Amy & Dan Smith's Planning for Life: How To "File and Suspend" Before It Is Too Late

With the recent changes to Social Security rules, filing and suspending will soon be phased out, but there’s still time to take advantage of the strategy.

Here’s a quick guide to maneuvering this rule while it still lasts, but as always, you should work with your financial advisor to discuss further how you can use this and other strategies in your financial plan.

The phasing-out of the file and suspend strategy:

Before these changes, filing and suspending offered a great opportunity for many couples to maximize their benefits. According to Social Security rules, spousal benefits can only be paid off a worker’s record who has already filed for benefits. However, with the file and suspend strategy, one spouse who has reached full retirement age can file for Social Security Benefits and then immediately suspend the payment of those benefits. Using this strategy, the suspending spouse can file without having to receive their benefits-allowing their benefits to continue to grow (via delayed retirement credits until age 70), while their spouse can begin receiving spousal benefits.

Unfortunately, with the rule change, filing and suspending will no longer allow a spouse (or minor dependent) to claim benefits on the suspending spouse’s earning records. The person who is filing will actually have to begin taking benefits in order for his or her spouse or dependent children to be eligible for spousal or dependent benefits.

Who can file and suspend?

Trying to figure out if you make the cut? Here’s what to know. The new law takes effect on April 29, 2016, so if you turn 66 by April 30, 2016 (Social Security deems you have attained your age one day before your birthday), you can file and suspend. If you make the deadline, your spouse will be able to collect benefits off your earnings while your own benefits are left to grow.

If you were born between April 30, 1950, and August 29, 1950:

Some experts believe that the April 29, 2016 deadline does not necessarily mean that a beneficiary must turn age 66 by then in order to “file and suspend.” They argue since the Social Security Administration permits people to file their benefits application as much as four months in advance and there is a regulation that says if you’re not yet entitled to a benefit you may still request that benefits be suspended. What they’re saying in effect is that a worker reaching age 66 by August 29, 2016, could still effectively implement the file and suspend strategy.

Before you sign up:

If your birthday falls between April 30, 1950, and August 29, 1950, and you want to file and suspend, there are a few potential risks to be aware of. The SSA may not interpret the law changes to allow applications for people turning 66 after April 30, 2016, so there is a chance it will process your retirement benefit, while ignoring the request to suspend.

Additionally, if the SSA sees the timing as a missed deadline, it may grant your request to file and suspend, but not permit your spouse or children to collect on your work record, while your retirement benefits remain suspended.

TIP: Should you choose to attempt to take advantage of this strategy, pay close attention to your awards notice to ensure that everything has been processed and is working as you intended. If your request to file and suspend is denied, you can appeal the denial all the way up to the federal district court if necessary, however, this could be a long, messy process.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, He has practiced law in Loudoun County since 1980.