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THE WARREN-WATCHUNG CONNECTION
APRIL/MAY 2016
! " # !"# !"# ! " # $ $ %& "' ! $ % $ #& ! " # !"# !"# ! " # $ $ %& "' ! $ % $ #& heritageinvestmentpartners.com SOCIAL SECURITY IS ELIMINATING 2 MAJOR LOOPHOLES By: Ryan P. Woodring, CFP ® Heritage Investment Partners, LLP, Chatham NJ If you are married and A.) turning 66 before April 29th 2016 or B.) have turned 62 by the end of 2015 you should read this article. As part of the Bipartisan Budget Act of 2015 passed on November 2nd 2015, two key Social Security “loopholes” are closing: file and suspend and restricted application. Bottom line is that there is a win- dow of opportunity. Consider tak- ing advantage of it. If you are full retirement age of 66 by April 30, 2016 you have until then to file and suspend. However, over the next four years, if you were 62 or older at the end of 2015, you may still be able to file a restricted appli- cation for spousal benefits when you turn full retirement age. Both of these techniques apply to spousal benefits, which is claiming social security payments based on your spouse’s record. One of the necessary requirements for claim- ing spousal benefits is that one spouse must have filed for their benefits at full retirement age before the other spouse can claim a spousal benefit. File and suspend is a strategy that allows one spouse to start receiving spousal benefits before the other spouse is ready to take their own benefit. This would entitle the spouse claiming spousal benefits up to four more years of additional payments, all the while allowing the suspended spouse to continue building credits. If this applies to you, you must act quickly, because after April 30, 2016 this loophole goes away. Restricted application allows a high-earning spouse to receive four years of spousal benefits off the lower earning spouse’s record, while allowing their own benefit to build delayed credits to a maximum of age 70. The lower earner starts their reduced benefit, once turning full retirement age, then the higher earner spouse files a restricted application for his spousal benefit and receives ½ the claiming spous- es benefit, again all the while con- tinuing to build their own benefit by annual delayed credits. Whether these opportunities are really worth pursuing will depend on a few other factors, such as age of the other spouse, earnings record of each spouse, whether you are contributing to a health savings account (HSA), timing of income needs, and assumed life expectancies. Also, do you want or need the money now, or do you want to plan for longevity protec- tion? Let’s applaud the government for doing something that makes sense to eliminate some wasteful spend- ing! Utilizing these strategies enables filers to receive additional social security payments that other- wise wouldn’t be received, without damaging a longer term claiming strategy. Although as always, knowledge is power, so not every- one does it. However, if you can still take advantage of it, why don’t you? Although every client’s situa- tion is different, it’s like I told my father in law… “Would you like to find a couple $20 dollar bills blow- ing down the street on your way to the mailbox every day for the next 4 years?” Then pursue this strategy, because that is what it could do. This information is not intended to be a substi- tute for specific individualized tax or financial advice. We suggest that you discuss your specif- ic issues with a qualified professional. Securities offered through LPL Financial Member FINRA/SIPC Financial Planning offered through Heritage Investment Partners, LLP - A Registered Investment Advisor and separate entity from LPL Financial.(#' $#& $'%'
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