill...

Post by curmudgeon » Wed Oct 28, 2015 4:29 pm

A potentially interesting side question may come into play here, which is, what happens in the case of a divorced spouse claiming spousal benefit. As I understand it, current law/regulations allow claiming spousal benefit without actually being dependant on what the other spouse did or didn't do in terms of claiming or suspending. That is, there is something like an imputed file, or "file and suspend" on the part of the spouse. Not clear if this would continue to exist with the new legislation. If it does, it may have the side effect of being another "marriage penalty". We will see what really emerges when the dust settles.

I expect that over time there will be more such squeezes around the edges of SS.

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Re: Changes to SS regulations in new funding bill...

Post by ObliviousInvestor » Wed Oct 28, 2015 4:29 pm

BigSaver wrote:
dcdowden wrote:Our plan had been for my wife to apply for spousal benefits at her FRA of 66 when she would receive half of what I would have received at FRA. She would collect that until she turned 70 when she would apply for her own benefit that would be much larger because she had delayed applying for it.
Under current SS rules, I believe your wife's spousal benefit at her FRA would be less than half of your FRA benefit since you started your benefit early.
The age at which the husband files for retirement benefits has no effect on the amount of the wife's benefit as his wife. Her benefit as his wife is based on his PIA rather than the amount he's actually receiving.
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