Articles

Social Security Changes to Know in 2016 by Jeffrey M. Mutnik, CPA/PFS


Posted on February 04, 2016 by Jeffrey Mutnik

 

Under the Bipartisan Budget Act of 2015, taxpayers under age 62 will no longer have the ability to take advantage of two popular strategies that once yielded married couples increased Social Security benefits in retirement.

 

Effective May 2016, married couples will be prohibited from employing the “file-and-suspend” and “restricted application for spousal benefits” strategies, which had previously allowed one spouse to delay receipt of his or her earned Social Security benefits while the other spouse collected income from unearned spousal benefits.  Rather, in the future, these married spouses will be limited to receive only the greater of either his or her own retirement benefits or his or her spousal benefits, not both.

 

Couples that are currently taking advantage of these strategies will be grandfathered in under the old rules and permitted to continue to do so.  Similarly, taxpayers age 62 to 66 may escape the restrictions in the new law when they take the following steps:

 

  1. Request a voluntary file and suspension before April 30, 2016, if born before May 2, 1950
  2. Complete a restricted application before April 30, 2016, if born between May 2, 1950, and January 2, 1954.

 

In light of these changes, current and soon-to-be retirees should meet with their advisors, including accountants and financial estate planners, to consider alternative strategies for maximizing retirement benefits as part of a comprehensive estate plan. While retirees can still begin claiming Social Security benefits when they reach 62, it is most likely advisable to wait as long as possible to maximize monthly benefits.

 

About the Author: Jeffrey M. Mutnik, CPA/PFS, is a director with the Taxation and Financial Services practice of Berkowitz Pollack Brant Advisors and Accountants, where he provides tax and estate-planning counsel to high-net-worth families, closely held businesses and professional services firms.  He can be reached in the CPA firm’s Ft. Lauderdale office at (954) 712-7000 or via email at info@bpbcpa.com.