Posted: Wed Jul 02, 2008 04:45 pm Post subject: Retirement Strategies Published in the Media
Below please find information extracted from SSA instructions circulated inside the agency via something called an "administrative message." I cannot imagine that what's posted below is sensitive material. It nonetheless seemed a good idea to pull out and post only the background and the policy instructions. I've left out the internal operating instructions and other internal stuff. Although Connect is largely focused on matters related to disability, I anticipate that some of the Connect audience does deal with this kind of thing.
There are a couple of undefined acronyms down below:
HI: Hospital Insurance, aka part A of Medicare.
SMI: Supplemental Medical Insurance, aka part B of Medicare
AM: administrative message
Quote:
A. Background
Several articles describing various retirement strategies have appeared in the media. One strategy to increase monthly benefits advises Social Security beneficiaries who elected reduced retirement benefits to withdraw their retirement application, repay all SSA benefits received, and reapply for benefits at age 70 to take advantage of delayed retirement credits (DRCs). This AM provides reminders about policy and procedure relating to the withdrawal of applications after payment.
A beneficiary can request to withdraw their retirement benefits application at any time. The withdrawal process and the effects of the withdrawal should be thoroughly discussed. This includes the amount to be refunded to SSA, the new benefit amount, the effect of withdrawal for others on the record, the timeframe to cancel the withdrawal request, and Medicare and other benefit considerations (Veterans Administration and Railroad Retirement benefits).
B. Policy
• Before SSA can approve a request to withdraw an application, all benefits paid based on that application, including SMI premium deductions, must be repaid. See GN 00206.095 for processing instructions.
• If the conditions for withdrawal are met (GN 00206.005) and the withdrawal is approved (see GN 00206.070), the individual will only have 60 days to cancel the withdrawal request (GN 00206.150) after which he or she will lose any possible entitlement for the period covered by the original application (except for any retroactivity allowed under a subsequent application).
• Be aware of situations where misinformation is alleged and an earlier “deemed” filing date may be established (GN 00204.008).
• If the individual withdraws the application before becoming entitled to Medicare, he or she will need to be aware of the Initial Enrollment Period (IEP) for Medicare (HI 00805.015). Failure to file a subsequent application during the IEP could result in a higher premium.
• If the individual is already entitled to Medicare, a withdrawal may be restricted to monthly benefits only so HI/SMI entitlement is not affected. See GN 00206.020 – Withdrawal Considerations When Hospital Insurance is Involved. The claims representative must ensure that the request clearly states whether or not the claimant wants to include HI coverage in the scope of the withdrawal;
• If the individual is entitled to railroad or veteran’s benefits, see GN 00206.025.
• If a percentage of the monthly benefit was withheld each month for voluntary tax withholding (VTW) purposes, individuals should contact the Internal Revenue Service (IRS) or their tax advisor regarding any tax implications. NOTE: Money withheld for VTW is included in the withdrawal repayment amount.
_________________ I've posted this in my private capacity. What I post might be wrong. Probably, it IS wrong. Any errors are my own. Please don't infer any SSA approval for what I post.
Do you not reckon the most prevalent future retirement strategy will be filing for disability under the grids at age 62 to avoid the reduction in benefits?
Why would the future be significantly different for a file-for-DIB-at-62 strategy? That is, if this going to be a good strategy for the future, wouldn't it also be a good strategy for right now? A few months change in the full retirement age does not to my mind count as a significant future difference.
I'm not aware that there's much of this file-for-DIB-at-62 going on right now. So I'm not seeing how the present predicts the future for this. But see the disclaimer below: I'm probably wrong. And as I've posted before, my crystal ball is cloudy, cloudy. _________________ I've posted this in my private capacity. What I post might be wrong. Probably, it IS wrong. Any errors are my own. Please don't infer any SSA approval for what I post.
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