The Bipartisan Budget Act of 2015, H.R. 1314, signed by President Obama on Monday, November 2nd, ends the “File and Suspend” Social Security claiming strategy for future filers, beginning in at least 180 days, on May 3rd, 2016, or soon after.

While the dust is settling, numerous posts, including our initial alert, are causing confusion.  Sorry about that!  Still, our message then as it is now is to wait on making any recommendations or changes.

Here is what we know today:

1.  Since the House passed the bill last week, a change was made so that anyone already receiving benefits utilizing a combination of “File and Suspend” and “Restricted Application” for spousal benefits or dependent child benefits will not see these payments discontinued in 6 months.  This is a change from what we alerted last week as the bill that passed the House stopped those benefits in 6 months. Whew!

2.  People who are 66 before 180 days of the bill’s enactment (again, about May 3rd, 2016 or soon after), will still be able to file to claim their own benefits and then immediately suspend their own benefits so that their spouse can file a Restricted Application to claim their spousal benefits (i.e., “File and Suspend”) while both earn delayed retirement credits up to age 70.

These people will also retain the right to change their mind and receive a lump sum payment of all the payments they would have received if they claimed at their FRA or later.  Those born after approximately May 4th, 1955 or so, won’t.

As has been legal since the turn of the century, the File and Suspend strategy is great for those who are financially able to implement this strategy, and their advisers had better be on top of the specific dates, or a couple could forego up to $60,000 in benefits.

While payments received using this strategy weren’t intended or accounted for in the overall scheme of things for Social Security, they certainly are important to those who are, will, or may receive these benefits.  Therefore, we appreciate that the final bill approved by the Senate and signed by the President provides a period for those affected to adjust their plans.

3.  Restricted Applications for survivor benefits for widows and widowers are NOT included.

4.  However, Restricted Applications for a divorced spouse who files to begin receiving payments while the former spouse does not or cannot claim their own benefits is not yet clear, though we anticipate this will be resolved in favor of the divorced spouse.  Still, another source has reported that divorced spouses will not be able to receive their spousal benefits until their former spouse claims their own benefits.  More to follow as the dust settles, though this is, of course, applicable to a small percentage of people.

5. Read this one two or three times – In keeping with an eye to minimizing changes for those already or about to receive benefits, Restricted Applications for spousal benefits will still be available for people who are age 62 by December 31, 2015, once they reach their own Full Retirement Age (FRA) by 2020, and whose spouse files for their own benefits. This doesn’t apply to very many people, but for those for whom it does, their adviser had better be on top of this nuance.

6. Restricted Application – the original intend is perpetuated.  People whose spouse has already claimed their own benefits are still able to file for a Restricted Application for their Spousal Benefits and enable their own benefits to accumulate delayed retirement credits until age 70.

While the changes are pretty logical and will make Social Security less complicated…REALLY…some of the articles being published are confusing rather than clarifying. Please advise your clients, family and friends to contact you for guidance and clarification.

We are working closely with our colleagues at Tarkenton Financial to update the Social Security Road Map and software, and we will continue to provide updates as more is learned about the enactment of the bill and for individual guidance.  If we don’t know the answer, we will find out.