In a bitterly divided Congress and the continuous bickering that’s been going on between the Republican controlled Congress and the Obama Administration, the lightening speed of this legislation becoming the law came as a shocking surprise to most people. In any case, new Social Security rules are the law now. In general, the law impacts spousal and dependent benefits. At a high level, the idea is that a spouse or other dependents should get Social Security benefits on a worker’s record only when the worker himself is taking benefits. But like all government rules, the devil is in details. Here are some salient features of this law. Pay close attention to the dates:

File & Suspend Provision

A person can still file and suspend ( and allow his eligible spouse take spousal benefits on his record while waiting his own benefits to grow) if he has attained full retirement age on or before 05/01/2016. What’s the logic behind this date? For one, it’s 6 months from the date this legislation was signed into law by the President. For others, go figure. Keep in mind that the full retirement age is based on a person’s date of birth. For those who made it to this date, I say congratulations for winning the lottery. And for those of us who are younger by  a day or more, I would say tough luck my friends.

Restricted Option

The restricted option (whereby the spouse of a person taking benefits can opt for only spousal benefits while waiting for own benefits to grow) also went through changes. According to new rules if you’re 62 or over as of 12/31/2015, the restricted option is available to you. What’s the logic behind this date? Make up one of your own. I guess some of those who will miss out on file and suspend can possible go for restricted option.

Ex-spouse Benefits
Under certain conditions an individual could claim half of the Social Security benefit on an ex-spouse’s record while letting his own benefits grow till age 70. Similar to restricted option, one can benefit from this approach if he/she is 62 or over as of 12/31/2015.

Dependent Children Benefits
As you may know, subject to family benefits limit, each eligible dependent of a Social Security recipient is eligible for half the benefits of a parent (higher of the two if both parents are eligible). Going forward dependent benefits will only be available when parent is collecting except if the parent filed and suspended on or before 05/01/2016. This is probably the most important date in my view.

Rules That Didn’t Change

• No change to survivor benefit rules. Thank god.
• No change to delayed retirement credit. The supposedly risk free 8% annual increase to delayed benefits is still available. Coupled with the compounding effect of COLA (Cost of Living Adjustment), it’s a very important option for people who’re likely to live longer.

Social Security Maximizer™ & New Rules

Obviously, this impacted the Social Security Maximizer™. We worked feverishly (including over the weekend, thank you GoWealthPro team) to implement all the changes that are part of this law. The challenge was to make sure the old rules work for those who are still eligible while new rules should apply to the rest. In any case, we’re happy to inform you that we’ve upgraded the software with new rules. Yippy…..

I hope you find this update helpful.

Dinesh