May Changes To Social Security Filing Strategies Affect Chicago Couples

Red law book and gavel

The House of Representatives passed the Bipartisan Budget Act of 2015, which included changes to Social Security, effective May 1, 2016. The changes were meant to close loopholes in the filing system that allowed some beneficiaries to maximize payments.

Social Security attorneys in Chicago warn couples to avoid conflict with the new laws by avoiding strategies like:

File And Suspend

The file and suspend strategy exploited a loophole that allowed one spouse to claim benefits from the other, even if the first spouse suspended benefits. In this arrangement, the first spouse to reach age 66 filed for benefits, then immediately suspended the claim. The other spouse would then file for spousal benefits while the original filer’s benefits grew by 8 percent a year for the next 4 years.

Under the new law, a couple can only receive spousal benefits if one of the two people in the marriage currently receives payment.

Restricted Applications

With a restricted application, Social Security attorneys in Chicago could file for spousal benefits on behalf of a client between 66 and 70. That person could then wait to file their own Social Security claims until they reached their full benefits at age 70.

The new laws establish the “deemed filing rule”, which says that spouses between 62 and 66 who file for spousal benefits have been “deemed” to have taken their own personal retirement benefit. Social Security will automatically pay the claimant the larger of the two benefits, either their personal claim or their spousal claim.

Suspended Benefits

One of the most popular loopholes closed by the law was the suspended benefit strategy. Claimants could file for Social Security at age 66, then suspend their benefits until they needed the payments. If the suspension ended before the age of 70, the claimant gave up the 8 percent growth of the benefits, but received a lump sum payment for all benefits, back dated to the original filing date.

Suspended benefits no longer include back payment of checks, but claimants are able to keep the growth their accounts generated.

Couples who are ready to file for retirement, or who met certain age benchmarks before May 1, could be eligible for older filing strategies until the end of the year under the grandfathering provisions of the changes.

For people nearing retirement, Social Security attorneys in Chicago are an invaluable resource to claim the maximum benefits under the law.