Regulations Tomorrow On Application Withdrawal And Suspension

Social Security will publish final regulations in the Federal Register tomorrow to:

... establish a 12-month time limit for the withdrawal of old-age benefits applications, allow one withdrawal per lifetime, and limit the voluntary suspension of benefits for purposes of receiving delayed retirement credits to months for which you have not received a payment. We are making these changes to revise current policies that have the potential for misuse.

This is being done because "Recent media articles have promoted the use of our application withdrawal process as a means for retired beneficiaries to increase their benefits or acquire an “interest-free loan.” Social Security's opinion is that:

This "free loan" is not free. It denies the Trust Fund and the Federal Government the use of these monies and the potential returns on the use of those funds. Moreover, the processing of withdrawal applications uses resources that we could use to serve others. Our nation faces significant challenges resulting from the potential number of future retirees. Current market and economic conditions have exacerbated these challenges

The regulations address benefit suspensions:

We currently allow beneficiaries to suspend past, current, and future old-age benefit payments. Beneficiaries who suspend past payments must repay benefits received during the period of suspension. This policy also has the potential for misuse. Our current policy allows workers to apply for old-age benefits prior to FRA [Full Retirement Age], begin receiving reduced benefits, suspend the benefits retroactively, repay benefits, and earn DRCs f[Delayed Retirement Credits] or the period of suspension. Workers earn DRCs for each month retirement is delayed past FRA up to age 70. As a result, workers who retroactively suspend old-age benefits to earn DRCs receive a higher monthly benefit amount. Because beneficiaries could use retroactive voluntary suspension as a vehicle to repay benefits and then reapply for higher benefits at a later age, we are revising this policy.

Social Security is dispensing with the normal regulatory process to adopt these regulations without allowing a comment period. That is unusual, perhaps unprecedented, for something of this importance.