Social Security Updates to File and Suspend

As you’ve most likely heard, major changes are coming to Social Security that will go into effect by the end of April 2016.

What exactly do these changes entail?

The updates to Social Security will affect your client’s ability to utilize the file and suspend and restricted Social Security strategies, which were popularly used to maximize clients’ combined benefits. The budget, which included language designed to close these loopholes, was negotiated and passed by Congress and signed by the White House in the fall of 2015.

What will change in eMoney?

To keep your plans and simulations as accurate as possible, we’ve updated the Social Security simulation in eMoney to reflect this change. Here are a few updates we’ve made:

1. The ability to file and suspend in the future has been removed.
2. In addition, the system will check if a client meets the criteria to be grandfathered into the old laws and, when applicable, give you access to a new field. This field allows you to designate that this client has performed a file and suspend strategy prior to the deadline.
3. Finally, if a client is eligible and applying for a restricted spousal benefit, their spouse must either be currently filed and suspended or be collecting their own retirement benefits.

The new File and Suspend field is defaulted to “No” for all clients. This may cause a reduction in your social security projection compared to before this update.  Advisors should check this field as needed and change the answer for those clients who have filed paperwork to file and suspend. We felt this was the most conservative approach we could take to ensure social security projections were not inadvertently too optimistic.

How should I let my clients know?

Here is some recommended language you can use to communicate to your clients. Feel free to copy and paste the text and send to your clients to ensure they fully understand the implications this will have on their retirement planning.

If you have any questions about how to update your client’s Social Security information, refer to our Social Security FAQ or give us a call at 888-362-8482.