Color of Money Chat Transcript: Yes, the IRS is sending debit cards with your stimulus money

May 28, 2020

Welcome to a weekly discussion about your money hosted by Michelle Singletary, nationally syndicated personal finance columnist for The Washington Post.

This week, Michelle took your questions on when you can expect to receive your stimulus payments and why you might still be waiting for a check if you receive social security, disability, or survivor benefits.

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Thanks for joining me today. 

As always, I would love to receive your Thursday Testimonies about any good financial news. 

Let's get started.

Hi. i received a plain white envelope with "Money Network Cardholder Services" in the return address window. Inside is a Visa Debit Card. the paperwork says "Enclosed is your Economic Impact Payment Card." Is this the Trump money or a scam? It also states "By using this card, you have agreed to the Terms and Conditions...." there is a website and 800 number, but i dont want to activate anything just by looking . . . . if this is the Stimulus money, they get a D- for marketing....

Yes, the IRS said it was sending about 4 million stimulus payments via debit cards. I'm hearing from a number of people who think it is a hoax. Can you email me with a scan of your letter and the envelope? Send it to colorofmoney@washpost.com. And if others were worried it was a scam, please email me as well. I'm working on a column about it for Monday. 

Here's the link from the IRS about the debit cards.

Millions of people will get their Economic Impact Payment by prepaid debit card

 

1. Even though we have made electronic payments for estimated taxes, they still sent a debit card. I prefer to have the money in our checking account so I can still earn miles with my credit card as I use the funds (we pay off the CC bill in full every month). Can the funds be easily transferred from the debit card to a bank account? 2. Related question: My husband and I have different last names. Even though my husband's SS number is the primary one on our IRS account, they used my last name for both of us on the debit card (i.e. Joe Wifelastname and Mary Wifelastname, as opposed to Joe Husbandlastname and Mary Wifelastname). So obviously it will not match any ID of his, nor our joint checking account, where we have our two different last names. I doubt our bank will let me transfer the funds, even if that is possible, since the names do not match.

This whole stimulus distribution has come with a lot of glitches and misunderstandings. Here's the thing, the IRS says it can't use banking information to send a stimulus check if it was connected with a taxes owed payment. It can and did use banking information if you were receiving a refund by direct deposit. 

I know.

Crazy.

Then to get more payments out the IRS and Treasury decided to issue debit cards, which are also causing confusion because rightfully so people are skeptical that it's a scam or mistaken the letter and card as junk mail. As for the last name issue, if you can just transfer all the money to your account and then move it however you like. 

I was inspired by last week's chat to begin preparing a death book for my wife. I'm wondering about the power of attorney. Everything we own except my Federal TSP is in a family trust - and I've designated beneficiaries for that, plus TSP has its own forms to fill out when I die. I can't see the need for a power of attorney under these circumstances. Can you or one of the chatters tell me why I'm wrong?

Wow. I love that you acted so quickly to create a "death book" or letter of instruction to let folks know certain information to handle your estate. 

If you missed last week's chat read the transcript here to catch up on the conversation about putting together all your documents in a "death book." 

If I were you I would talk to an attorney to discuss if you need a power of attorney, which by the way ends when you die. 

So really the power of attorney is there in case for example someone may need to pay your bills if you become incapacitated. 

In 2000, my wife and I bought a minivan. While expensive, it turned out to be a great vehicle we kept for 15 years - room for 7 and lots of room in the back for hauling stuff back from Home Depot. When we finished paying for it, we decided to keep paying ourselves the monthly car payment into what we called the "Car Fund." We have continued to pay into the car fund ever since, even into retirement, so we can buy our cars for cash. So far it has allowed us to buy two new cars and two used cars for our children. While I supposed we could have used it to pay down our mortgage, car loans have a much higher interest rate. The car fund has allowed us to buy our cars without taking out loans, saving us thousands of dollars.

I love this testimony. And a "car fund" is something I've recommended often. It's exactly what my husband and I have done. As young adults starting out we took out car loans. But once we paid off those cars we also began saving the car payments. The result: We have not had an auto loan for more than 20 years. Every vehicle we've purchased since the late 1990s has been with cash. Since we don't need the car money for years, we also invest the money helping it to grow to afford better used cars. When it gets close to the point when we will buy the car -- a year or two out -- we take the money out of the investment fund and put in a money market fund/car fund.

I HATE debt as many of you know so not having a car loan for decades is just so wonderful. 

Today we received in the mail a Visa Debit card with an insert calling it an "Economic Impact Payment Card" on behalf of the U.S. Treasury. Big giveaways: Our income level is above that of those receiving checks/cards and they fashioned a weird combination of my husband's and my (different) last names. The sender is Money Network Cardholder Services out of Omaha, NE. Shame, shame, shame on them because some folks are not going to spot the hoax! (Signed) She/her, Pennsylvania

Well you may be happy to find out this is not a hoax. The card is legit. The bank name is legit. And it could be that the IRS used your income from 2018 to determine your payment and if so you may have qualified for the money. 

Here's more information from the IRS on the EIP (economic impact payment): Start using your EIP Card

 

You may have answered this already, sorry in this case. If I skip RMD this year as allowed, am I obliged to withdraw this amount next year or in the future? Or is it exempt forever? I'd rather not. Thanks!

No worries. And for the record I never get tired of answering the same question because it's new to you. Please always ask if you need to know about anything. 

So, no you do not have to make up the missed 2020 required minimum distribution from your retirement account. 

For those wondering about what this is all about read this:  

Coronavirus stimulus package offers relief for retirees with RMD waiver and penalty-free 401(k) withdrawals

I was working on mine as well this weekend! "People say" to go through all your financial stuff at the start of the new year, but I'm starting to think Memorial Day weekend may be a better time. I'm always pretty exhausted after the autumn / winter holidays, and Memorial Day weekend seems like a reasonable time to think about death.

Anytime is a good time so just pick the best time for you. I typically do such things around now because I spring clean every year. You should see my office right now -- a HOT MESS. But it feels so good to organize things. I'm working on my death book too. I realized we have our wills, etc. in a book but I still needed to update with current bank accounts, passwords, insurance etc. We are also switching our personal representative to our now 25 year old daughter (we have an older person to work with her). 

But folks please do this. If will be such a gift to your family to have all the important information and directives in one place. I may even start on my obit. I know that sounds morbid but since I'm often the one asked to write the obituary, it would have helped to have some direction from the person I'm writing about. 

My mom is going to be tickled pink that this has become the default name on the chat. I actually call mine (still in the early construction phase) The Book of the Dead after Ancient Egypt. But it was a little too much to type on the fly. Mom cleans and organizes closets and drawers for fun and to relieve stress. The book was just another project in that mode after she got stuck as executor for two of our less organized relatives.

You need to email me (colorofmoney@washpost.com) because I love that this has become a topic thread too.  Yeah, it totally morbid but the "death book" is really the "Live After" book because it's not for you. It's for the folks who have to tend to your affairs while grieving and that's so hard when you can't find things and have to spend so much time going through mounds of paperwork. 

Michelle, I thoroughly enjoy your columns and chats, filled with common sense. I know that you are active in your church and wondered what your position is on tithing during times of layoffs and tight budgets.

If you believe in tithing then you know it's not situational. You tithe on your "increase" or income no matter where it comes from -- during good times and bad. Now, for many people who are not believers this may sound crazy. People who are unemployed need every dollar they might argue. But this is an act of faith and it can seem illogical. Tithing is also a personal decision. I would not judge anyone for however they decide on this issue. 

I got my stimulus payment by check last week, so I'm not affected, but that IRS press release about the stimulus debit cards shows that they made a lot of odd choices. The names "Money Network Cardholder Services" and "MetaBank N.A." sound exactly like what a fraudster would use. And the clickthrough site is just as bland.

I totally agree with you. The letter and everything about it should have included language to reassure people this was legit and coming from the IRS. SMH!

No question, but a testimony. After reading your chats for over a year, I finally made the leap in Jan 2020 to work with a fee-only financial advisor. After doing the math, I am saving so much more by using a fee-only advisor than someone working on a commission. And together we’ve come up with a plan for me to maximize my retirement to hopefully be able to retire before 60 along with my SO who’s 12 years older than me - mortgage-free, debt-free, and with healthy life-happens and emergency savings. I thought I was on track, but the advisor showed me some ways and areas that I could be more resourceful to get to my goal of an early retirement. So I would suggest to anyone who is able to, work with a fee-only advisor because they are worth their weight (even though you pay a larger fee upfront than what a commission-based advisor would offer). Thank you, Ms. Singletary! (She/her, 42, Ellicott City, MD)

Thank you for this. And for following through. That's huge and put you on a path that aligns with your desire to retire when you want!

Same problem with the debit card. After I figured out it wasn’t a scam (thanks to this chat for being aware that the payment might come that way. I (the wife) am listed as the taxpayer in our returns (because I was paying quarterlies when we got married and our accountant was worried that if we filed with my husband as primary, the payments wouldn’t get credited correctly). My husband is a Junior. So on the payment card, we are listed as Susy Jr (not our real names) and Sam A Smith Jr. (Which really made me feel like this was a fake credit card.) So they picked up Jr as our last names. After talking my bank, they said to go ahead and activate the card online, and then try to do a ACH transfer. The bank said they cannot pull money from the cards directly. Another catch is that you apparently cannot transfer all the money at once. So after a few days of trying off and on, I think I was able to transfer $1000 over to my bank. Will take 24 hours or so, to go thru. Will let you know if that doesn’t work. Fun. NOT.

Thanks for sharing this. I get that they were trying to get money out faster but the number of glitches is just crazy. Plus in general I hate these types of cards just for the reasons you list. Just give me my money in a check or direct deposit!

Thanks for mentioning that you are thinking of writing your own obit. As a former obit writer for several newspapers, I am convinced that this is a great idea for everyone to do. There may be things about yourself that no one else would know to include. I've written obits for several family members. I wrote my mother's in the weeks before she had heart surgery. She lived for seven more years, but I wanted to write it then just in case, and there were things she wanted included that I wouldn't have known. As she approached death four years ago, I sat down with her and read it to her for her approval. She rolled her eyes at my mention of the fact that she was not a good cook. It may sound morbid, but writing an obit is a great way to honor someone you love and to learn more about that person. I treasure the memory of spending time with my mother during this process and it greatly helped to ease my grief. Sorry that this is not a money issue, but it is an important end-of-life issue to consider.

First, thanks for your work as an obit writer. I had the responsibility of writing obits while I was interning and it was one of the best assignments because I could share stories about some amazing people. 

And this chat is about money and everything connected to it, which includes the "death book." If time is money, doing this assignment saves you time and a lot of worry that you are missing the very things the deceased would want people to know. I hope my kids include this line that I use all the time but makes them roll their eyes every time. 

When they say something that I don't like when we are playing around I say, "Yo momma" as a comeback. But then I would follow up with, "Wait, that's me!" to which they groan. I think it's so funny! I want that in my obit. 

Afternoon Michelle - A somewhat Thursday testimonial - I'm thrilled about it, regardless! While I lived in DC I saved a ton, so when I relocated to South Carolina with my parent's "wedding money" gift (they said it was earmarked for a wedding but I could use it for whatever I wanted), I bought a house in January. After the house buying and a few furniture and required purchases for the home (i.e. lawnmower), I was down to $2,000 in my savings. Now, 5 months later, I have $7500! I am taking advantage of not having automatic deductions for parking at work, a discount on my car insurance, using almost no gas, and having student loan payments suspended (I'm on PSLF) to save, save, save! I'm planning on becoming a mom by donor next year, so saving everything I can is crucial!

This is totally a testimonial -- not somewhat at all. 

Good for you!

Hi Michelle, I'd be curious to hear what advice (short term and long term) you would offer to Millennials and Generation Z in terms of weathering this crisis, particularly in light of this rencent WaPo analysis. https://www.washingtonpost.com/business/2020/05/27/millennial-recession-covid/ Some practical advice that meets people where they are would definitely be welcome, especially after perusing some of the tone depth commentary, as just one example someone recommended Millennials (who, as stated in the article have the lowest rate of home-ownership) make extra money by renting out the rooms in their non-existent houses!

I hear you. And perhaps the person meant renting out an extra room in an apartment maybe?

The first thing I recommend is figure out a way to cut the cost of housing. And if possible -- recognizing it may not be for everyone -- move back home. If you are in another city, consider moving back to home state so you can live at home even if you have to take a pay cut. Then talk to your parents about not charging rent or charging just a little so you can save, pay off student loans, etc. 

I just had this conversation with my son yesterday. He will graduate from UMBC next spring. My husband and I are encouraging all your children to come home, live with us for several years and save about 90% of their pay. If they do this for four or five years they will have enough or nearly enough to buy a home outright. They won't need to take out a loan for a car when the used ones we gave them die. I'm very tired of people telling young adults that they "need" to live out on their own to learn to be responsible. Sure, eventually live on your own but in the early years -- if possible -- why not give them the freedom on not having to pay all the expenses connected with an apartment so that when the launch they will have a significant amount of savings and/or the ability to buy a home and not have a mortgage for 30 years. That is a game changer. 

Or if parental home is not an option, live with a relative. 

And we parent and relatives should offer space to the young in our family. We have done this and it's a financial game changer. 

 

Hi Michelle, thank you for all that you do! My husband and I are in our early 40s , own a home , no kids. I appreciate your advice on planning ahead for the future. How do you find the right POA to help with setting up a will and all of the important exit plan documents? Is there a specific resource or website you can suggest? We are also federal government employees- would EAP also offer reliable options? We prefer someone local and trustworthy, and googling and searching via yelp feels overwhelming. Unsure where to begin.. Thank you and I hope your family is doing well.

You should consult an attorney who can help you pick the right POA. The POA doesn't set the wills, etc. That's the job of an attorney. But the POA is the person who may have to execute some of your wishes while you are alive. Again, the POA ends when you die. The person who handles your estate is your personal representative or a similar titled position depending on the state where you live.

And the POA needs to be very trustworthy because this person can literally act as if he or she is you! 

Hi Michele, I have $15,000 accumulated for a new car, which I was planning on buying this spring. I am SO GLAD I never got around to buying a new car. In these crazy times, I want that cash right there in my bank account. I can live with my old rattly, squeaky car for another year if I have to.

I hear you. I was about to replace my 14-year old van when the coronavirus crisis hit. But since I'm not driving much, I'm going to wait until next year or the year after. Cash is king right now.

I have a refund from the federal government due for my 2019 taxes. I filed in early April, but have heard nothing. Is it being held up due to the IRS working on stimulus payments instead?

Yes, very likely. But also because the customer service centers where folks would process returns, etc. are shut down because of the coronavirus. 

I heard on the news that those with IRAs do not have to take a disbursement in 2020. I have a non-spouse inherited one. Do you know if this is true? I don't need the money. Thanks

If you are required to take a distribution from a retirement plan this payment referred to as a RMD is suspended for 2020. Check with the financial services company for more details. 

Michelle: My husband received his stimulus check in the first week, I haven't received anything. Am I supposed to my own check/prepaid card or.... Thank you. Sarah

There are so many reason why you may not have gotten yours. But if you qualify you should get it. There is still several million payments that need to be sent. 

I would qualify for the stimulus based on my 2018 return, but not my 2019 and as a result I have not filed my 2019 return. I still see "status not available" on the website. I did find an IRS number and called because we moved since we filed our 2018 return (the number was circulating as a number people were actually picking up, and I verified on the IRS website it was a legit number). They were helpful and updated my address. The gentleman on the phone seemed to know that I would not qualify based on 2019 -- he mentioned my income for that year (I work for the government, so in theory that information would be there?). Anyways, it made me think they are doing something other than looking at your 2018 return, because my income was below 75k then. I'm thinking I'll never see this money. Have you heard of this? Ugh all frustrating.

If you have not filed for 2019, the IRS will use your return for 2018. And the delay for you may be the address issue so glad you got that cleared up. 

For the post about MetaBank sounding like a fraud (as well as anytime you are concerned about a bank name), go to the FDIC's Institution Directory (ID) - https://www7.fdic.gov/idasp/ You enter a bank's name (or part of a name) and it will bring up info about the bank. There you can find the MetaBank is a real FDIC-insured bank in South Dakota.

Thanks for this.

Speaking of car funds, have you put your van to rest yet? ;-)

As you may have just read, nope. My husband is still pushing to let her go. But I'm resisting. I've got a drawer full of duck tape!

I just read your daily Personal Finance email about Soc Sec shortfall being exacerbated by the COVID-19 problem. Not a question, just food for thought: There might be a mitigating factor in that this virus is killing off Soc Sec recipients at an alarming rate. Another year or two of this and there might be such a huge reduction in the number of eligible Soc Sec recipients that it could slow down the depletion of the Soc Sec fund and counteract the lack of action by Congress.

You are right that the cover-19 is hitting older adults harder but even so, the number of death although high have not come close to impacting overall payments percentage wise. It would take millions of deaths in this population to mitigate the Social Security shortfall. 

I'm so worried about losing my social security payments. What is the likelihood of that happening? I will start receiving my payments in a few months.

I don't think you have to worry at all. Social Security will still be able to pay abut 76% of benefits in 15 years without a fix. Such a cut would be hard but the fund is in a crisis but income is still coming in. 

The Michelle-bot uses Fidelity's rule of thumb that you should have x times your salary in retirement savings by age y. It's something I included in my own long term planning spreadsheet when I made it up many years ago. I went and revisited that calculation a couple months ago and noticed a couple things. The targets have moved. In 2014 they were 3x @ 45, 4x @ 50, 5x @ 55, & 8x at retirement. Now it's 1x @ 35, 3x @ 40 (5 years earlier), 6x @ 50 (50% more), 8x @ 60, and 10x @ 67. I've been behind on the old metric (in part because of the dot.com collapse & ensuing grad school), but I'm catching up. And now I discover I'm even further back. Presumably the change is based upon larger cost trends. It's a bit disheartening, but my (conservative) projection says I will ultimately catch up by retirement. But the other thing is, it does not account for a pension. I do have a small one. Is there a way I can modify the formula to include it?

Retirement planning is so hard because as you point out costs escalate and you have to make decisions based on information you can't possibly know -- when will you die, for example.

But don't be scared off by the benchmarks just them to push yourself. 

If you haven't tried my new retirement calculator please do. I goal is to help people start somewhere. 

Here it is: Trying to plan for retirement during the pandemic? We made a bot to help you.

 

 

I'm writing this on Saturday morning, where I've just spent the past hour gathering financial data and putting the numbers into your retirement bot. I'm lucky enough to currently have some job security as a federal employee, and I can't figure out where annuities fit into your bot. According to the bot, I have 36% of what I need to comfortably retire, but when I use OPM's Federal Ballpark Estimator, I'm at a whopping 262% of my current salary as retirement salary. Two variables: the bot doesn't have a spot for expected annuities, and the Federal Ballpark Estimator doesn't take my spouse's income (or expenses in retirement) into account. What else can I do to get more accurate numbers? Thanks for all you do!

So the bot is intended as a first step. We didn't add Social Security or pension because it just made things more complicated. But we do mention and encourage people to factor in Social Security and/or a pension. 

You didn't exactly what we hoped. You used the bot to crunch numbers and then added what you need to get a full picture of where you are. I would say based on your number crunching you are in good shape.

We paid extra on our mortgage loan for 22 years and paid it off 8 years early. And since I have a travel business and no income right now....I am REALLY glad my house is paid for (and that I drive a late-model, paid-for car)!!!

This is exactly why I encourage people to pay off their mortgage as soon as they can. Thanks for sharing and so glad you can breathe a little easier. 

OP states: "I would qualify for the stimulus based on my 2018 return, but not my 2019 and as a result I have not filed my 2019 return." But actually it's a credit based on 2020 income, right? So even if the payment were received today, and the OP submitted their 2019 return tomorrow, if their 2020 income exceeds the limit they'll need to repay it [or it will be credited against a refund] when they file next year. Right?

Wrong. People do not have to pay back the money if they IRS used an earlier return in which they qualified. Yes, it's true the money is an advanced credit but the law was written so that people don't have to pay taxes on the money or pay it back if their 2020 income would not qualify them for a payment. 

Also the money does not reduce any refund due in 2020. 

If you get stimulus money and you qualified based on your 2018 or 2019 return but wouldn't for 2020, you do not have to pay it back. 

Lynn - F/64 / Arlington - my father passed last year and I am co-executor of his very well organized estate. He had his book filled with important details as well as his wishes for obit and funeral arrangements. (He even prepaid his funeral.) Included a few jokes as well to lighten things a bit. HOWEVER, he forgot about some accounts and insurance policies that he had for many years. I found a LOT of "lost money" and only because he saved the statements for some and mail later came in from some others. Even though we had his email and passwords, online statements are a HORRIBLE idea. They mix with junk mail and his email accounts changed over time. Without PAPER statements all of this would have been lost. I refuse to allow any of my financials go to digital no matter how many times they insist on it. I even closed one account because everytime I logged in online, I was "tricked" into authorizing electronic notifications and eliminating the more costly (for them) paper statements. Please warn your readers. Thank you.

Thanks for sharing. And I think the answer is both. Do online but keep some paper statements as well. I do both. 

Michelle, thank you answering my question about POA and finding the right attorney. How do you find the right attorney without going through google, yelp? We live in Alexandria, VA. I'm learning so much from you, thank you!

Ask friends and family members. Ask co-workers. If that doesn't turn up any recommendations go to the local bar association, which has lawyer look ups. 

I actually have a prepaid legal service through my job and I used the attorney in that plan. 

I am retired, have no children. Last year I started donating $100.00 monthly to a 529 account for a one year old child of my neighbor and friend. My intent is to continue doing this until my death and/or continue this commitment afterwards by leaving instructions in my will. Is there anything else I need to do to ensure my support continues after my death?

Just be sure you have a will and have designated someone to continue your amazing gift. Kudos to you. 

A couple of weeks I sent you a Thursday Testimony to celebrate my boyfriend's accomplishment of finishing reimbursing his personal loans and credit cards, thanks to your helpful advice. Well yesterday a water valve broke at our place and we had to call a plumber to fix it. My boyfriend insisted to pay half the bill because he now has some savings that was put in a Life Happens Fund. He told me: Who knew saving money would feel so good? He's a changed man! Thank you so much!

Wow. How wonderful. 

Is it testimony as in in court or in church?

Lol. Could be both but mostly like in church. It was a reader's idea to call it Thursday Testimony time and a way for people to share good financial news -- paying off debt, helping others or that they took some advice I offered and it turned out the way I knew it would because well, I'm pretty smart about these things :)

So sorry I have to go. Please know I read every single question and comment. 

But running to write about this debit-card fiasco. 

Take care and see you back her next week. 

I’ve been reading your column for years and have always valued your advice. I’m sure it’s been tough hearing from so many people who are hurting but it sure has been comforting having someone on our side to get the facts straight. Thank you! Take care of yourself <3

Okay, had to get the one in before I go.

Thank you!

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Michelle Singletary
Michelle Singletary writes the nationally syndicated personal finance column, "The Color of Money," which appears in The Post on Wednesday and Sunday and is carried in more than 120 newspapers.

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