SEC. 831. CLOSURE OF UNINTENDED LOOPHOLES. (a) PRESUMEDFILING OFAPPLICATION BYINDIVID- UALSELIGIBLE FOROLD-AGEINSURANCEBENEFITS AND
Full Answer
What is the social security loophole?
What's the loophole? It's the rule that allows 66-year-old retirees to collect spousal benefits on a husband's or wife's Social Security record while letting their own benefit continue to grow until age 70, at which point they get a 32 percent bonus added to their monthly retirement checks.
Can you collect 1/2 of spouse's Social Security and then your full amount?
Your full spouse's benefit could be up to one-half the amount your spouse is entitled to receive at their full retirement age. If you choose to begin receiving spouse's benefits before you reach full retirement age, your benefit amount will be permanently reduced.
Can I file for my Social Security at 62 and switch to spousal benefits later?
Only if your spouse is not yet receiving retirement benefits. In this case, you can claim your own Social Security beginning at 62 and make the switch to spousal benefits when your husband or wife files.
How does the Bipartisan Budget Act of 2015 affect Social Security?
These policy changes – specifically the limit on deeming to people below the full retirement age, the ability to suspend benefits to earn DRCs, and the elimination of the Retirement Earnings Test (RET) at the full retirement age – allowed the loopholes that led to the use of aggressive claiming strategies to increase ...
At what age is Social Security no longer taxed?
At 65 to 67, depending on the year of your birth, you are at full retirement age and can get full Social Security retirement benefits tax-free.
Can I collect Social Security from my ex husband if I remarried?
Can I collect Social Security as a divorced spouse if my ex-spouse remarries? Yes. When it comes to ex-spouse benefits, Social Security doesn't care about the marital status of your former spouse; it only cares about your marital status.
Can I collect ex spousal benefits and wait until I am 70 to collect my own Social Security?
You can only collect spousal benefits and wait until 70 to claim your retirement benefit if both of the following are true: You were born before Jan. 2, 1954. Your spouse is collecting his or her own Social Security retirement benefit.
Can you collect your deceased spouse's Social Security and your own?
Social Security will not combine a late spouse's benefit and your own and pay you both. When you are eligible for two benefits, such as a survivor benefit and a retirement payment, Social Security doesn't add them together but rather pays you the higher of the two amounts.
What is the average Social Security benefit at age 62?
$2,364At age 62: $2,364. At age 65: $2,993. At age 66: $3,240. At age 70: $4,194.
Why would Social Security benefits be suspended?
If you have reached full retirement age, but are not yet age 70, you can ask us to suspend your retirement benefit payments. By doing this, you will earn delayed retirement credits for each month your benefits are suspended which will result in a higher benefit payment to you.
What's the most you can get from Social Security?
The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2022, your maximum benefit would be $3,345. However, if you retire at age 62 in 2022, your maximum benefit would be $2,364. If you retire at age 70 in 2022, your maximum benefit would be $4,194.
Can I collect half of my husband's Social Security at 62?
The maximum spousal benefit is 50% of the other spouse's full benefit. You may be eligible if you're married, formerly married, divorced, or widowed. You can collect spousal benefits as early as age 62, but in most cases, the benefits are reduced permanently if you start collecting early.
What are the loopholes in Social Security?
Prior to the recently enacted Bipartisan Budget Act of 2015 (BBA), unintentional Social Security loopholes were in place that allowed couples with financial means to obtain additional or enhanced benefits that Congress did not intend, and are contrary to the goals of the Social Security program. The loopholes could harm the program’s finances by undermining the formulas that ensure Social Security beneficiaries receive roughly the same amount of lifetime benefits regardless of when they start to claim them. These loopholes are often described as “aggressive claiming strategies” because they involve higher-income individuals who follow a deliberate claiming pattern — often under the advice of financial planners — to exploit benefits in a manner that is not the norm (or an option) for most middle class workers.
What is Section 831 of the BBA?
Section 831 of the BBA eliminates these aggressive claiming loopholes by 1) extending “deemed” filing (eliminating the ability to file for only a worker or only a spouse benefit) to all retirement and spouse applicants, not just those below the full retirement age; and 2) changing the suspension policy so that other benefits payable on the worker’s record, such as a spousal benefit, are also suspended. Widowed spouse benefits are not affected by the former policy, and divorced spouse benefits are not affected by the latter. Both policies will be implemented on a prospective basis only.
What is a claim then suspend?
Claim then Suspend: This practice allowed a worker to file for benefits but then suspend payments , while still allowing a benefit to be paid to the spouse, even though the worker had not retired and was not collecting benefits. This undermined the purpose of spousal benefits, which is to supplement benefits paid to the worker when there are dependent family members. A worker who chooses to delay receipt of retirement benefits beyond the full retirement age, currently 66, accumulates “delayed retirement credits” (DRCs) which lead to a higher benefit when they do retire. The formula for calculating DRCs for workers who delay retirement is designed to be “actuarially fair” – meaning the worker would be expected to receive the same amount of benefits over their lifetime as they would if they did not delay retirement – and assumes that no spousal benefits are being provided when the worker is not receiving benefits. The loophole subverted that actuarial fairness, giving those who use this claiming strategy more in benefits than was intended. The provision to close this loophole takes effect April 30, 2016. After that, if a worker suspends his or her retirement benefit, then spousal benefits based on that person’s earnings will also be suspended. Furthermore, a worker who suspends after April 30 will no longer be able to retroactively “un-suspend” benefits at a later point and receive a lump sum for the past-due period.