Today’s column responds to questions about whether 2019 is really the deadline to file a restricted application, whether an annuity will be subject to the WEP, retroactive restricted applications for spousal benefits only, widow’s benefits and reinstating a suspended retirement benefit. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc, a company that markets Maximize My Social Security and MaxiFi Planner. Both tools maximize lifetime Social Security benefits. MaxiFi also finds retirement account withdrawal strategies and other ways to lower your lifetime taxes and raise your lifetime spending. Most important, it suggests how much to spend and save each year to enjoy a stable living standard through time.
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Ask Larry about Social Security here.
Is 2019 Really The Deadline To File Social Security Restricted Applications?
Hi Larry, I was born before 1954 and, based on information I read in your excellent book, I know I am eligible to file for a restricted application for my spousal benefit on my wife’s record, born in 1954, once she actually begins taking her retirement benefit. This will let me earn delayed retirement credits to increase my retirement benefit when I finally file for it at 70. We’re planning on doing this in the early part of 2020. But recently I have read some articles online and in print that seem to be stating that the ability to apply for a restricted benefit will end at the in 2019. Is there any truth to this claim? Thanks, Todd
Hi Todd, There is no truth whatsoever to that very inaccurate claim. There’s no specific deadline for filing a restricted application. I assume that the articles you read intended to convey that only people who reach full retirement age (FRA) before 1/2/2020 can file a restricted claim for spousal benefits without also being deemed to be filing for their own Social Security retirement benefits. That doesn’t mean, however, that you, based on your birthdate, won’t still be able to file a restricted application for spousal benefits after 2019.
You and your wife may want to use one of my company’s two tools — Maximize My Social Security or MaxiFi Planner — to help maximize your lifetime Social Security benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry
Will The Annuity I Receive Be An Exception To WEP?
Hi Larry, I worked for a United Nations Organization outside the US for a few years. I was neither subject to SSA withholding nor subject to that country’s Social Security withholding but I will receive an annuity based on contribution I made to a plan similar to a 401K plan. Will that be an exception to the Windfall Elimination Provision? I have read the topic carefully but can’t wrap my head around it. Thanks, Stanya
Hi Stanya, If your employer made contributions to the retirement plan you refer to, then your annuity would almost certainly count for Windfall Elimination Provision (WEP) purposes. But if no employer contributions were involved, then it would only count for WEP if the plan was your employer’s primary pension plan. In other words, the annuity won’t cause a WEP reduction if it was an optional savings plan (e.g. IRA) outside of your employer’s pension plan, and if only you made contributions to the plan. Best, Larry
Can I Now Retroactively File A Restricted Claim For Spousal Benefits And Get A Lump Sum Payment?
Hi Larry, My wife is slightly older than me. She filed for Social Security retirement benefits upon reaching her FRA. I chose to wait until I reach 70. Now I realize that I could have made a restricted filing for spousal benefits back when I reached FRA and doing so would have still allowed my own retirement benefits to increase until I was 70. Can I now retroactively make a restricted filing for spousal benefits and get a lump some payment? Thanks, Stephen
Hi Stephen, The maximum retroactivity allowed for that type of claim is six months, so if you reached your full retirement age (FRA) more than six months ago, you wouldn’t be able to claim benefits all the way back to your FRA. However, you can still file a restricted claim for spousal benefits now and claim up to six months of back pay.
You don’t mention your current age or date of birth, but It sounds like you should probably contact Social Security as soon as possible to either apply for spousal benefits or to at least make an appointment to file a claim. Making an appointment with Social Security establishes a protective filing date, which should prevent you from any further possible loss of benefits. Best, Larry
Am I Eligible For My Husband’s Full Benefit Amount As A Widow?
Hi Larry, My late husband retired at 70 so he could receive a higher retirement benefit due to the delayed retirement credits he earned by waiting. As his widow, am I eligible for his full benefit when I reach 66, my full retirement age? Thanks, Jo
Hi Jo, I’m sorry for your loss. Yes, since your husband waited until 70 to start drawing his benefits, you would be eligible for his full age 70 rate if you are at least full retirement age (FRA) when you start drawing widow’s benefits. You wouldn’t get that full amount plus your own Social Security benefits, though, just the higher of the two amounts. So if the retirement benefit he was receiving at the time of his passing is larger than your retirement benefit based on your own record, you’ll receive your larger widow’s benefit instead. Best, Larry
How Does My Husband Go About Reinstating His Benefits?
Hi Larry, My husband filed and suspended his retirement benefit before 4/29/2016. He is turning 70 in October and wants to apply to reinstate the benefits that he voluntarily suspended and obtain a lump sum payment for those 4 years. Can he apply online? How many months in advance of his 70th birthday in October can we apply? Is the entire lump sum subject to income tax withholding? Thanks, Kim
Hi Kim, If your husband filed for and suspended his retirement benefit, he won’t need to file a new application to reinstate it at 70. His benefits will be automatically reinstated effective the month he reaches 70 unless he elects to reinstate them before then. If he elects to do that, he can do so anytime prior to the month he reaches 70 by contacting Social Security and requesting reinstatement either orally or in writing. Benefit reinstatements can’t be done online.
If your husband voluntarily suspended his benefits before 4/29/2016, he can elect to reinstate his benefits retroactively to as far back as the first month of suspension. However, by doing so he will lose all of the delayed retirement credits (DRCs) that he’s earned to date, and his lower corresponding benefit rate may also cause you to receive a lower widow’s rate in the event of his death. If you husband does elect to receive a lump sum, it would count for income taxes in the year in which it’s paid. Best, Larry
To learn more about your Social Security options, visit Economic Security Planning, Inc.