Ally to require SSN for benefiaries, points to new FDIC rule

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shawn_lad
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Ally to require SSN for benefiaries, points to new FDIC rule

Post by shawn_lad »

I got an email from Ally stating that according to new FDIC rule, they will now require SSN for beneficiaries.

I find this very disturbing for a number of reasons:
- I did not see the new FDIC rule requiring use of SSN - am I wrong? [see UPDATE below]
- having all my beneficiaries' SSN sitting in Ally database, and if other banks follow them in a bunch of other bank databases, increases SSN exposure of my beneficiaries that much.
- Ally (and other banks that follow them) employees get access to my beneficiaries' SSN.
- Why should I even know my beneficiaries' SSN at all? Some beneficiaries may not even know I listed them, and for others, why am I being forced to ask for their SSN?
- What if some beneficiaries reside outside of US and don't have a US tax id / SSN. How would that be handled? [see UPDATE below]

Even the slow-to-adopt Medicare recently stopped using SSN for identification purposes (Medicare number).

Perhaps a sufficient number of folks pushing back on Ally or FDIC would make them change their mind? :-)

================================= Text of the email =================================

FDIC rule requires us to ask for more beneficiary information

The FDIC has made updates, effective April 1, 2020, to its regulatory requirements for paying deposit insurance. To make sure you receive the maximum insurance coverage you’re entitled to, you’ll need to provide a valid Social Security number or Tax Identification number for each of your beneficiaries. Check out FDIC’s Part 370 Rule, recordkeeping requirements in section 370.4, for further details.

We want to help make sure you’re covered. Update your beneficiary information now, or log in to your account later, select the Profile icon, then Beneficiaries. Select Edit beneficiary to add the Tax ID or SSN to each of your beneficiaries.
...
================================= Text of the email =================================

I believe this is the rule they are referring to

UPDATE: upon closer reading of above link, perhaps I found what Ally is referring to. I see "Appendix B to Part 370: Output Files Structure" says the following:
The unique identifier and government identification are required in all four tables so those tables can be linked where necessary.


Later, table description shows "CS_Govt_ID" field with this description
This field shall contain the ID number that identifies the entity based on a government issued ID or corporate filling. Populate as follows: --For a United States individual - SSN or TIN --For a foreign national individual - where a SSN or TIN does not exist, a foreign passport or other legal identification number (e.g., Alien Card)
--For a Non-Individual - the Tax identification Number (TIN), or other register entity number
This means that other institutions may start following this. I am still not clear on implications for existing accounts that do not have beneficiary information on file. E.g. CD with 3 beneficiaries is no longer insured for $750k if SSN is not on file for them?
Last edited by shawn_lad on Sat Jan 18, 2020 1:24 pm, edited 5 times in total.
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HueyLD
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by HueyLD »

Each bank can have its own rules as long as the rules are not in violation of the law.

If you disapprove of their policy, you can invest with your feet as it is your money.
Perkunas
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by Perkunas »

Did you read the citation they directed you to? It seems pretty clear to me:

"a covered institution must maintain in its deposit account records for each account the information necessary for its information technology system to meet the requirements set forth in § 370.3. The information must include:

(1) The unique identifier of each:

(i) Account holder;

(ii) Beneficial owner of a deposit, if the account holder is not the beneficial owner; and

(iii) Grantor and each beneficiary, if the deposit account is held in connection with an informal revocable trust that is insured pursuant to 12 CFR 330.10 (e.g., payable-on-death accounts, in-trust-for accounts, and Totten Trust accounts)."
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by stan1 »

(iii) Grantor and each beneficiary, if the deposit account is held in connection with an informal revocable trust that is insured pursuant to 12 CFR 330.10 (e.g., payable-on-death accounts, in-trust-for accounts, and Totten Trust accounts).
I don't know if above language is new but specifically calls out electronic record keeping for PoD beneficiaries.

Ally may be a ahead of other financial institutions. I did have to provide SSN for a beneficiary on a non-FDIC account.

The days of trying to protect SSN from bad guys are gone. Just assume the bad guys have your SSN in the bad guy data lake, have it joined with whatever other public information and breached information about you they know about, and move on. Nothing more you can do about it. Everyone should have credit frozen.
Last edited by stan1 on Sat Jan 18, 2020 10:31 am, edited 1 time in total.
Dottie57
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by Dottie57 »

How would you have the bank verify identification?
beehivehave
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by beehivehave »

Dottie57 wrote: Sat Jan 18, 2020 10:31 am How would you have the bank verify identification?
How did they do it previously?
There is no FDIC requirement for beneficiary SSN.
Change banks - don't capitulate, as in those who say "we have no privacy anyway".
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shawn_lad
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by shawn_lad »

HueyLD wrote: Sat Jan 18, 2020 10:21 amEach bank can have its own rules as long as the rules are not in violation of the law.
Yes, but they don't need to blame FDIC for their own bad choice. Unless I am missing where FDIC requires SSN usage.
Perkunas wrote: Sat Jan 18, 2020 10:24 am Did you read the citation they directed you to? It seems pretty clear to me:
What you quoted in your post said absolutely nothing about SSN. It just required some unique identifier in their system.
stan1 wrote: Sat Jan 18, 2020 10:29 amI don't know if above language is new but specifically calls out electronic record keeping for PoD beneficiaries.

Ally may be a ahead of other financial institutions. I did have to provide SSN for a beneficiary on a non-FDIC account.

The days of trying to protect SSN from bad guys are gone. Just assume the bad guys have your SSN in the bad guy data lake, have it joined with whatever other public information and breached information about you they know about, and move on. Nothing more you can do about it. Everyone should have credit frozen.
Sorry, I disagree that we should give up security of our SSN, let alone that of other people (beneficiaries) who may not feel the way you do. Frozen credit is not enough of protection. SSN is still extremely valuable piece of info and no, not all peoples' SSN is easily available to hackers.
Dottie57 wrote: Sat Jan 18, 2020 10:31 am How would you have the bank verify identification?
Same way they have done it up to this point.
beehivehave
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by beehivehave »

Beneficiaries are put on the spot to provide their SSNs. Do they say no, forcing owner with choice of leaving them out or changing banks? Or does CD owner provide it without permission?
(I would reluctantly provide it.)
rebellovw
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by rebellovw »

Ridiculous thread. Love Ally - great bank - great service. I have to do the same thing for Fidelity for my beneferrys.
Alan S.
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by Alan S. »

If you have beneficiaries on your POD account that increase the amount of FDIC insurance above your own FDIC limit, are we to assume that if we do not comply with the bank's request for beneficiary SSNs, it will delay the receipt of the FDIC payment in case of default?

And/or in cases of no default, when you pass this will lack of preferred IDs on file delay payment to your beneficiary?

I wonder if part of this relates to underfunding of the FDIC, and determining the amount of uncovered deposits in the banks that can be subtracted from total deposits?
bhradbh
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by bhradbh »

And what if the beneficiary is a foreign national with no SSN?
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by Dottie57 »

beehivehave wrote: Sat Jan 18, 2020 10:34 am
Dottie57 wrote: Sat Jan 18, 2020 10:31 am How would you have the bank verify identification?
How did they do it previously?
There is no FDIC requirement for beneficiary SSN.
Change banks - don't capitulate, as in those who say "we have no privacy anyway".
In real life I have a very common name. Someone could easily pose as me if since they have the same name. If you don’t want the SSN on the account, then paas the account through a will and have the will probated.
Last edited by Dottie57 on Sat Jan 18, 2020 11:21 am, edited 1 time in total.
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shawn_lad
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by shawn_lad »

rebellovw wrote: Sat Jan 18, 2020 10:56 am Ridiculous thread. Love Ally - great bank - great service. I have to do the same thing for Fidelity for my beneferrys.
Ridiculous reply. I use Ally as one of my main banks, so I clearly like it too. That does not take away from their bad decision. As for Fidelity, I did NOT provide my beneficiaries' SSN there, at least for my 401(k) account there and as I recall, not even for other accounts.
Alan S. wrote: Sat Jan 18, 2020 11:07 am If you have beneficiaries on your POD account that increase the amount of FDIC insurance above your own FDIC limit, are we to assume that if we do not comply with the bank's request for beneficiary SSNs, it will delay the receipt of the FDIC payment in case of default?

And/or in cases of no default, when you pass this will lack of preferred IDs on file delay payment to your beneficiary?

I wonder if part of this relates to underfunding of the FDIC, and determining the amount of uncovered deposits in the banks that can be subtracted from total deposits?
Ally email (see OP) appears to be vaguely threatening in this respect. They are implying it may affect amount of insurance FDIC coverage (perhaps even at other banks??). I wish I knew if this were true or they are just trying to scare us into giving the SSNs to them.
bhradbh wrote: Sat Jan 18, 2020 11:09 am And what if the beneficiary is a foreign national with no SSN?
Yes, that was one of my questions in the OP.
Dottie57 wrote: Sat Jan 18, 2020 11:17 am In real life I have a very common name. Someone could easily pose as me if since they have the same name. If you don’t want the SSN on the account, then have the will probated.
Normally identification happens not just by name but also by things like address and/or phone and/or DOB and/or relationship to account holder. Further, institutions can collect SSN on optional basis, but not REQUIRED basis.
Last edited by shawn_lad on Sat Jan 18, 2020 11:21 am, edited 1 time in total.
student
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by student »

Dottie57 wrote: Sat Jan 18, 2020 11:17 am
beehivehave wrote: Sat Jan 18, 2020 10:34 am
Dottie57 wrote: Sat Jan 18, 2020 10:31 am How would you have the bank verify identification?
How did they do it previously?
There is no FDIC requirement for beneficiary SSN.
Change banks - don't capitulate, as in those who say "we have no privacy anyway".
In real life I have a very common name. Someone could easily pose as me if since they have the same name. If you don’t want the SSN on the account, then have the will probated.
But don't they also ask for address and relation to the owner. If one is a friend, then there may be a problem but if it is a relative, then it should be uniquely identifiable.
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by Dottie57 »

student wrote: Sat Jan 18, 2020 11:21 am
Dottie57 wrote: Sat Jan 18, 2020 11:17 am
beehivehave wrote: Sat Jan 18, 2020 10:34 am
Dottie57 wrote: Sat Jan 18, 2020 10:31 am How would you have the bank verify identification?
How did they do it previously?
There is no FDIC requirement for beneficiary SSN.
Change banks - don't capitulate, as in those who say "we have no privacy anyway".
In real life I have a very common name. Someone could easily pose as me if since they have the same name. If you don’t want the SSN on the account, then have the will probated.
But don't they also ask for address and relation to the owner. If one is a friend, then there may be a problem but if it is a relative, then it should be uniquely identifiable.
This is a big world.


See the posts with the FDIC reason for having the SSN. It is the real reason the SSN is required.


I suspect it will eventually come down to giving an SSN if you want to have POD or specifying in a will and then probating. I think most if not all banks will comply with the rule in order to have maximum deposit insurance.
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by HueyLD »

bhradbh wrote: Sat Jan 18, 2020 11:09 am And what if the beneficiary is a foreign national with no SSN?
Where I used to work, we asked for foreign national beneficiary’s passport information, including a copy of that page showing the passport number, issue date, expiration date and picture.

I think I would rather make it as easy and straightforward as possible for my beneficiaries.
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by whodidntante »

I've never been able to reconcile the Boglehead affinity with Ally with the frequent concerns posted about them, or with the fact that their rates are consistently below the best available. Can someone explain the love of Ally to me?
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by Turbo29 »

whodidntante wrote: Sat Jan 18, 2020 11:53 am I've never been able to reconcile the Boglehead affinity with Ally with the frequent concerns posted about them, or with the fact that their rates are consistently below the best available. Can someone explain the love of Ally to me?
For a site that doesn't allow posts about religion, there are several religions on this site. Ally is one of them.
It is by the goodness of God that in our country we have those three unspeakably precious things: freedom of speech, freedom of conscience, and the prudence never to practice either of them. --M. Twain
Lastrun
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by Lastrun »

I am confused by this thread:

First, most POD/TOD/BD forms I have seen (Schwab, Fidelity, etc.) ask for the SSN of each beneficiary.

If you are designating a beneficiary for your Ally account today, you also assume the worst that the POD/TOD will become active tomorrow when you are hit by a bus. Tomorrow the designated beneficiary will be required to provide their SSN to Ally. So I just don't see the outrage.
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by UpperNwGuy »

whodidntante wrote: Sat Jan 18, 2020 11:53 am I've never been able to reconcile the Boglehead affinity with Ally with the frequent concerns posted about them, or with the fact that their rates are consistently below the best available. Can someone explain the love of Ally to me?
I have this question too.
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shawn_lad
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by shawn_lad »

Lastrun wrote: Sat Jan 18, 2020 12:37 pm I am confused by this thread:

First, most POD/TOD/BD forms I have seen (Schwab, Fidelity, etc.) ask for the SSN of each beneficiary.

If you are designating a beneficiary for your Ally account today, you also assume the worst that the POD/TOD will become active tomorrow when you are hit by a bus. Tomorrow the designated beneficiary will be required to provide their SSN to Ally. So I just don't see the outrage.
Most places do not require SSN for beneficiaries. Some do. Presumably, when you are hit by the bus, places will use other information to match against their records. Exposing SSN of beneficiaries is a risk (to them).
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by stan1 »

Seems like you have several choices:
1) Provide SSN
2) Put account into trust and leave to heirs that way instead of PoD
3) Move to another FI that doesn't require SSN today, but that might be a moving target and may cease to exist at an FDIC insured institution after April 1 2020.
Last edited by stan1 on Sat Jan 18, 2020 12:52 pm, edited 1 time in total.
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by Lastrun »

shawn_lad wrote: Sat Jan 18, 2020 12:42 pm Presumably, when you are hit by the bus, places will use other information to match against their records. Exposing SSN of beneficiaries is a risk (to them).
That is not my experience. The DB, executor or trustee will contact the financial institution and they will request W-9s for the BDs before anything moves.
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by Lastrun »

stan1 wrote: Sat Jan 18, 2020 12:47 pm Seems like you have several choices:
. . . . .
2) Put account into trust and leave to heirs that way instead of PoD
. . . . .
This works and there is also another option. Designate a revocable trust as the DB and use your SSN for the tax id for the trust.
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shawn_lad
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by shawn_lad »

whodidntante wrote: Sat Jan 18, 2020 11:53 am I've never been able to reconcile the Boglehead affinity with Ally with the frequent concerns posted about them, or with the fact that their rates are consistently below the best available. Can someone explain the love of Ally to me?
Turbo29 wrote: Sat Jan 18, 2020 12:03 pm For a site that doesn't allow posts about religion, there are several religions on this site. Ally is one of them.
UpperNwGuy wrote: Sat Jan 18, 2020 12:42 pm I have this question too.
I have used Ally for many years now, after having used 2 other institutions as my primary ones long ago. I have no problems switching if I find a better one. So far, I've liked it for the following reasons:
- I like most of their web interface:
---- it shows unambiguously current rate, number of remaining savings acct transactions, POD (other financial institutions usually do not)
---- opening, managing, and closing CDs is very easy, transparent and requires no calls to customer service
---- most other interface aspects are very straight forward too
- They live up to their image of no nonsense fees
- They are a great HUB bank - I can easily ACH up to 250k/day in and 150k/day out without problems, and can connect the bank with very many other institutions. For anything over these limits, it's probably more cost effective to do a wire transfer anyway.
- 1-day ACH with many institutions is a nice perk
- They compute interest in straight-forward way that matches my simple Excel formula. Some other banks / credit unions don't and make more mistakes.

If you know of other banks doing all or most of the above, please DO let me know (assuming they consistently have higher rates).

Cons:
- Some UI issues have occurred - bill pay is too wide for my screen and I have to scroll horizontally which is annoying. Still, works good enough.
- Their customer service is not the best
- Their rates are not the best indeed. But they are close enough consistently. Also, I don't keep too much money there for CDs except when my funds are in transit from one financial institution to another. I've used their no-penalty CDs though as well as their random $1k promotion a year or two ago.
Last edited by shawn_lad on Sat Jan 18, 2020 1:22 pm, edited 2 times in total.
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shawn_lad
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by shawn_lad »

Lastrun wrote: Sat Jan 18, 2020 12:51 pm
shawn_lad wrote: Sat Jan 18, 2020 12:42 pm Presumably, when you are hit by the bus, places will use other information to match against their records. Exposing SSN of beneficiaries is a risk (to them).
That is not my experience. The DB, executor or trustee will contact the financial institution and they will request W-9s for the BDs before anything moves.
If you have first-hand experience, could you elaborate on what happens when the bank does not have SSN but only other info like name, address and relationship to the deceased?

Even if beneficiary supplies their SSN at the time of death of account owner, which I have no problem with, would not the institution just say 'since we don't have SSN on file for them, we'll just use the other information'? Otherwise, how do beneficiaries EVER inherit funds in such cases?
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shawn_lad
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Re: Ally to require SSN for benefiaries, points to new FDIC rule

Post by shawn_lad »

UPDATE: upon closer reading of my OP link, perhaps I found what Ally is referring to. I see "Appendix B to Part 370: Output Files Structure" says the following:
The unique identifier and government identification are required in all four tables so those tables can be linked where necessary.


(Side Note: this statement is actually quite silly because unique ID, aka primary key, suffices for linking the tables and govt id is not required for linking the tables)

Later, table description shows "CS_Govt_ID" field with this description
This field shall contain the ID number that identifies the entity based on a government issued ID or corporate filling. Populate as follows: --For a United States individual - SSN or TIN --For a foreign national individual - where a SSN or TIN does not exist, a foreign passport or other legal identification number (e.g., Alien Card)
--For a Non-Individual - the Tax identification Number (TIN), or other register entity number
This means that other institutions may start following this. I am still not clear on implications for existing accounts that do not have beneficiary information on file. E.g. CD with 3 beneficiaries is no longer insured for $750k if SSN is not on file for them?
Last edited by shawn_lad on Sat Jan 18, 2020 1:23 pm, edited 1 time in total.
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Re: Ally to require SSN for benefiaries, points to new FDIC rule

Post by puc_ytpme »

stan1 wrote: Sat Jan 18, 2020 12:47 pm Seems like you have several choices:
1) Provide SSN
2) Put account into trust and leave to heirs that way instead of PoD
3) Move to another FI that doesn't require SSN today, but that might be a moving target and may cease to exist at an FDIC insured institution after April 1 2020.

+3
No person ever steps in the same river twice, for it’s not the same river & they’re not the same person
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by Lastrun »

shawn_lad wrote: Sat Jan 18, 2020 1:09 pm Otherwise, how do beneficiaries EVER inherit funds in such cases?
The reality of the situation is that most financial institutions do NOT distribute directly from the decedent's account. Assume no trust is involved. They will either distribute to the estate if there is no beneficiary, or to the beneficiary(ies), if there is a POD/TOD/DB on the account. BUT, they will require a new estate account or a new account for the DB (as the case may be). To open this account, they will require the DBs SSN.

See this Schwab form for a good example of how this works in reality.

https://www.schwab.com/public/file/P-37 ... 1-fill.pdf

Notice the options are to distribute to an existing or new Schwab account. See also the specific instructions for a DB that has no SSN.

My point here is that the financial institution is going to need the DB's SSN at some point, and perhaps as soon as a few days after you make the designation. So I don't see the outrage.
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shawn_lad
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by shawn_lad »

Lastrun wrote: Sat Jan 18, 2020 1:28 pm
shawn_lad wrote: Sat Jan 18, 2020 1:09 pm Otherwise, how do beneficiaries EVER inherit funds in such cases?
The reality of the situation is that most financial institutions do NOT distribute directly from the decedent's account. Assume no trust is involved. They will either distribute to the estate if there is no beneficiary, or to the beneficiary(ies), if there is a POD/TOD/DB on the account. BUT, they will require a new estate account or a new account for the DB (as the case may be). To open this account, they will require the DBs SSN.

See this Schwab form for a good example of how this works in reality.

https://www.schwab.com/public/file/P-37 ... 1-fill.pdf

Notice the options are to distribute to an existing or new Schwab account. See also the specific instructions for a DB that has no SSN.

My point here is that the financial institution is going to need the DB's SSN at some point, and perhaps as soon as a few days after you make the designation. So I don't see the outrage.
First, not all banks require SSN. Funny enough, even Ally bank FAQ as of this moment does not appear to require it. Apparently Driver's license or other form of ID is fine too.

But even in cases where SSN would be required from beneficiaries... there is a huge difference in exposure here. It's one thing for me to give my beneficiaries SSN to 25 financial institutions ON A CHANCE that I die while still having business with them. It's quite different when I die many years from now for my beneficiaries to give their SSN only to those institutions where I happen to (still) have funds and still list them as my beneficiaries.

Over my lifetime, I will bank with many different places and many banks will disappear or get merged before I die. Even my beneficiaries may per-decease me or I may change who I want to inherit my funds. Exposing my beneficiary information through the rest of my (hopefully long) lifetime is a much much bigger risk to them then providing their SSN to the last set of financial institutions for essentially a 1 time claim of funds.
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by rkhusky »

stan1 wrote: Sat Jan 18, 2020 12:47 pm Seems like you have several choices:
1) Provide SSN
2) Put account into trust and leave to heirs that way instead of PoD
3) Move to another FI that doesn't require SSN today, but that might be a moving target and may cease to exist at an FDIC insured institution after April 1 2020.
4) Ignore them and force them to take action.

If they have your money in an FDIC insured account, it's insured by the FDIC. Force them to close your account and send you a check. Often these institutions like to threaten, but never take action.
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Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by whodidntante »

shawn_lad wrote: Sat Jan 18, 2020 1:04 pm
whodidntante wrote: Sat Jan 18, 2020 11:53 am I've never been able to reconcile the Boglehead affinity with Ally with the frequent concerns posted about them, or with the fact that their rates are consistently below the best available. Can someone explain the love of Ally to me?
Turbo29 wrote: Sat Jan 18, 2020 12:03 pm For a site that doesn't allow posts about religion, there are several religions on this site. Ally is one of them.
UpperNwGuy wrote: Sat Jan 18, 2020 12:42 pm I have this question too.
I have used Ally for many years now, after having used 2 other institutions as my primary ones long ago. I have no problems switching if I find a better one. So far, I've liked it for the following reasons:
- I like most of their web interface:
---- it shows unambiguously current rate, number of remaining savings acct transactions, POD (other financial institutions usually do not)
---- opening, managing, and closing CDs is very easy, transparent and requires no calls to customer service
---- most other interface aspects are very straight forward too
- They live up to their image of no nonsense fees
- They are a great HUB bank - I can easily ACH up to 250k/day in and 150k/day out without problems, and can connect the bank with very many other institutions. For anything over these limits, it's probably more cost effective to do a wire transfer anyway.
- 1-day ACH with many institutions is a nice perk
- They compute interest in straight-forward way that matches my simple Excel formula. Some other banks / credit unions don't and make more mistakes.

If you know of other banks doing all or most of the above, please DO let me know (assuming they consistently have higher rates).

Cons:
- Some UI issues have occurred - bill pay is too wide for my screen and I have to scroll horizontally which is annoying. Still, works good enough.
- Their customer service is not the best
- Their rates are not the best indeed. But they are close enough consistently. Also, I don't keep too much money there for CDs except when my funds are in transit from one financial institution to another. I've used their no-penalty CDs though as well as their random $1k promotion a year or two ago.
The ACH push limits and online management of CDs cut the competitor list down quite a bit if those are important concerns. Thanks for sharing.
rkhusky
Posts: 10625
Joined: Thu Aug 18, 2011 8:09 pm

Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by rkhusky »

Perkunas wrote: Sat Jan 18, 2020 10:24 am Did you read the citation they directed you to? It seems pretty clear to me:

"a covered institution must maintain in its deposit account records for each account the information necessary for its information technology system to meet the requirements set forth in § 370.3. The information must include:

(1) The unique identifier of each:

(i) Account holder;

(ii) Beneficial owner of a deposit, if the account holder is not the beneficial owner; and

(iii) Grantor and each beneficiary, if the deposit account is held in connection with an informal revocable trust that is insured pursuant to 12 CFR 330.10 (e.g., payable-on-death accounts, in-trust-for accounts, and Totten Trust accounts)."
But note also the following a few lines down:
(b) Alternative recordkeeping requirements. As permitted under this paragraph, a covered institution may maintain in its deposit account records less information than is required under paragraph (a) of this section.
(1) For each deposit account for which a covered institution's deposit account records disclose the existence of a relationship which might provide a basis for additional deposit insurance in accordance with 12 CFR 330.5 or 330.7 and for which the covered institution does not maintain information that would be needed for its information technology system to meet the requirements set forth in § 370.3, the covered institution must maintain, at a minimum, the following in its deposit account records:

(i) The unique identifier of the account holder; and

(ii) The corresponding "pending reason" code listed in data field 2 of the pending file format set forth in Appendix B (and need not maintain a "right and capacity" code).
So, they are not required to maintain information on beneficiaries. Just a unique identifier of the account holder, which could be name, address and phone number; or a driver's license number. The same could be used for an identifier of the beneficiaries.

Also note the language above: (1) For each deposit account for which a covered institution's deposit account records disclose the existence of a relationship which might provide a basis for additional deposit insurance in accordance with 12 CFR 330.5 or 330.7.

The first few clauses of 330.5 are:
§ 330.5 Recognition of deposit ownership and fiduciary relationships.

(a) Recognition of deposit ownership--(1) Evidence of deposit ownership. Except as indicated in this paragraph (a)(1) or as provided in § 330.3(j), in determining the amount of insurance available to each depositor, the FDIC shall presume that deposited funds are actually owned in the manner indicated on the deposit account records of the insured depository institution. If the FDIC, in its sole discretion, determines that the deposit account records of the insured depository institution are clear and unambiguous, those records shall be considered binding on the depositor, and the FDIC shall consider no other records on the manner in which the funds are owned. If the deposit account records are ambiguous or unclear on the manner in which the funds are owned, then the FDIC may, in its sole discretion, consider evidence other than the deposit account records of the insured depository institution for the purpose of establishing the manner in which the funds are owned. Despite the general requirements of this paragraph (a)(1), if the FDIC has reason to believe that the insured depository institution's deposit account records misrepresent the actual ownership of deposited funds and such misrepresentation would increase deposit insurance coverage, the FDIC may consider all available evidence and pay claims for insured deposits on the basis of the actual rather than the misrepresented ownership.
The FDIC is concerned with determining who owns the funds and wants to make sure that people don't get more than they are entitled to in the event of bank failure(s). If you have deposits at multiple banks, which are owned by the same entity, you will only get the max of $250K. Similarly, if it is determined that you own more than the max of $250K in ambiguously recorded accounts at the same bank, then the FDIC may only provide you $250K of insurance. Note that accounts titled in your name, your spouse's name, and in both you and your spouse's names, are considered different and each would receive the max $250K insurance.

From an FDIC FAQ:
Q: Can I have more than $250,000 of deposit insurance coverage at one FDIC-insured bank?

A: Yes. The FDIC insures deposits according to the ownership category in which the funds are insured and how the accounts are titled. The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, per ownership category. Deposits held in different ownership categories are separately insured, up to at least $250,000, even if held at the same bank. For example, a revocable trust account (including living trusts and informal revocable trusts commonly referred to as payable on death (POD) accounts) with one owner naming three unique beneficiaries can be insured up to $750,000. See the Your Insured Deposit brochure for details.
Perhaps it is for trusts that Ally is seeking SSN's. From nolo.com:
Revocable Trust Accounts

Trust accounts are treated differently. Only the interests of the beneficiaries to the trust are insured; owners of a trust account are not insured. Generally speaking, funds are insured up to $250,000 for each beneficiary, per account owner.

So, for example, if a couple (mother and father) had $800,000 in a qualified living trust account naming two children as equal beneficiaries, the entire account balance would be fully insured. This is because each beneficiary is covered up to $500,000—$250,000 via the mom and $250,000 via the dad. With a balance of $800,000, the account does not exceed the combined $1,000,000 limit.

...

Here are a few key points about trust accounts that you should be aware of:

FDIC coverage on a trust does not necessarily equal $250,000 per beneficiary, per owner. For example, let's say a mother owns a trust account with a $400,000 balance. If she names both her children as beneficiaries, you might assume that the entire account balance would be insured—$200,000 per child, per owner. However, if the mother makes one child the beneficiary of 75% of the trust and the second child a beneficiary of only 25%, the child entitled to $100,000 would be fully covered, but the child entitled to $300,000 would not be covered for the $50,000 exceeding the $250,000 limit.
In calculating the per-beneficiary insurance limit, the FDIC combines all of an owner's payable-on-death (POD) and living trust accounts at the same bank. So, for example, if a father names a child the sole beneficiary in a living trust account worth $230,000 and also names him as sole beneficiary of a POD account with a $40,000 balance, the $20,000 exceeding the $250,000 limit would be uninsured.
J295
Posts: 2734
Joined: Sun Jan 01, 2012 11:40 pm

Re: Ally to require SSN for benefiaries, points to new FDIC rule

Post by J295 »

OP. Very straightforward. Don’t want to comply with the rule have Ally change the rule for you or switch banks.
Topic Author
shawn_lad
Posts: 87
Joined: Tue Mar 20, 2018 4:01 pm

Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by shawn_lad »

rkhusky wrote: Sat Jan 18, 2020 3:03 pm So, they are not required to maintain information on beneficiaries. Just a unique identifier of the account holder, which could be name, address and phone number; or a driver's license number. The same could be used for an identifier of the beneficiaries.
Or any random string they generate. Note that unique identifier could be just an internal customer number. Elsewhere they in fact state that unique id is expected to be generated by the bank itself. So, I think "unique id" is irrelevant here.

However, please see UPDATE of my OP. I believe they might be referring to a different section actually - the one that specifically talks about government id as required (even though the reason they gave does not make sense - tables can be joined / cross referenced purely based on unique id and without government id).
Topic Author
shawn_lad
Posts: 87
Joined: Tue Mar 20, 2018 4:01 pm

Re: Ally to require SSN for benefiaries, points to new FDIC rule

Post by shawn_lad »

J295 wrote: Sat Jan 18, 2020 4:37 pm OP. Very straightforward. Don’t want to comply with the rule have Ally change the rule for you or switch banks.
Problem is if Ally is correct that this rule will apply to ALL banks (and NCUA perhaps), then switching banks is not going to help. Further, for alreadu existing CDs that go out many years, we need to understand if this rule means insurance coverage will be negatively affected. E.g. a CD or account 3 beneficiaries (without SSN) will no longer be covered up to 750k - again for both, Ally AND other banks / credit unions?
J295
Posts: 2734
Joined: Sun Jan 01, 2012 11:40 pm

Re: Ally to require SSN for benefiaries, points to new FDIC rule

Post by J295 »

shawn_lad wrote: Sat Jan 18, 2020 4:44 pm
J295 wrote: Sat Jan 18, 2020 4:37 pm OP. Very straightforward. Don’t want to comply with the rule have Ally change the rule for you or switch banks.
Problem is if Ally is correct that this rule will apply to ALL banks (and NCUA perhaps), then switching banks is not going to help. Further, for alreadu existing CDs that go out many years, we need to understand if this rule means insurance coverage will be negatively affected. E.g. a CD or account 3 beneficiaries (without SSN) will no longer be covered up to 750k - again for both, Ally AND other banks / credit unions?
Ok. So comply or use a will or trust instead of beneficiary designation.

Personally providing SSNs for beneficiaries is not a concern for me.
rkhusky
Posts: 10625
Joined: Thu Aug 18, 2011 8:09 pm

Re: Ally to require SSN for benefiaries - blames new FDIC rule

Post by rkhusky »

shawn_lad wrote: Sat Jan 18, 2020 4:42 pm
rkhusky wrote: Sat Jan 18, 2020 3:03 pm So, they are not required to maintain information on beneficiaries. Just a unique identifier of the account holder, which could be name, address and phone number; or a driver's license number. The same could be used for an identifier of the beneficiaries.
Or any random string they generate. Note that unique identifier could be just an internal customer number. Elsewhere they in fact state that unique id is expected to be generated by the bank itself. So, I think "unique id" is irrelevant here.

However, please see UPDATE of my OP. I believe they might be referring to a different section actually - the one that specifically talks about government id as required (even though the reason they gave does not make sense - tables can be joined / cross referenced purely based on unique id and without government id).
Does the appendix mention government ID for beneficiaries or just account owner? SSN would be needed to report interest. Might also be needed for money laundering purposes.
Topic Author
shawn_lad
Posts: 87
Joined: Tue Mar 20, 2018 4:01 pm

Re: Ally to require SSN for benefiaries, points to new FDIC rule

Post by shawn_lad »

J295 wrote: Sat Jan 18, 2020 5:02 pm Ok. So comply or use a will or trust instead of beneficiary designation.
Will or trust does not help with increasing insurance over $250k limit, does it? E.g. if I have 3 PODs on my CD, I am insured for $750k instead of $250k.
rkhusky wrote: Sat Jan 18, 2020 5:44 pm Does the appendix mention government ID for beneficiaries or just account owner? SSN would be needed to report interest. Might also be needed for money laundering purposes.
If I read FDIC link right, I think "Account Participant File" is the one that contains 1 row per beneficiary.

There, AP_Govt_ID reads " --For a United States individual - Legal identification number (e.g., SSN, TIN, Driver's License, or Passport Number) " and that field is not null. Clearly that field is not used to link to any of the other 3 tables (or what they call "files").

For reporting interest and money laundering purposes, SSN can be collected only when beneficiary actually attempts to collect the money.
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