Social Security Ends Payback Option

May 16th, 2011  |  Published in Social Security  |  4 Comments

Last year I wrote about how you could take social security early and still receive the full benefit. The IRS has caught on to that option and is has established rules that keep it from being a viable option. The Social Security Administration published rules that limit the time period for beneficiaries to withdraw an application for retirement benefits to within 12 months of the first month of entitlement and to one withdrawal per lifetime. The SSA stated that it is changing its withdrawal policy because recent media articles have promoted the use of the current policy as a means for retired beneficiaries to acquire an “interest-free loan.” However, this “free loan” costs the Social Security Trust Fund the use of money during the period the beneficiary is receiving benefits with the intent of later withdrawing the application and the interest earned on these funds. The processing of these withdrawal applications is also a poor use of the agency’s limited administrative resources in a time of fiscal austerity — resources that could be better used to serve the millions of Americans who need Social Security’s services. Although it would be nice to have the payback option this does seem to be a smart move by the SSA.