
INSIGHTS FROM OUR NATIONAL TAX OFFICE	NOVEMBER 9, 2015

The End of File and Suspend

With President Obama's signature of the Bipartisan Budget Act of 2015 on November 2, 2015, the death knell was sounded for a Social Security claiming strategy called "file and suspend."

The act included a delayed effective date of "at least 180 days after the date of enactment" before the ability to voluntarily "file and suspend" Social Security benefits is no longer allowed. Therefore, anyone who has reached the age of 66 on or before April 30, 2016, (some others writing about this change have used May 1, 2016; we will need the IRS to give guidance on the actual date) will be allowed to use the old rules and voluntarily make the decision to file for Social Security benefits and then immediately request suspension of any payment, whereas younger, future applicants will not have that ability.

How It Works

While the "file and suspend" claiming strategy is not for everyone, and one needs to take into account more than just financial considerations when deciding to use the strategy, the ultimate benefit for a married couple is that the claiming strategy allows spousal benefit payments to begin for a husband or wife without either person taking full Social Security benefits. The spouse who applied for Social Security suspends their benefits, thereby allowing the non-applicant spouse, typically not qualified to receive direct benefits or not currently wanting to apply for their own benefits, to receive current spousal benefit payments. And, an added bonus is that the applicant spouse accrues larger future benefits, equal to 8 percent per year, until they start taking benefits or reach age 70.

Deadline Approaching

If you or your spouse will be at least 66 years of age on or before May 1, 2016, and have not started taking Social Security benefits, it would be wise to at least consider if the "file and suspend" claiming strategy would benefit your personal situation. In addition, if you are 66 and just recently started receiving Social Security benefits, there may be an opportunity, depending on the amount that has been received, to withdraw the original application and repay the benefits received to allow a fresh start for consideration of the "file and suspend" claiming strategy. A withdrawn application, with proper repayment of benefits, will be treated as though the application were never made. In either case, you must decide and act before May 1, 2016, and the sooner the better.

Contact your Eide Bailly professional for additional information.

Eide Bailly's National Tax Office serves as a resource for clients to help analyze complex tax issues related to business decisions. Our professionals are committed to helping clients stay informed about tax news, developments and trends through various specialty areas, including cost segregation studies, wealth transfer, state and local taxation, international tax, IRS controversy and procedures, R&D tax incentives, tax-exempt organizations, tax legislation, accounting methods and pass-through entities.

855.889.5508

eidebailly.com/tax

NationalTaxOffice@eidebailly.com

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Eide Bailly LLP and the author do not assume responsibility for any individual's reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique before recommending the technique to a client or implementing it on the client's behalf. To request reprints of this publication, send a written request to RequestReprints@eidebailly.com. © 2015 Eide Bailly LLP.