Pushing SS Income Into Next Year
Pushing SS Income Into Next Year
Setup: June, 2020 Birthday = 70 y/o
Plan: Delay signing up for SS until late November / early December with retroactive start date to June.
Objective: Start receiving SS payments after Jan 1, 2021, including retroactive amounts. Have Medicare premium deductions start. Have the SS income taxed starting in 2021.
Questions:
1) Any reason(s) this won't work?
2) Anyone among you who has already done this?
3) Downside(s) of doing this?
Plan: Delay signing up for SS until late November / early December with retroactive start date to June.
Objective: Start receiving SS payments after Jan 1, 2021, including retroactive amounts. Have Medicare premium deductions start. Have the SS income taxed starting in 2021.
Questions:
1) Any reason(s) this won't work?
2) Anyone among you who has already done this?
3) Downside(s) of doing this?
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
Re: Pushing SS Income Into Next Year
What's the point? What are you hoping to achieve?
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Re: Pushing SS Income Into Next Year
To specifically control my taxable income in 2020.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
Re: Pushing SS Income Into Next Year
I'm considering the same strategy. I would like to do one last large Roth conversion this year, so we plan to file for Social Security in December, with 6 months of retroactive benefits for myself and 6 months of retroactive spousal benefits for my DH. I'm interested to read the replies to your question because I want to be sure there is no way the retroactive benefits could be considered taxable income in 2019 2020.
Edited to fix typo: 2020, not 2019.
Last edited by Chip Munk on Mon Feb 17, 2020 4:30 pm, edited 1 time in total.
Re: Pushing SS Income Into Next Year
Suggestion: do your Roth conversion ASAP (I did mine for this year on Jan 23; in past years I waited until the last week of December). That way any dividends on the converted amount will be applied in the rIRA and not in the tIRA.Chip Munk wrote: ↑Mon Feb 17, 2020 12:42 pmI'm considering the same strategy. I would like to do one last large Roth conversion this year, so we plan to file for Social Security in December, with 6 months of retroactive benefits for myself and 6 months of retroactive spousal benefits for my DH. I'm interested to read the replies to your question because I want to be sure there is no way the retroactive benefits could be considered taxable income in 2019.
I'm hoping this strategy will work. I have a friend (not a BH) who last year forgot to take SS at age 70 (went 4 months beyond), then signed up requesting the retroactive application to her birth month. Her first two SS payments were 1) the retroactive lump sum and 2) the normal SS payment for the preceding month, both credited to her bank account in the same month.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
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Re: Pushing SS Income Into Next Year
This is my wife's last year on ACA. This might be something I should try if it works.
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Re: Pushing SS Income Into Next Year
Why do you want to reduce your monthly SS benefit for the rest of your/spouses life?Chip Munk wrote: ↑Mon Feb 17, 2020 12:42 pm I'm considering the same strategy. I would like to do one last large Roth conversion this year, so we plan to file for Social Security in December, with 6 months of retroactive benefits for myself and 6 months of retroactive spousal benefits for my DH. I'm interested to read the replies to your question because I want to be sure there is no way the retroactive benefits could be considered taxable income in 2019.
Just wondering...
- Ron
Re: Pushing SS Income Into Next Year
My thoughts exactly. If you were able to manage okay delaying until age 70 then why not skip the retroactive payment in favor of larger monthly checks for the rest of your life?
Re: Pushing SS Income Into Next Year
He's turning 70 in June; his benefit will not increase after that. If he filed three months after he turned 70 they might go back and pay him as through he retired at 69 and 9 months. He should be ok filing at 70 and 6 months.
Re: Pushing SS Income Into Next Year
Ok, I get it now. Didn't even know you could do this.
Re: Pushing SS Income Into Next Year
I'm not the OP, whose case is more clear cut since he's filing at age 70+. In my case, DH has the higher benefit and is waiting until 70. I will reach my FRA this year. Various social security calculators I have run over the past 18 months recommended I file well before FRA, and have DH file a restricted application for his spousal benefit. I decided to wait until my FRA because I didn't want to settle for a reduced benefit, even though it meant giving up a year or more of DH's spousal benefit, and because we wanted to do larger Roth conversions instead.Ron wrote: ↑Mon Feb 17, 2020 1:55 pmWhy do you want to reduce your monthly SS benefit for the rest of your/spouses life?Chip Munk wrote: ↑Mon Feb 17, 2020 12:42 pm I'm considering the same strategy. I would like to do one last large Roth conversion this year, so we plan to file for Social Security in December, with 6 months of retroactive benefits for myself and 6 months of retroactive spousal benefits for my DH. I'm interested to read the replies to your question because I want to be sure there is no way the retroactive benefits could be considered taxable income in 2019.
Just wondering...
- Ron
Delaying until December and filing for retroactive benefits would allow me to do a larger Roth conversion this year but would backfire if it turned out any part of those retroactive benefits were taxable in 2020. (There is a typo in my original post when I stated "taxable income in 2019" -- I'm working on my 2019 taxes at the moment and mixing up my tax years!)
Last edited by Chip Munk on Mon Feb 17, 2020 4:34 pm, edited 1 time in total.
Re: Pushing SS Income Into Next Year
At the expense of next year's taxable income?
This isn't just my wallet. It's an organizer, a memory and an old friend.
Re: Pushing SS Income Into Next Year
Yes, it is a little complicated. This year I want to empty my tIRA (conversion to rIRA) and it pushes me close to the IRMAA cliff. Next year I need to rollover my i401k to the empty tIRA and terminate the i401k plan. This year I can't do a QCD to offset above-the-line income (to avoid the IRMAA cliff) but I can do so next year (age 70.5).
All of this machination - if it goes as planned - should push my can't-avoid-it, IRMAA cliff problem two more years down the pike. It is going to be close, but fortunately the IRMAA cliff rises fast enough I should be able to pull it off.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
Re: Pushing SS Income Into Next Year
UPDATE -
I know some folks were following this a while back.
Filed the application for SS benefits online this morning. Very straightforward and well laid out webpages (lots of them, so set aside 15-20 minutes to do it) with very clear questions mostly answered by checkboxes/buttons most with quick-answer popups to your questions if needed. There is a "Remarks" box included so you can communicate other thoughts to the person reviewing the application.
I chose the latest start date offered (my 70th birthday month/year) and included in the remarks that I want the payments to start after Jan 1, 2021 so that the income is taxable in 2021 and beyond.
Also presumed that I should expect two direct deposits the first month (1 - normal, monthly payment and 2 - retroactive payment back to my chosen start date).
I'll update this thread further when I learn more ...
I know some folks were following this a while back.
Filed the application for SS benefits online this morning. Very straightforward and well laid out webpages (lots of them, so set aside 15-20 minutes to do it) with very clear questions mostly answered by checkboxes/buttons most with quick-answer popups to your questions if needed. There is a "Remarks" box included so you can communicate other thoughts to the person reviewing the application.
I chose the latest start date offered (my 70th birthday month/year) and included in the remarks that I want the payments to start after Jan 1, 2021 so that the income is taxable in 2021 and beyond.
Also presumed that I should expect two direct deposits the first month (1 - normal, monthly payment and 2 - retroactive payment back to my chosen start date).
I'll update this thread further when I learn more ...
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
Re: Pushing SS Income Into Next Year
Update -
Learned today that retroactive benefit payment amounts are paid very soon after the SS retirement application is approved and not on the same schedule as the regular monthly payments (which are made the 2nd, 3rd or 4th Wednesdays of each month).
In order to prevent a large retroactive payment from occurring in December (and messing up my tax planning for this year and IRMAA planning for two years hence), I had to withdraw my SS application today (using form SSA 521 which specifically addresses this sort of issue) and will reapply on Jan 1.
Just a word for the wise.
Learned today that retroactive benefit payment amounts are paid very soon after the SS retirement application is approved and not on the same schedule as the regular monthly payments (which are made the 2nd, 3rd or 4th Wednesdays of each month).
In order to prevent a large retroactive payment from occurring in December (and messing up my tax planning for this year and IRMAA planning for two years hence), I had to withdraw my SS application today (using form SSA 521 which specifically addresses this sort of issue) and will reapply on Jan 1.
Just a word for the wise.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
Re: Pushing SS Income Into Next Year
Final Update -
Success! Filing the SSA-521 in December and subsequent "cancellation of withdrawal" letter created a bit of confusion for me. I FAXed the letter to the SSA on Jan 4 and didn't hear from them so called every week through Jan 22. Gave up at that point in favor of just waiting (maybe COVID has the SSA backed up, too).
Feb 8 I got an email saying mySSA had been updated and sure enough, my application had been approved (and forward-dated to Jan 4) and a "Benefit Verification Letter" was available for download. The letter explains in detail the retirement benefit amount I'll see going forward each month & the day to expect the direct deposit each month (less the Medicare deduction). It went on to explain the retroactive payments (also less the Medicare deduction.)
Feb 9 my bank notified me of a pending deposit which looks like the retroactive amount.
So, in answer to my OP, yes it is definitely possible to push SS income into the next year and not lose benefits for any month, just be sure you count the months correctly.
Success! Filing the SSA-521 in December and subsequent "cancellation of withdrawal" letter created a bit of confusion for me. I FAXed the letter to the SSA on Jan 4 and didn't hear from them so called every week through Jan 22. Gave up at that point in favor of just waiting (maybe COVID has the SSA backed up, too).
Feb 8 I got an email saying mySSA had been updated and sure enough, my application had been approved (and forward-dated to Jan 4) and a "Benefit Verification Letter" was available for download. The letter explains in detail the retirement benefit amount I'll see going forward each month & the day to expect the direct deposit each month (less the Medicare deduction). It went on to explain the retroactive payments (also less the Medicare deduction.)
Feb 9 my bank notified me of a pending deposit which looks like the retroactive amount.
So, in answer to my OP, yes it is definitely possible to push SS income into the next year and not lose benefits for any month, just be sure you count the months correctly.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
Re: Pushing SS Income Into Next Year
Thanks, this was helpful. I'll place in my planning file for when my time comes. This will give me an extra year of conversions
Re: Pushing SS Income Into Next Year
I very much appreciate the updates. I might use your approach when the time comes. Thanks for taking the time to explain the process.
Between the idea And the reality...Between the motion And the act...Falls the Shadow - T. S. Eliot
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Re: Pushing SS Income Into Next Year
Thanks so much! This is an awesome stratgey.
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Re: Pushing SS Income Into Next Year
Agree. Thanks for posting as I may use your strategy when the time comes.
Re: Pushing SS Income Into Next Year
I suppose this could work for a spouse while not 70 but past FRA, could get spousal back to FRA (if within 6 months of it) once the higher earner filed at 70.5.
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Re: Pushing SS Income Into Next Year
Thanks for posting this. (And to @Flobes for the link.) It's exactly the info I was looking for.
I hope to do this the end of the year to get more Roth conversions in 2021.
Birthday month is Dec. OpenSocialSecurity says max time to claim is 69+11 mos (Nov.) From having gone through the process, @BolderBoy, would you think that filing the last day or two of Dec. would do the trick? Or do you recommend waiting until Jan.
@BolderBoy wrote:
I hope to do this the end of the year to get more Roth conversions in 2021.
Birthday month is Dec. OpenSocialSecurity says max time to claim is 69+11 mos (Nov.) From having gone through the process, @BolderBoy, would you think that filing the last day or two of Dec. would do the trick? Or do you recommend waiting until Jan.
@BolderBoy wrote:
But hadn't you already paid Medicare premiums for the months covered by those retroactive payments? Hard to imagine Medicare letting payments slide from June-Dec. So if they deducted for Medicare on the retroactive payments, did they reimburse you?It went on to explain the retroactive payments (also less the Medicare deduction.)
Re: Pushing SS Income Into Next Year
If you absolutely have to guarantee that you don't see any SS income in December, I would wait until Jan 1 and do the application filing online. In practice, I suspect that doing it the last few days of December will likely be just fine. SS is paid in arrears, so your regular December-starting-month payment would not show up until January at the earliest anyway. If you miss the regular January payment cycle, then you'll likely see a retroactive payment for 1 month (December) then your regular SS payment in cycle starting in February.notPatience wrote: ↑Thu Apr 22, 2021 3:09 amBirthday month is Dec. OpenSocialSecurity says max time to claim is 69+11 mos (Nov.) From having gone through the process, @BolderBoy, would you think that filing the last day or two of Dec. would do the trick? Or do you recommend waiting until Jan.
I have no idea why your SS benefit would go down if you wait past age 69+11 months and suspect that is not correct (warning - I am not an expert). I would (and did) wait until 70+ to take SS and am getting the maximum calculated benefit I can get.
@BolderBoy wrote:
It went on to explain the retroactive payments (also less the Medicare deduction.)
Yes, I had been paying those Medicare premiums in my account on the Medicare website (by credit card for the 2% rebate) each month I was waiting post-age-70. The only month in contention was February when my normal SS payments started coming in. I had already paid the Medicare premium for that month so effectively a double payment had been made (by me directly and from my SS benefit withholding indirectly.) A poster in another thread a couple of years ago had mentioned that if you just wait, a reimbursement check for the overpayment will magically arrive and sure enough about 2 weeks after the SS began said check showed up in the mail - I didn't have to request it.NotPatience wrote: But hadn't you already paid Medicare premiums for the months covered by those retroactive payments? Hard to imagine Medicare letting payments slide from June-Dec. So if they deducted for Medicare on the retroactive payments, did they reimburse you?
So for me, the entire process was mostly about being patient. The SS folks did exactly what they should have; it just took time.
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Re: Pushing SS Income Into Next Year
Just to clarify, Open Social Security is not saying that the monthly benefit maxes out at 69 and 11 months but rather that the expected present value of lifetime benefits happens to be highest when filing at 69 and 11 months, given the inputs provided. (Though a one month change in either direction will rarely make a significant difference to the expected PV.)BolderBoy wrote: ↑Thu Apr 22, 2021 11:16 amI have no idea why your SS benefit would go down if you wait past age 69+11 months and suspect that is not correct (warning - I am not an expert). I would (and did) wait until 70+ to take SS and am getting the maximum calculated benefit I can get.notPatience wrote: ↑Thu Apr 22, 2021 3:09 amBirthday month is Dec. OpenSocialSecurity says max time to claim is 69+11 mos (Nov.) From having gone through the process, @BolderBoy, would you think that filing the last day or two of Dec. would do the trick? Or do you recommend waiting until Jan.
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Re: Pushing SS Income Into Next Year
Yes! Sorry that didn't get carried over from my original thread, where I said the difference from 69+11 and 70 was $4 total for lifetime. So clearly not a difference in monthly benefit. Was just curious about the difference.ObliviousInvestor wrote: ↑Thu Apr 22, 2021 11:24 am Just to clarify, Open Social Security is not saying that the monthly benefit maxes out at 69 and 11 months but rather that the expected present value of lifetime benefits happens to be highest when filing at 69 and 11 months, given the inputs provided. (Though a one month change in either direction will rarely make a significant difference to the expected PV.)
Appreciate all your info in my years of reading the forum.
Re: Pushing SS Income Into Next Year
I resurrected this thread because I may do something similar next month and had a question about how to count the retroactive benefit months.BolderBoy wrote: ↑Tue Feb 09, 2021 8:38 pm Final Update -
Success! Filing the SSA-521 in December and subsequent "cancellation of withdrawal" letter created a bit of confusion for me. I FAXed the letter to the SSA on Jan 4 and didn't hear from them so called every week through Jan 22. Gave up at that point in favor of just waiting (maybe COVID has the SSA backed up, too).
Feb 8 I got an email saying mySSA had been updated and sure enough, my application had been approved (and forward-dated to Jan 4) and a "Benefit Verification Letter" was available for download. The letter explains in detail the retirement benefit amount I'll see going forward each month & the day to expect the direct deposit each month (less the Medicare deduction). It went on to explain the retroactive payments (also less the Medicare deduction.)
Feb 9 my bank notified me of a pending deposit which looks like the retroactive amount.
So, in answer to my OP, yes it is definitely possible to push SS income into the next year and not lose benefits for any month, just be sure you count the months correctly.
You eventually filed for benefits in Jan 2021, retroactive for six months. Did your retro benefits cover July 2020 - Dec 2020? Or is the month in which you file part of the retroactive period, resulting in an application filed in January to be retroactive to at most August?
I'm preparing to do something similar but want to be sure the lump sum retroactive payment is not made in 2021. I had considered filing in late Dec 2021, but given what you've posted I may wait until Jan 2022 to file even though it will cost me one month's worth of retroactive benefits. Would an application filed in early January 2022 be retroactive to July 2021 or August 2021?
Thanks for coming back with an update!
Re: Pushing SS Income Into Next Year
For anyone else who may want to know, I found the answer to my question. Paragraph 1513.2 on this page of the Social Security Handbook makes it clear that an application filed in January 2022 could be retroactive back to July 2021. https://www.ssa.gov/OP_Home/handbook/ha ... -1513.html
1513.2 How is the retroactive entitlement date determined?
You are entitled to benefits beginning the first month in the retroactive period that you meet all requirements (except for the filing of an application) for entitlement. For example, suppose you reach FRA in March 2008 and you are fully insured. You do not file an application for retirement insurance benefits until March 2009. In this case, you may be entitled retroactively beginning with the month of September 2008 (six months before you filed an application).
1513.2 How is the retroactive entitlement date determined?
You are entitled to benefits beginning the first month in the retroactive period that you meet all requirements (except for the filing of an application) for entitlement. For example, suppose you reach FRA in March 2008 and you are fully insured. You do not file an application for retirement insurance benefits until March 2009. In this case, you may be entitled retroactively beginning with the month of September 2008 (six months before you filed an application).
Re: Pushing SS Income Into Next Year
Yes. And understand that when you file your application "the clock stops". By that I mean that even if it takes the SSA 5 months to approve your application and start making payments, the retroactive amount would include the additional 4 months it took SSA to get payments started (the 5th month representing the actual payment start month).
So while the SSA will pay retroactively up to 6 months based on your request, they may end up paying more than 6 months retroactively if they need to make up for lost time on the SSA's part.
Bottom line: no one loses benefits due to the internal workings of the SSA. They are very good at what they do.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
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Re: Pushing SS Income Into Next Year
Very interesting thread. There is always something new to learn. I have a birth month late in the year so may want retroactive payments in order to maximize my Roth Conversions, when the time comes.
However this may not always make sense for me and for others, who are interested in Roth conversions during low income years. In many cases, SS is a smaller amount which ought to be paid out by age 70, though possible to delay until age 70.5 without losing benefits. In many cases, RMDs are a larger amount which must be taken by age 72. So Roth conversions may still be attractive while receiving SS payments after age 70 but before the RMDs hit. So for years when one is 69-70, 70-71 and possibly even 71-72 (now receiving RMDs for a few months) one MAY still want to perform Roth conversions.
So this SS retroactive payment strategy ought to be examined year by year, when the tax picture (and income) is clearer.
However this may not always make sense for me and for others, who are interested in Roth conversions during low income years. In many cases, SS is a smaller amount which ought to be paid out by age 70, though possible to delay until age 70.5 without losing benefits. In many cases, RMDs are a larger amount which must be taken by age 72. So Roth conversions may still be attractive while receiving SS payments after age 70 but before the RMDs hit. So for years when one is 69-70, 70-71 and possibly even 71-72 (now receiving RMDs for a few months) one MAY still want to perform Roth conversions.
So this SS retroactive payment strategy ought to be examined year by year, when the tax picture (and income) is clearer.
Last edited by SpideyIndexer on Fri Dec 03, 2021 12:35 pm, edited 1 time in total.
Re: Pushing SS Income Into Next Year
Thanks for that information. I expect it will take a while for them to process my application so it's good to know I won't lose out on any benefits.BolderBoy wrote: ↑Fri Dec 03, 2021 11:28 amYes. And understand that when you file your application "the clock stops". By that I mean that even if it takes the SSA 5 months to approve your application and start making payments, the retroactive amount would include the additional 4 months it took SSA to get payments started (the 5th month representing the actual payment start month).
So while the SSA will pay retroactively up to 6 months based on your request, they may end up paying more than 6 months retroactively if they need to make up for lost time on the SSA's part.
Bottom line: no one loses benefits due to the internal workings of the SSA. They are very good at what they do.
And thanks again for starting this thread and sharing your experience.
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Re: Pushing SS Income Into Next Year
Am I understanding you correctly, if my birthday is in June 20XX, you can file for benefits in December to start payments in the next year including the retroactive payments for the prior year?
Re: Pushing SS Income Into Next Year
Yes, they will pay up to 6 months retroactive. You should verify with SSA.ColoRetiredGirl wrote: ↑Mon Mar 07, 2022 6:49 pm Am I understanding you correctly, if my birthday is in June 20XX, you can file for benefits in December to start payments in the next year including the retroactive payments for the prior year?
Get most of it right and don't make any big mistakes. All else being equal, simpler is better. Simple is as simple does.
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Re: Pushing SS Income Into Next Year
Thank you!GaryA505 wrote: ↑Mon Mar 07, 2022 7:02 pmYes, they will pay up to 6 months retroactive. You should verify with SSA.ColoRetiredGirl wrote: ↑Mon Mar 07, 2022 6:49 pm Am I understanding you correctly, if my birthday is in June 20XX, you can file for benefits in December to start payments in the next year including the retroactive payments for the prior year?
Re: Pushing SS Income Into Next Year
OP here. Yes, but file near the end of December. I filed on December 8th and the SSA was so efficient that they were prepared to pay my retroactive amount by December 20 when I wanted it all to start in January or later. (caused a headache for me but was ultimately fixable)ColoRetiredGirl wrote: ↑Mon Mar 07, 2022 6:49 pmAm I understanding you correctly, if my birthday is in June 20XX, you can file for benefits in December to start payments in the next year including the retroactive payments for the prior year?
When you file your application it goes into the queue and is assigned to a regional service rep. That rep is under great pressure to clear applications as quickly as possible without incurring a backlog of pending applications. Remember that the SSA receives >11,000 benefit applications per day including weekends and holidays.
And file online if you can.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect