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A restricted application Social Security tip for 132% higher benefit

 

 

Q: The recent changes to Social Security have altered my retirement strategy. I am eligible for restricted application; I was born in 1952. But I am confused about how to maximize my wife’s and my benefits now. I will retire in May at 64. My wife is 60. She is retired. I want to maximize my benefit and wait till 70 to file. How can I use restricted application? — Steve Kegler, Detroit

A: Assuming your wife has her own benefit based on her work record, she should file for benefits at least by the time you turn 66, though she may file earlier depending on your personal needs and circumstances, says Joe Elsasser, a managing member with Sequent Planning.

Then, when you turn 66, be sure to restrict your application to only spousal benefits, he says.  “And when you turn 70, you’ll want to switch to your own benefit, which will be 132% larger than it would have been at 66,” says Elsasser.

 

Q: I live in France and receive through direct deposit my U.S. military pension and my U.S. Social Security.  The IRS wants me to fill out a FinCEN Form 114. What is that form, and do you see any problems if I fill it out? Jacqueline St. Pierre, Chanville, France

A: First, FinCEN stands for the Financial Crimes Enforcement Network, which is bureau of the U.S. Treasury. Its mission is to safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.

As for the form in question, the Treasury Department says this on its website: A U.S. person that has a financial interest in or signature authority over foreign financial accounts must file a Foreign Bank and Financial Accounts (FBAR) report if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. In your case, that would be FBAR (Foreign Bank Account Report FinCEN 114).

The Treasury Department further states that an FBAR filer is considered an individual when he/she personally owns (or jointly owns with a spouse) a reportable foreign financial account that requires the filing of an FBAR for the reportable year. Individuals may electronically file their FBAR through the BSA E-Filing System without registering for an BSA E-Filing account.

For more, visit https://www.fincen.gov/forms/bsa_forms/fbar.html.

Bottom line. Experts can’t emphasize enough the importance of filing this FBAR. “It is required for all foreign bank or investment accounts that this person may own or is a signatory on,” says Robert Keats, president at KeatsConnelly.

Keats also notes: The filing is due by June 30 every year; filing this form will not affect your income taxes on Form 1040 at all other than checking a box at the bottom of Schedule B that indicates that you own foreign accounts; and failure to file can result in substantial penalties.

 

Robert Powell is editor of Retirement Weekly, contributes regularly to USA TODAY, The Wall Street Journal and MarketWatch. Got questions about money? Email rpowell@allthingsretirement.com.

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