If your child qualifies for Supplemental Security Income (SSI) and receives a large lump-sum payment, the Social Security Administration (SSA) may require you to open a dedicated account. This guide explains what dedicated accounts are, who needs one, and how to set one up correctly.
In this article, we'll cover:
- What a dedicated account is
- Who is required to open one
- How to open a dedicated account
- What the funds can and cannot be used for
- What happens if funds are misused
1. What Is a Dedicated Account for SSI?
A dedicated account is a special type of bank account used to manage past-due SSI benefits paid to a child under 18.
SSA requires this account when the child is owed more than six months' worth of SSI at once—usually due to a delay in processing the application.
Example: If a child is approved for SSI after 9 months of waiting, SSA may pay all 9 months at once. That back pay must be placed in a dedicated account.
The purpose is to ensure these funds are used only for specific expenses that benefit the child, not for everyday living costs.
2. Who Is Required to Open a Dedicated Account?
Dedicated accounts apply when:
- The SSI recipient is under age 18
- The child is owed more than 6 months' worth of SSI
- You are acting as their representative payee
SSA will notify you by mail when a dedicated account is required. You must open the account before SSA will release the funds.
Important: If you receive a letter from SSA requiring a dedicated account, don't delay. The back pay cannot be deposited until the account is properly set up.
3. How Do I Open a Dedicated Account?
You can open a dedicated account at any FDIC-insured bank, credit union, or financial institution. Here's what the account must include:
- Only SSI back pay—no other funds allowed
- No debit card access or checks unless approved by SSA
- SSA must be able to monitor the funds
The account title must include:
- The child's name
- A note indicating it's a dedicated account
Example title: "John Smith, a minor, by Jane Smith, representative payee—Dedicated Account for SSI"
Bring the SSA letter requiring the dedicated account with you when opening the account. Many banks are unfamiliar with the term, so you may need to explain.
4. What Can Dedicated Account Funds Be Used For?
These funds are limited-use and cannot be spent on day-to-day expenses.
Allowed uses include:
- Medical treatment not covered by insurance
- Education or job training
- Personal needs related to the child's disability
- Special equipment or therapy
- Assistive technology
Not allowed:
- Food or housing
- Routine clothing or school supplies
- Entertainment or toys not related to the disability
Important: You must keep records and receipts of all spending. SSA may review how the money was used during your annual payee report.
5. What Happens If You Don't Use the Funds Properly?
If you misuse the money or fail to report how it's spent, SSA may:
- Require you to repay the funds
- Remove you as the representative payee
- Delay or stop future payments
SSA requires annual reports on how dedicated account funds were spent. Staying organized and keeping documentation is essential.
How Purple Helps Representative Payees Stay Compliant
Managing a dedicated account alongside regular SSI benefits can be complicated. Purple makes it easier.
Custom Accounts and Labeling Purple makes it easy to open separate accounts for day-to-day SSI and special-purpose funds, keeping everything organized.
Deposit Tracking Our app clearly labels SSI deposits and back payments so you know exactly what went where.
Digital Receipts and Notes Upload and tag receipts for dedicated account purchases to keep everything organized for SSA reporting.
Companion AI Support Ask Purple Companion questions like:
- "Can I use dedicated funds for a wheelchair?"
- "How do I title the account?"
- "What receipts should I keep?"
Open the Right Account, Stay in Compliance
Dedicated accounts are required for certain SSI back pay, and using them correctly is essential for staying in good standing with SSA. With proper setup and careful record-keeping, you can manage these funds confidently.