If you've been appointed as a representative payee for someone receiving SSI or SSDI, setting up the right bank account is one of your most important responsibilities. Getting it wrong can create problems with the Social Security Administration—and potentially put the beneficiary's funds at risk.
In this article, we'll cover:
- What a compliant rep payee account looks like
- How to title the account correctly
- Common mistakes that cause SSA problems
- What records you need to keep
- How to manage funds properly
- How Purple simplifies rep payee compliance
1. What Makes a Rep Payee Account Compliant
A compliant rep payee account meets all of SSA's requirements for managing someone else's benefits. The key elements include:
- Proper account titling that shows the rep payee relationship
- Separation from your personal funds so there's no co-mingling
- FDIC or NCUA insurance to protect the beneficiary's money
- Clear record-keeping for SSA's annual accounting requirement
Important: Using your personal bank account for a beneficiary's funds—even temporarily—violates SSA rules. The beneficiary's money must be kept completely separate from your own at all times.
2. How to Title the Account Correctly
Account titling is where many rep payees make mistakes. SSA requires the account to clearly show that you're managing funds on behalf of someone else.
Acceptable titling formats include:
- "[Your Name], Representative Payee for [Beneficiary Name]"
- "[Beneficiary Name] by [Your Name], Rep Payee"
- "[Your Name] FBO [Beneficiary Name]" (FBO means "for benefit of")
The account should not be:
- In your name only
- A joint account with equal ownership
- Titled as a custodial account (like a UTMA)
When you open the account, bring your SSA appointment letter. This document proves your authority to act as representative payee and helps the bank set up the account with correct titling.
3. Common Mistakes That Cause SSA Problems
Avoid these errors that can trigger SSA scrutiny or put you at risk:
Co-mingling funds
Never deposit your own money into the rep payee account or use the beneficiary's funds for your personal expenses. Even small mix-ups can raise red flags.
Incorrect account type
A standard joint account doesn't meet SSA requirements. The account must clearly indicate the rep payee relationship, not shared ownership.
Missing documentation
If you can't show where the money went, SSA may question your management. Keep records of every transaction.
Spending on non-allowable items
Rep payee funds must be used for the beneficiary's current maintenance needs: food, housing, clothing, medical care, and personal comfort. You cannot use funds for your own benefit.
Ignoring the annual accounting
Each year, SSA requires rep payees to file Form SSA-6230, reporting income and expenses. Missing this deadline can result in removal as payee.
4. What Records You Need to Keep
Good record-keeping protects both you and the beneficiary. For each transaction, document:
- Date of the purchase or payment
- Amount spent
- Category (housing, food, medical, clothing, etc.)
- Description of what was purchased
- Receipt when available
Keep records for at least two years, though holding onto them longer is wise. You'll need this information for your annual accounting report and in case SSA ever audits your payee activities.
Important: If you manage benefits for multiple beneficiaries, keep completely separate records and accounts for each person. Never mix their funds together.
5. How to Manage Funds Properly
Once your account is set up correctly, follow these ongoing practices:
Use funds only for the beneficiary's needs
Current maintenance comes first: rent, utilities, food, clothing, and medical expenses. Once those needs are met, remaining funds should be saved for the beneficiary's future needs.
Don't accumulate excessive savings
While saving some money is appropriate, large balances may raise questions about whether the beneficiary's needs are being met. For SSI recipients, savings above $2,000 can also affect eligibility (ABLE accounts are an exception).
Keep the beneficiary informed
When appropriate, involve the beneficiary in decisions about their money. They have a right to know how their funds are being used.
Report changes to SSA
If the beneficiary's living situation, income, or needs change significantly, report it to SSA. Your payee responsibilities may need to adjust.
6. How Purple Simplifies Rep Payee Compliance
Purple was designed with representative payees in mind. We understand the unique challenges of managing someone else's benefits while staying compliant with SSA rules.
With a Purple rep payee account, you get:
- Correct account titling that meets SSA requirements from day one
- Online account opening without needing to visit a branch
- Automatic transaction categorization to simplify record-keeping
- Notes and receipt storage attached to each transaction
- Reports formatted for SSA annual accounting (Form SSA-6230)
- Early direct deposit so benefits arrive up to 4 days sooner
- Separate sub-accounts if you also need a dedicated account for back pay
Managing benefits for someone else is a serious responsibility. Purple gives you the tools to do it right—and the peace of mind that comes with knowing your account is compliant.