Social Security ends the interest free loan party

It’s been a great trip while it lasted, but it appears that Social Security will be ending the unlimited withdrawal period, whereby you could pay back social security payments and reset your withdrawals after you’ve already been accepting them for years. Effectively, this was an interest free loan and was a bit of an abuse, but it was a great tactic for higher income earners.

From the Social Security administration’s website:

The agency 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.