Hey Marc!

The following are questions received from advisors across the country.  Contact Marc Kiner at mkiner@mypremierplan.com or 513.218.8505 with any questions.

Topic – Earnings Test

Hey Marc! – My birth date is 4/30/58.  I will retire at 65 and one month 5/31/23, prior to full retirement age.  From 1/1/23 to 5/31/23, I will earn $150,000 earned income.  After 5/31/23, I will never have any further earned income.

  1. If I elect SSA benefits 6/1/23 will I have any reduction in benefits due to the 5/31/23 and prior earned income?
  2. Assuming the answer to question 1 above is no, how does SSA know my earned income ended on 5/31/23?   Clearly my 2023 Form 1040 does not reveal that fact.

Answer – You will inform SSA when filing for Social Security that your monthly earnings from June – Dec will be zero/$0.  The SS application will ask for this information. You can use the monthly earnings test in 2023 instead of the annual test.   Your benefits will not be impacted due to the earnings test.   The monthly earnings test in 2023 is $1,770.

Topic – State Pension

Hey Marc ! – Chloe worked for the state and gets PERA.  Her Social Security report says she would get $746/mo benefit at age 62.   John will get $,2011/mo at age 62.  When we run Social Security Timing, the suggested timing is for John to take his social security at age 70 and Chloe as well. It says she would get $0. Wouldn’t Chloe’s benefit be reduced to a maximum of half her benefit due to PERA? Also, if John predeceases Chloe, does Chloe get John’s social security in addition to her PERA benefit?

Answer – I am assuming Chloe’s PERA is based on wages not covered by Social Security, thus subject to WEP/GPO.

Chloe’s Social Security retirement benefit is reduced due to the Windfall Elimination Provision (WEP).  Based on her benefit amount, I am guessing she has less than 20 years of substantial Social Security covered wages.  If that is correct Bend Point #1 will be 40% instead of 90%.  This can reduce her benefit by as much as $558 in 2023.  It can be less if her AIME is less than $1,115.

The Social Security spousal benefit is reduced by 2/3rds of her PERA pension due to the Government Pension Offset (GPO) (also known as Grumpy Partner Offset).  If John dies before Chloe, she will receive 100% of his Social Security reduced by 2/3rds of her PERA pension.

Topic – SSDI or Retirement Benefits

Hey Marc! – My sister-in-law turned 66 on August 15, 2022 and will reach full retirement age on December 15. She is currently in a residential Mental health facility but will be released tomorrow. She has not applied for Social Security benefits and the psychiatrist is telling her to apply for Social Security disability benefits. She has PTSD and is bipolar. She has not worked since May but has only been under psychiatric care for 3 weeks. They are currently telling her she can’t get a job at this point in time.

Is there any benefit to her in applying for disability benefits or is it too late considering her full retirement age is in 3 weeks?

Answer – I don’t see any reason for your sister-in-law to file for disability.  Disability has a 5-month waiting period which would be June through October.  She would draw disability for 1 month and then it would be converted to retirement at full retirement age effective December.  She can file for retirement to be effective November and it would be reduced 5/9ths of 1% or wait and begin with December with no reduction.  Unless she has been in contact with Social Security prior to November any retirement benefit cannot begin before this month.

Topic – Incarcerated Individuals

Hey Marc ! – Will the wife of an incarcerated ex-husband be eligible for a spousal benefit on her ex-husband’s work history? Would it make a difference if they were not officially divorced?

Answer – Only the individual’s benefit who is incarcerated are suspended.  Others entitled on their record will continue to receive payments.  If they were not officially divorced the spouse is not eligible for benefits unless the worker had filed for benefits and they are only suspended because of his incarceration.  If he had not filed before going to jail she will not be eligible because he never established his application.

Topic – Restricted Application / Lump Sum

Hey Marc! –  I took the NSSA program last June and was on your open forum last Monday.  Last Thursday I had a couple come to me with a “situation”.  His dob is 10/21/1953 and her dob is 9/15/1954.   They have had mixed messages from SS. They asked if he could draw the spousal benefit off her SS if she files.  I told them I thought he could but she has to file first.  He would collect spousal until he turns on his age 70 benefit next year in November.  I am not sure this is the restricted application, just filing for spousal benefit.   So for the next year he should get one half of her SS benefit and she gets her full benefit by filing, right?  It is still all a little confusing when the facts start flying with other people’s numbers.  I would appreciate any guidance you can provide to confirm or correct my thoughts.

Answer – you are correct.  He can file a Restricted Application for a spousal benefit.  They can both file at the same time.  His age 70 benefits will begin in October, 2023 and not November as he turns age 70 in October.  Consider the following strategy:

  1. Wife files for her benefits in November 2022, effective in May, 2022.
  2. Husband files a RA in November 2022, effective in May, 2022.
  3. Husband files for his own benefits at age 70.

They both receive lump sum checks.  Both applications can be filed online.  We can assist with the online filing.  Fee is $250 for both applications.

Have a great weekend.

Topic – Benefit off Ex

Hey Marc! – I have a client who is going to be 65 in Jan. She’s divorced and no longer speaks to her ex. He’s an immigrant, but has worked long enough to get SS and is a little older.  He is already receiving his benefit. Let’s say his benefit is $1,000 per month and she’s entitled to 50%.  If she claims off ex-spouse now, prior to claiming hers, can she switch to her own benefit at her Full Retirement Age? And will SS give us the information on what is available off ex-spouse?

Answer – She must take her own Retirement benefit when she files due to Deemed Filing.  She was not born by 1.1.54 and cannot file a Restricted Application.  Deemed Filing requires an individual to receive all eligible benefits when filing.  Generally, an individual will receive their own benefit and a spousal boost if applicable. She should contact SSA for information on benefit off ex-husband if necessary.   SSA number is 800.772.1213. 

Topic – Restricted Application and Lump Sum Opportunity

Hey Marc! – I recently received my SS Advisor certificate and I have a client that has a question about social security. The client is 69 and his wife is 74.  He plans to take his social security at 70.  With the Restricted Application is she able to switch and file on her spouse’s benefits?

Answer – She cannot switch as she has been receiving benefits for over a year.  The Do Over is not available.  Also, he is not receiving his benefits, so a spousal benefit is not even payable.  When he turns on his SSB, she might be eligible for the spousal benefit boost.  HOWEVER,  HE SHOULD file a Restricted Application and claim a spousal benefit off her record.  He was born by the magic birthdate of January 1, 1954.  He should make the RA effective 6 months ago resulting in a nice lump sum check.  Do not delay.  We can assist with the application.  Our fee is $250.  You will be a hero in the eyes of your client with this strategy.

Topic – Widow Benefit – COVID Death

Hey Marc! – had a client inquire on behalf of a neighbor who recently lost her husband to COVID. The surviving spouse was told by SS that she in entitled to receive her SS benefit AND his because he died from COVID and they have been paying her both benefits since April.  My bet is that someone at SS made a mistake, and that SS will come calling for a repayment of benefits. I can’t imagine cause of death being COVID would change what a surviving spouse is entitled to receive. Am I right?

Answer – SSA is incorrect.  There is no exception for COVID deaths.  However, she is probably receiving a benefit off deceased husband’s record to bring her up to a full widow benefit.  So, in essence, she is receiving her benefit and an additional benefit off deceased.  I guess, SSA is correct in some way.  Ugh!  Mar

Topic – Divorce Spouse Benefit and GPO

Hey Marc! – Had a call yesterday with a client who is quite confident her SS amt off her ex-husband’s record is stronger than her own. She does not know if her X-has filed or what the amount would come to. 

How do x-spouses find out in that scenario?  Also, she is receiving a state pension.  Does GPO apply?

Answer – She should contact SSA to determine amount of benefit off ex-husband.  If divorced less than two years, ex-husband must be receiving a benefit before she can claim off his record.  She will need to supply a divorce decree and probably a marriage certificate to support 10 years of marriage.  Of course, GPO, (Grumpy Partner Offset), will apply reducing benefit off ex by two-thirds of state pension.

Topic – SS Myths

Hey Marc ! – I am delivering a SS presentation at our firm’s annual holiday client brunch (500 people – mostly retired and approaching retirement age). I would like to design a “MYTH BUSTERS” style presentation around SS.

If you have a moment, what are the top SS MYTHS that I can “de-bunk/bust” for the audience? 

Answer – Five myths are below.

Myth – The nice SS representations at the local office will provide advice and guidance.

Answer – No, the representations will take your application but not provide advice or guidance. 

 

Myth:  Social Security is broke.  Congress stole all the money from Social Security.

Answer:  Social Security has 2.8 trillion dollars in US Treasury bonds.  As the funding decreases they will cash in the bonds.  They are fully funded through 2034.  If nothing is done SSA will still have money coming in (i.e. FICA tax and income tax collect on Social Security benefits) but only enough to pay 80% of benefits.

 

Myth:  Social Security computes your benefit using you last 5 years of earnings.

Answer:  Social Security uses your highest 35 years of earnings to computer your benefit.  They use 35 years in the computation even if you don’t have 35 years of earnings.

 

Myth:  You must notify Social Security at age 65 even if you are not filing for benefits or Medicare.

Answer:  You do not have to contact Social Security to tell them you are not filing.

 

Myth:  I will never collect all the money I paid into Social Security.

Answer:  You will be paid all the money you paid in taxes in about 4 years if you file at your full retirement age.

Topic – Taxation of SSB

Hey Marc ! – I just wanted to get your take on the potential tax impact on the COLA increase related to people being taxed more and how that could we impact distributions from their investment portfolios etc. question can you give me some commentary on the impacts of this change? 50% versus 85%.

Answer – Unfortunately, the taxable amounts are not indexed for inflation so as benefits go up folks are subject to their Social Security being taxes or taxed at a higher rate.  It is all dependent on their other income, so your question is more of a tax advisor question.

Topic – Common Law Marriage After Divorce

Hey Marc ! – My sister-in-law lives in Columbus Ohio. She divorced from her husband many years ago and she was married to him for 8 years at time of divorce.

After the divorce they stayed together.  According to her, there was common law marriages in Ohio at the time, and though they were divorced they stayed together for several years and filed joint tax returns.

Her husband or should I say Ex-husband died 20+ years ago when he was in his 40’s and she is now 63.

Question – Is there a potential survivorship benefit? Or is it cut and dry that she is not because she was not married for the 10-year requirement. Her local office quickly told her she is not entitled to a benefit.

Answer – Actually, there is no time limit for a common law marriage.  The recognition of common law ended in Ohio in 1991.  The issue your sister-in-law has is the divorce.  She will need to show the common law continued and they held themselves out to the public as married after their divorce.  Certainly, filing as a married couple will help.  What other documentation does she have?  Things like mortgages or rent contracts or any other documentation will help.  It doesn’t hurt to file and get an official determination.

Topic – FRA and Effective Start Date

Hey Marc ! – If a client’s birthday is 8/2/1956, is his FRA effective start date of 66-4 months in December or November?

Answer – FRA is December.  If he had been born 08/01/1956 FRA would be November. 

Topic – Retirement Benefit / Surviving Ex-Spouse Benefit Options

Hey Marc ! – Quick question.  I have a client who will be turning 62 in January.  SS retirement benefit is around $750, and she makes around $16,000 a year income.  Her ex-husband is deceased.  They were married over 30 years.  His death PIA is over $3,000 per month.  Ex-husband had not filed for SSB before he died.  The plan is for her to file for retirement benefit at age 62 and then switch to the survivor benefit at FRA.  Is this doable?? 

Answer – Yes, she can take her own at 62 and switch to the surviving divorced ex-spouse benefit at her FRA for survivor benefits.

Topic – Survivor Benefits / SSA Report

Hey Marc! – Thanks so much for sharing your knowledge and expertise in today’s meeting.  I just wanted to follow up with a quick note to see if you’d been able to determine the name of the form or report I would have clients ask for when they go into the office (or call in) that details their potential survivor benefit amount.  I get nervous accepting just a verbal amount when advising clients on decisions regarding lifetime income streams!   ….. not that I think a SS rep could ever be wrong, but…. 😉 

Answer – It is called the Benefit Matrix.

Topic – WEP / GPO on Inherited N/C Pension

Hey Marc! – Can you clarify for me. 65 female is drawing survivor benefit from her deceased husband. She remarried after age 60 to a man that has non covered pension and when he retired he included survivor benefit for her on his pension. Will GPO apply to her current survivor benefit from deceased husband or her own work history which will be greater at age 70 if her current husband passes away?

Answer – She did not work for the government, so she is not subject to WEP or GPO. 

Topic – Social Security Terms

Hey Marc! – Does SSA ever define terms like COLA, Credits, Earnings Record, FICA?

Answer – SSA just issued a blog defining these terms.  Link.

Topic – Restricted Application – Divorced Spouse

Hey Marc ! – I know in the NSSA® class in Kansas City you said that someone could still do a Claim and Suspend (really means Restricted Application!) on a Divorced spouse.

I think I had it come up recently at a SS workshop, asking if a person could do a Restricted application on a Divorced spouse.

Answer – Assuming they meet the magic date of 01/01/1954, a divorced spouse can file a restricted application on their ex-spouse’s record.  If divorced for 2 years or more the ex-spouse doesn’t even have to be receiving a benefit.

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