top of page


Either write something worth reading or do something worth writing.


Benjamin Franklin


Updated: Apr 15, 2018

If I had a dollar for the number of times I have heard someone tell me that Social Security planning is so "two years ago" or that the claiming strategies were wiped out that made the topic appealing within the realm of retirement income planning, I would be a rich woman. I'll admit that the rules are confusing and, in fact, if you look at them long enough, they can make your eyes cross. If you really want to take the risk of losing your mind, do what I do and comb through SSA's Procedural Operations Manual (POMS); now that's a fun way to spend a Saturday night if you ask me. I am only half way kidding and anyone who knows me will attest to that truth.

Yes, there were significant changes in late 2015 that did impact some crafty strategies that could potentially enhance overall lifetime benefits. Two, to be exact, were the target of the legislation under the Bipartisan Budget Act of 2015. File and suspend and filing a restricted application were accused of being "unintended loopholes" designed to increase the income, particularly of married couples, if they played their cards right. I'm still puzzled to this day as to why these two strategies were made out to be some seedy underhanded use of the system since the Social Security Administration itself published them as viable options, if you were fortunate enough to understand their appeal.

Nevertheless, let me clear up the confusion that continues to pervade consumers and financial advisors alike. If you were eligible but didn't affirmatively elect to file and suspend with the SSA by April 29, 2016, you missed the boat. What does this mean? It means that if I want someone to collect benefits under my record, such as my spouse or my eligible child, I have to file for my benefit before they can do so. Prior to the April 2016 deadline, I could have filed for my benefit (assuming I was at least age 66 at the time), immediately suspended it and continued to let my benefit earn those coveted delayed retirement credits up to age 70, while my non-working spouse, for example, collected a spousal benefit under my record.

Now let's switch gears to file and suspend's partner in crime - the restricted application. First of all, these are not one in the same and second, both didn't meet their demise simultaneously. Here's what you need to know first and foremost. If you have a client or prospect whose birth date falls before January 2, 1954, stop multi-tasking for a moment and give me your undivided attention. These individuals are the ones that are grandfathered into the ability to file a restricted application if all their stars are aligned. "Remind me what exactly a restricted application is", you say?

Let's use me again as the example. Suppose I was born on December 11, 1953. I am entitled to my own retirement benefit estimated to be $2,650 at my full retirement age (FRA) of 66. Let's also assume that I am married and my husband has just retired at age 66 and recently claimed his own benefit of $2,000. If I wait until my FRA of 66, I have the option of filing restricted for 1/2 of my husband's primary insurance amount, or $1,000, and delaying my own to as late as age 70, when my $2,650 benefit would now be worth $3,498 (accounting for 4 years at 8% per year of delayed retirement credits and 0% COLA). So, while I'm letting my own benefit earn a monthly credit for each month past FRA I delay claiming it, I'm collecting $1,000 while I wait in the form of a spousal benefit. The bonus is that I am also securing a far higher benefit to whomever survives between my husband and me than had I just collected my own benefit at age 66.

Obviously, in the interest of brevity, I won't go into the myriad examples of what could happen when only one person meets the requirement or if both do and neither have yet filed. Suffice it to say that each client's circumstances deserve a deeper dive than what I've provided here. But I urge you to know that this opportunity exists for many consumers. And yes, the strategy can potentially do amazing things in terms of creating peace of mind for the survivor and perhaps requiring less of a draw down on other assets saved for retirement.

For more information, visit and read the rules surrounding deemed filing (which is what those of us who were born post-January 1, 1954 fall under). You may find the link to it here: FAQ #4 is the sweet spot for eligible individuals who have the option to file restricted. It may not be for everyone but knowing that filing restricted is an option for some of your clients is most definitely worth exploring as they navigate the waters of retirement.

HLS Retirement Consulting, LLC is an independent consulting firm and is not affiliated with any other company and does not endorse or recommend investment products. Consulting provided herein should not be construed as tax or legal advice. Your clients should always seek guidance from their tax or legal counsel prior to following a proposed course of action.

Updated: Feb 5, 2018

On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (TCJA), the most comprehensive piece of tax reform since the Bush era tax cuts circa 2001-2003. Among the most significant changes affecting individual taxpayers were a lowering of the marginal tax brackets, an almost doubling of the standard deduction, suspension of personal exemptions, and an increase in the child tax credit along with more generous income thresholds to be able to take advantage of the credit.

As a retirement planning practitioner, I was concerned that, after years of being on the proverbial chopping block, the inherited IRA rules allowing non-spousal beneficiaries to stretch distributions over a period based upon their life expectancy would be eliminated and give way to only a 5-year period. Surprisingly, the inherited IRA was left alone and, at least for now, remains intact.

However, much to my chagrin, the Roth conversion was not left completely unscathed under the TCJA. Conversions to a Roth IRA from either an employer-sponsored plan or a traditional IRA have been used over the years as a powerful tax diversification tool. While the converted amount is subject to ordinary income tax upon conversion, in theory, now you have taken a pre-tax retirement vehicle and made at least a portion of it eligible for tax free distributions later by converting to a Roth IRA. Not only is a qualifying Roth IRA distribution tax free, balances in Roth IRAs are not subject to lifetime RMDs AND distributions to beneficiaries upon death may be distributed, in most cases, tax free over many years.

Roth conversions themselves are still alive and well. But under TCJA, the ability to rechactacterize a Roth conversion by October 15th of the year following the conversion was permanently repealed in 2018 and beyond. Recharacterization allows an individual to take more risk per se because the ability to change his/her mind later and send the converted amount plus earnings back to its original home meant that if there was a significant market loss on the converted amount or the individual’s tax situation changed, the conversion could be undone thereby eliminating the taxes due on the conversion.

The fact that recharacterization is no longer permitted doesn’t mean that the Roth conversion isn’t still a powerful tax diversification strategy. It just means that more time and consideration should be given to the potential outcome if circumstances change post-conversion. It may make more sense to wait until closer to year end when one’s tax picture is more clearly defined and less likely to change substantially. Smaller conversions over several years to mitigate the risk of a large tax bill all at once is always an option as well.

A couple of things worthy of mention are these. First, IRS has verbally indicated on more than one occasion that conversions that occurred in 2017 are still eligible to elect to recharacterize by October 15, 2018. So, if you have clients who converted in 2017, it’s a good idea to reach out and make sure that they are comfortable with the decision to convert and have the means to pay the taxes due on the conversion. This is their last chance to get a do-over.

Second, the repeal of recharacterization only extends to Roth conversions and not to amounts contributed to either a traditional IRA or Roth IRA. For example, let’s say I contribute $5500 to my traditional IRA for 2017 only to discover that I was ineligible to deduct it but still meet the income thresholds to contribute the same $5500 to a Roth IRA. I elect to recharacterize my contribution originally made to my traditional IRA to a Roth IRA. The only stipulation is that I also must recharacterize any earnings on the contributed amount with it. My deadline to do this is my tax filing deadline, plus extensions.

Make no mistake. The Roth conversion can still be a powerful tool to add to an overall retirement income planning strategy or as part of a legacy plan. Clients just need to proceed with greater caution in 2018 and beyond.

HLS Retirement Consulting, LLC is an independent consulting firm and is not affiliated with any other company and does not endorse or recommend investment products. Consulting provided herein should not be construed as tax or legal advice. Your clients should always seek guidance from their tax or legal counsel prior to following a proposed course of action.

bottom of page