Social Security Switching to Direct Deposit for Benefits
Is it true that the Social Security Administration will no longer mail monthly checks to beneficiaries? If so, how will people receive their benefits?
Paper checks will be abolished for all federal benefits, including Social Security, eventually, but people who currently receive checks will have some extra time to adjust to the new rules. Individuals who apply for Social Security, Veterans Affairs or other federal benefits on or after May 1, 2011, will have to select an electronic payment method -- either a debit card that will be reloaded each month or direct deposit to a bank account. The direct deposit option, which is safer than a check and involves no fees, is the best option for most people. But current beneficiaries who receive monthly checks will continue to receive their benefits in that form until March 1, 2013. After that, they must select an electronic payment method.
Even though current Social Security beneficiaries have nearly two years to sign up for electronic payment, it’s a good idea to make the change sooner to avoid the last-minute rush. ”We’re encouraging that group of people not to wait until March 2013,” says Walt Henderson, director of the electronic funds transfer strategy division for the U.S. Treasury Department. To sign up for direct deposit of your Social Security benefits, have your bank’s routing number and your account number ready (you can find it on your checks), and go to the Treasury’s GoDirect.org Web site. “It should take less than five minutes,” he says.
If you’d like personalized attention, call the Treasury’s electronic payment helpline at 800-333-1795. Your bank can also help you make the change. “We’ve reached out to banks and they’re very eager to convert people over to direct deposit, and they can help a person identify the routing number on their check,” says Henderson. He recommends discussing the new payment options with elderly relatives and assisting them, if necessary, to make the switch to direct deposit before the 2013 deadline.
Although here are no set-up or maintenance fees with the Direct Express debit card, you will pay 90 cents for ATM withdrawals beyond one free withdrawal per month (in addition to any fees for out-of-network ATMs). You’ll also be charged $1.50 for each transfer made from the debit card to a checking or savings account. See the Direct Express Web site for more information about the card fees.
The government hopes to save about $120 million per year by switching from paper checks to electronic payment of these federal benefits, and it expects to save 12 million pounds of paper in the first five years.
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