Delay SS & file retroactively for additional Roth conversion?

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Topic Author
Puppy Lip Soup
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Joined: Mon Sep 11, 2017 4:03 pm

Delay SS & file retroactively for additional Roth conversion?

Post by Puppy Lip Soup »

Help! I need the wisdom of the Bogleheads!

Tax question: Hubby turns 70 February 27, 2022. Can he delay filing for SS till Jan. 2022 and file retroactively for payments due in 2021? We want to push the SS benefits/taxable income into 2022. Would this allow him to do a Roth conversion in 2021, as well as a QCD (after August 27th when he is age 70 1/2)?
By filing for delayed benefits retroactively, will he be entitled to the entire 10 months of benefits due for 2021? I will not be filing for SS for until 2023.

Our 2022 goal: squeeze out one more large Roth conversion while also making a large multi-year charitable contribution.

Thank you for your advice.
LeeMKE
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Joined: Mon Oct 14, 2013 9:40 pm

Re: Delay SS & file retroactively for additional Roth conversion?

Post by LeeMKE »

I'm unable to figure out what your post is saying.

What are retroactive benefits? If he files Jan'22 for age 70 benefits beginning Feb'22, there are no SSI benefits paid in 2021.

Roth Conversion in 2021 must be complete by 31DEC21. This will create taxable income on your 2021 return.
A QCD in AUG22 will reduce taxable income and RMDs in 2022 (but RMDs may not be required until age 72 at the moment. Check on this, because I don't have RMDs but know some pandemic adjustments were made and may still be in place.)

From the little we have in your post, it looks like you have 2021 to make Roth Conversions and 2022 will be a different calculation with the addition of SSI payments for most of the year.

For others reading along, this is why we urge folks to look into Roth Conversions in your late 50s. Some of us need almost 10 years to effectively set up our portfolio. Best to start looking early, so you have enough runway to get things set up before RMDs and SSI begin.
The mightiest Oak is just a nut who stayed the course.
BogleTaxPro
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Re: Delay SS & file retroactively for additional Roth conversion?

Post by BogleTaxPro »

The Social Security Administration will be able to pay retroactive benefits covering up to six months prior to the month you file the application. However, if you choose to collect retroactive benefits, you lose any delayed retirement credits you earned for those months.

If you receive the retroactive payments in 2022, they will be counted as 2022 income.
Topic Author
Puppy Lip Soup
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Re: Delay SS & file retroactively for additional Roth conversion?

Post by Puppy Lip Soup »

I apologize for the confusion.

Hubby files for SS benefits retroactively in Jan. 2023 even though he turns 70 on Feb. 27th 2022. The objective is to do the following:

1) Push SS income into 2023 so we can do one last large Roth conversion in 2022.
2) Do a QCD Aug 27th 2022 (when hubby turns 70 1/2) to allow a greater Roth conversion.

Does this make sense? Is it a good strategy?
Will SS pay the full 10 months delayed of benefits in Jan 2023?
BogleTaxPro
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Re: Delay SS & file retroactively for additional Roth conversion?

Post by BogleTaxPro »

Puppy Lip Soup wrote: Sat Oct 23, 2021 10:34 am Will SS pay the full 10 months delayed of benefits in Jan 2023?
No, the most you can get retroactively is 6 months.
https://www.aarp.org/retirement/social- ... ctive.html
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BolderBoy
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Re: Delay SS & file retroactively for additional Roth conversion?

Post by BolderBoy »

Puppy Lip Soup wrote: Sat Oct 23, 2021 10:34 amWill SS pay the full 10 months delayed of benefits in Jan 2023?
Probably not.

I managed to get 8 months of retroactive payment but it was due to a fluke in the way the system works and folks shouldn't count on that fluke working for them.

Basically, you can wait to file for benefits until age 70 + 6 months and not lose benefits. But for most folks, every month delayed beyond that is a lost month of benefits.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
Topic Author
Puppy Lip Soup
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Re: Delay SS & file retroactively for additional Roth conversion?

Post by Puppy Lip Soup »

Thanks for the advice, BogleTaxPro and Bolder Boy. Looks my strategy won't work. Dang!
heyyou
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Re: Delay SS & file retroactively for additional Roth conversion?

Post by heyyou »

I received a small retroactive spousal SS benefit when I filed for fully delayed SS, which did push that delayed benefit into the year when it was received, not the year when it was earned. Your plan looks good to me (as a fan of Roth conversions), but do not trust my untutored tax advice.
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Eagle33
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Re: Delay SS & file retroactively for additional Roth conversion?

Post by Eagle33 »

Puppy Lip Soup wrote: Sat Oct 23, 2021 10:34 am I apologize for the confusion.

Hubby files for SS benefits retroactively in Jan. 2023 even though he turns 70 on Feb. 27th 2022. The objective is to do the following:

1) Push SS income into 2023 so we can do one last large Roth conversion in 2022.
2) Do a QCD Aug 27th 2022 (when hubby turns 70 1/2) to allow a greater Roth conversion.

Does this make sense? Is it a good strategy?
Will SS pay the full 10 months delayed of benefits in Jan 2023?
Doing a QCD before the year your husband turns 72 (start of RMDs) will not reduce your income. That pre-RMD QCD would just be tax free gift to charity. It does reduce his IRA balance.
Topic Author
Puppy Lip Soup
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Re: Delay SS & file retroactively for additional Roth conversion?

Post by Puppy Lip Soup »

"Doing a QCD before the year your husband turns 72 (start of RMDs) will not reduce your income. That pre-RMD QCD would just be tax free gift to charity. It does reduce his IRA balance."

I realized that as soon as I hit 'Submit.' As you stated, it will still help reduce his IRA balance and accomplish our charitable contribution.
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