My husband filed and suspended before April 30, 2016 at age 66. He is turning 70 in October and wants to apply to reinstate the benefits that he voluntarily suspended and obtain a lump sum payment for those 4 years. Can he apply online? How many months in advance of his 70th birthday in October? Is the entire lump sum subject to income tax withholding? Thank you.
If your husband filed for and suspended his benefits he won't need to file a new application to start drawing his benefits. His benefits will be automatically reinstated effective with the month he reaches age 70 unless he elects to reinstate them before then. If he elects to do that, he can do so anytime prior to the month he reaches age 70 by contacting Social Security and requesting reinstatement either orally or in writing. Benefit reinstatements can't be done online.
If your husband voluntarily suspended his benefits before April 30 2016 he can elect to reinstate his benefits retroactively to as far back as the first month of suspension. However, by doing so he will lose all of the delayed retirement credits (DRC) that he's earned to date, and his lower corresponding benefit rate may also cause you to receive a lower widow's rate in the event of his death. You and your husband may want to strongly consider using our software to explore your options so that you can choose the best possible strategy.
If you husband does elect to receive a lump sum, it would count for income taxes in the year in which it's paid. For more information about taxation of Social Security benefits, refer to this Social Security website: https://www.ssa.gov/planners/taxes.html.