We recently had a new member open a Rep Payee account. The letter that he gave us from the Social Security Administration stated "because of a new law you must set up a separate account in a financial institution before we can pay the past-due benefits."

We have for many years opened separate accounts titled John Smith Rep Payee for Jane Smith. My question is: does anyone know about this "new law"? I would like to be able to reference it when we get push back from people that want to co-mingle funds with their own or that of the beneficiary.

SSA's Guide for Representative Payees was updated in May, 2017. To my ears, it doesn't sound much different than it did before; i.e. it certainly encourages separate accounts, but also acknowledges that benefits for people in the same family can be deposited in the same account.

As for a "new law?" The rule of thumb is to ask the person who's telling you about some law or regulation to provide the cite; i.e. call your SSA office and ask them. Regardless, if your bank requires a separate account, that's the way it is...

Ken, is this titled correctly?

Isn't Jane the owner and the rep payee an alternate title. I didn't think this fell under the CIP guardianship rules so we would need to CIP Jane, not John (unless he has an account of his own).

I've always required:
Jane Smith - sole owner
Alternate name, John Smith Rep Payee,
CIP Jane Smith only.

Page 6 of the attached publication gives two examples. This is the "banker preferred" version:

“(Beneficiary’s name) by (your name),
representative payee.”

The person entitled to the payment is under a disability. For CIP purposes, the representative payee is the customer.

If you need the citation to support Ken's statement regarding CIP, you will find it here:

Sec. 1020.100 Definitions.

(c) Customer. For the purposes of §1020.220:

(1) Customer means:

(i) A person that opens a new account; and

(ii) An individual who opens a new account for:

(A) An individual who lacks legal capacity, such as a minor;

Here's where I'm struggling . . . and maybe I'm being too technical.

As cited above, a customer is one who opens an account for one who lacks capacity.

The SSA; however, expressly states that a Rep Payee may not sign legal documents (https://www.ssa.gov/payee/faqrep.htm see "What are some examples of what a payee can not do") A signature card is a legal document so the beneficiary is the one opening the account, not the Rep Payee.

I've always taken that to mean the beneficiary is our sole client, the Rep Payee is akin to an authorized signer.

Am I splitting hairs too thin?

Of course the Rep Payee signs the signature card and opens the account. He or she is your customer for CIP. The SSA's statement about the RP not being able to sign legal documents is to illustrate that the Rep Payee isn't an attorney in fact or other agent of the beneficiary, and can't sign anything other than the account opening documents on behalf of the beneficiary. The Rep Payee, for example, can't borrow money on behalf of the beneficiary, can't sign a lease for him/her, purchase life insurance, etc.

All the RP can do is open the account and manage the beneficiary's SSA or SSI payments deposited to the account.

This may be what your customer was talking about - a "dedicated" rep payee account that needs to be kept apart from the regular monthly benefit. We found out about it when a new customer asked to open a dedicated account and I googled the term:
https://www.ssa.gov/ssi/spotlights/spot-dedicated-accounts.htm

Nice contribution.