If you've been appointed as a representative payee—or you're considering becoming one—you may be wondering what type of bank account you need. A rep payee account is specifically designed to manage Social Security benefits on behalf of someone else.
Here's what you need to know about rep payee accounts and whether you need one.
In this article, we'll cover:
- What a rep payee account is
- Who needs a rep payee account
- How rep payee accounts differ from regular accounts
- Requirements for rep payee accounts
- How to open a rep payee account
- How Purple makes rep payee banking easier
1. What Is a Rep Payee Account?
A rep payee account is a bank account that a representative payee uses to receive and manage Social Security benefits on behalf of a beneficiary. The account is titled to show the representative payee relationship.
Representative payees are appointed by the Social Security Administration (SSA) when a beneficiary is unable to manage their own finances due to age, disability, or other circumstances. Common examples include:
- Parents managing benefits for minor children
- Adult children managing benefits for aging parents
- Caregivers managing benefits for adults with disabilities
- Organizations managing benefits for multiple individuals
The rep payee account is where the beneficiary's monthly SSI or SSDI payment is deposited and where the payee manages funds for the beneficiary's needs.
2. Who Needs a Rep Payee Account?
You need a rep payee account if:
- SSA has officially appointed you as someone's representative payee
- You receive Social Security benefits on behalf of another person
- You need to keep the beneficiary's funds separate from your own
Important: Simply helping someone with their finances doesn't make you a rep payee. You must be formally appointed by SSA, which involves an application process and background check.
If you're managing benefits without being officially appointed, you could face legal issues. If someone needs help managing their benefits, contact SSA to start the rep payee application process.
3. How Rep Payee Accounts Differ From Regular Accounts
A rep payee account has some important differences from a standard bank account:
Account titling:
Rep payee accounts must be titled to show the relationship. For example:
- "Jane Smith, representative payee for John Smith"
- "Jane Smith for John Smith"
- "John Smith by Jane Smith, rep payee"
This makes it clear that the funds belong to the beneficiary, not the payee.
Ownership:
The money in a rep payee account belongs to the beneficiary, even though the payee controls the account. The payee is managing the funds in a fiduciary capacity.
Spending restrictions:
Funds must be used only for the beneficiary's current maintenance needs (food, housing, clothing, medical care). Excess funds should be saved for the beneficiary's future needs.
Record-keeping:
Rep payees must keep detailed records of all income and spending, and file an annual accounting report with SSA (Form SSA-6230).
4. Requirements for Rep Payee Accounts
SSA has specific requirements for how rep payee accounts should be set up and managed:
Required:
- Account must be at a bank or credit union insured by FDIC or NCUA
- Account must be titled to show the payee relationship
- Beneficiary's funds must be kept separate from the payee's personal funds
- Account must be in the beneficiary's name (with payee designation)
Prohibited:
- Co-mingling the beneficiary's funds with your personal money
- Keeping benefits in a personal account without proper titling
- Using the beneficiary's funds for your own expenses
- Investing in risky assets without SSA approval
Important: If you currently have a beneficiary's funds in your personal account, you should open a properly titled rep payee account and move the funds. This protects both you and the beneficiary.
5. How to Open a Rep Payee Account
Opening a rep payee account involves a few steps:
Step 1: Get your appointment letter
SSA sends a letter when you're appointed as representative payee. You'll need this document to open the account.
Step 2: Gather required documents
Most banks will ask for:
- Your photo ID
- Your Social Security number
- The beneficiary's Social Security number
- Your rep payee appointment letter from SSA
- Proof of your address
Step 3: Visit the bank or apply online
Some banks require you to open rep payee accounts in person. Others (like Purple) let you apply online.
Step 4: Request proper titling
Make sure the account is titled correctly to show the rep payee relationship. Don't accept a standard joint account—it must be clear that you're the payee, not a co-owner.
Step 5: Set up direct deposit
Once the account is open, update the beneficiary's direct deposit information with SSA so benefits go to the new account.
6. How Purple Makes Rep Payee Banking Easier
Purple was built with representative payees in mind. We understand the unique challenges of managing someone else's benefits.
With a Purple rep payee account, you get:
- Proper account titling that meets SSA requirements
- Easy online account opening without visiting a branch
- Transaction categorization to track spending by type
- Notes and receipt storage for every transaction
- Reports formatted for SSA annual accounting
- Early direct deposit so funds are available sooner
- Balance alerts to help stay under the SSI resource limit
- Separate sub-accounts for dedicated account funds
Managing benefits for someone else is a serious responsibility. Purple gives you the tools to do it right.