How to Get Social Security Direct Deposit

Under government-wide rules, paper checks to nearly all federal beneficiaries will end in March 2013.

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Beginning next March, new federal rules take effect requiring the end of nearly all federal checks to consumers, including Social Security payments. Since May 2011, all new Social Security recipients have had to sign up for direct deposit. But now those rules will apply to all recipients.

A direct deposit confirmation notice on a desk with a calculator and a pen.
A direct deposit confirmation notice on a desk with a calculator and a pen.

At the end of September, more than 94 percent of Social Security recipients and 83 percent of those receiving disability and other supplemental payments were already getting them electronically. But with 61.9 million total beneficiaries, that still leaves several million people who must convert from paper to electronic payments over the next several months.

If you already have a bank account, your financial institution can work with you to set up direct deposit. You also can work with Social Security in three ways: by visiting a local Social Security office and completing a direct deposit sign-up form, calling Social Security at 1-800-772-1213, or using the agency's online tools to sign up for direct deposit. If you don't already have an online password with the agency, you will need to set one up. It will then be used to access all of your personalized Social Security information.

There are three preferred ways to receive electronic deposits: to an established account at a federally insured financial institution, to the U.S. Treasury's Direct Express debit card, or to a fee-based electronic transfer account (ETA) at a bank. ETAs are federally insured and were created for people who don't have or don't qualify for a bank account. Social Security payments are protected from third-party garnishments with the most common exceptions being for child support and alimony payments. These rights are retained under direct deposit.

Some recipient payments go directly to third parties such as assisted living facilities. And a small percentage of beneficiaries may opt to have non-bank financial firms receive their money. In terms of costs, ease of use, and consumer safeguards, it's almost always preferable to use a federally insured banking firm that accepts direct deposits.

According to Social Security spokeswoman Dorothy Clark, nearly 2.5 million beneficiaries already get their benefits by using the Direct Express MasterCard debit card. There are no sign-up, monthly account, or overdraft fees. The Treasury says free services include:

• Purchases at retail locations

• Cash back with purchases

• Optional notification of deposits to debit card by phone, email, or text message

• Optional low-balance alert when account balance falls below a certain level

• Unlimited balance inquiries at ATMs, by phone or online

• Cash withdrawals through bank or credit union tellers

• One free replacement card per year

• One free ATM cash withdrawal for each deposit posted to your account each month, provided you use one of the more than 50,000 surcharge-free network ATMs.

Optional services available for a fee include:

• ATM cash withdrawals after free transactions are used in the United States, including the District of Columbia, Guam, Puerto Rico, and U.S. Virgin Islands. Surcharge by owner may apply ($0.90 each withdrawal after free transactions are used).

• Monthly paper statement mailed to you ($0.75 per month)

• Funds transfer to a personal U.S. bank account ($1.50)

• Card replacement after one free each year ($4.00 per card after one free each year)

• Expedited delivery of replacement card ($13.50 each time)

• ATM cash withdrawal outside the United States. Surcharge by ATM owner may apply ($3 plus 3 percent of amount withdrawn).

• Purchases at merchant locations outside the United States (3 percent of purchase amount)

There are a small number of exceptions to the direct-deposit requirements. The primary exception is related to age: Anyone born prior to May 1, 1921, may continue to receive paper checks. Clark emphasizes that these rules are set and overseen by the U.S. Treasury Department, not Social Security. "We just certify the payment. Treasury actually issues it," she says. "If a person comes in and says they don't want direct deposit, we will refer them to Treasury."