Dear Liz: I’m reaching out about a notice from the Social Security Administration that came out last year. It asked people receiving Social Security income to name someone as their Senior Designated Representative. It also mentioned that these names must be submitted each year. I think a lot of folks might not be aware of this requirement. Could you clarify— is this a preliminary step or something that’s mandatory? And what happens if I choose not to nominate anyone?
answer: When someone is underage, incapacitated, or unable to manage their Social Security benefits, the Social Security Administration will appoint a representative to manage the funds on their behalf.
This voluntary representative payee pre-designation program lets you choose someone you trust to take over in case you become incapacitated. You can pick up to three individuals as potential payees. You have the flexibility to change your choices anytime, but the Social Security Administration will ask you to check in on it every year, just to ensure you’re still okay with your selections—because, you know, situations and people can change.
Even if your chosen candidates opt into the advanced designation program, that doesn’t guarantee them the position. They will prioritize your preference but will still assess whether the individual is suitable for the role.
Dear Liz: I’ve got $160,000 in a 403(b) retirement plan and I’m 70 years old. I realize that I’ll need to start taking required minimum distributions (RMDs) when I hit 73. Should I move that money into a Roth IRA, or can I just begin taking RMDs from my 403(b) and let the remainder grow?
answer: Yes, you can take RMDs from a 403(b). Moving funds into a Roth IRA is considered a conversion, and the entire amount could be subject to taxation.
Converting later in life could be beneficial if you anticipate that your future RMDs will push you into a higher tax bracket than you’re in now, or if you’re ready to pay taxes upfront for the sake of providing tax-free income to your heirs later. (Roths don’t have RMDs, which means the account can stay intact for your beneficiaries, who generally have 10 years to withdraw the funds.) Keep in mind, though, that conversions might also lead to higher Medicare premiums, so it might be wise to consult with a tax professional before making any moves.
