FF&F News & Events

Social Security Changes, Are Your Retirement Plans Foiled?

Social security card with statements.; Shutterstock ID 90287281; PO: DF-112612-ss-money-2Written by Richard Chaffiote, Peter DiPaola, Crystal Lee

On November 2, 2015, President Obama signed the Bipartisan Budget Act of 2015 that includes significant changes to social security. These revisions to the law affect two well-known “strategies” or “options” many couples have utilized in order to maximize the amount of social security benefits that they will receive in their lifetime.  The strategies are referred to as “file and suspend” and “restricted application for a spousal benefit.”  The revisions take effect on April 30, 2016.


“File and suspend” increases social security claim options for married couples by allowing them to take advantage of spousal benefits and delay retirement credit. Typically, the higher wage earner in the couple, who is at full retirement age (FRA), could file for his or her own social security benefits and then immediately suspend those benefits while the spouse files for spousal benefits.

A spouse cannot claim a spousal benefit unless the main beneficiary claims first. This strategy allows one spouse to claim a spousal benefit while the higher wage earner suspends his or her benefits.   The higher earner’s benefits will continue to grow at 8% per year until the age of 70. This enables the spouse who files for spousal benefits to delay receiving retirement benefits on their own records and also allowing his or her benefits to grow at 8% per year until the age of 70.  This current strategy to file and suspend will expire after April 29, 2016. Anyone who has already filed and suspended or who does so by April 29, 2016, will be able to benefit from this strategy on an ongoing basis into the future.

In addition to this, a married individual who had reached full retirement age could file a “restricted application” for spousal benefits after the other spouse had filed for retired worker benefits. This allowed the individual to collect spousal benefits while delaying filing for his or her benefit, in order to accrue delayed retirement credits.


On April 30, 2016, this strategy will be no longer available, the worker will still be able to file and suspend but no one can collect benefits on the worker’s earning record during the suspension period. Also anyone who files and suspends on or after April 30, 2016, will no longer be able to request a lump sum payout of suspended benefits.


In order for both spouses to take advantage of the current file and suspend option, they must both:

1. Reach their 66th birthday or FRA by April 29, 2016


2. Make sure their benefits are suspended in time

In order to take advantage of the lapsing “restricted application” strategy, one or both spouses must be age 62 by the end of 2015. That would allow one of the spouses to retain the right to claim spousal benefits only at 66, allowing his/her own retirement benefit to continue to grow up until age 70.  Those who are younger than 62 by the end of 2015 lose the right to claim spousal benefits only.  That means when they claim Social Security, they will be paid the highest benefit to which they are entitled, whether on their own record or as a spouse.

If you are concerned about how the new Social Security rules might impact you, feel free to contact us with your questions at 212-245-5900 or info@fffcpas.com. Proper planning does pay off and FF&F can assist you in making the right decisions.

Peter DiPaola, CPA, is a Tax Manager at Farkouh, Furman & Faccio with over 16 years of experience. He holds a BBA in Public Accounting from Pace University. Since joining FF&F 6 years ago, Peter has worked with a range of clients including manufacturers, oil and gas companies, transportation companies, attorneys and investment advisors. Peter specializes in state and local taxation of Corporations and Partnerships.

Richard Chaffiotte, CPA, CFP, is a Tax Manager at Farkouh, Furman & Faccio. He has a B.A. in Business Administration from St. Michael’s College and over 20 years of experience. Since joining FF&F, Richard has worked with and specialized in High Income and High Net Worth Individuals. His experience includes Individual, Partnership and Corporation tax returns.

Crystal Lee is a Tax Manager at Farkouh, Furman & Faccio with 10 years of experience in accounting. Crystal earned dual Bachelor’s degrees in Accounting and Finance at the University of San Francisco. She has worked with a diverse group of clients at FF&F, including clients in real estate, investment banking, and lawyers. She specializes in High Net Worth Individuals, Family Limited Partnerships and Closely Held Partnerships.