Dear Liz: Years ago, I opened a credit card for my two children to pay for college. They were authorized users for miscellaneous expenses. They no longer use or even have access to the card. Now, they both have stable, high paying jobs. I would like to keep the card but remove the authorized users. How would this affect my children’s credit scores? Or mine?
answer: By adding your child as an authorized user, you have helped them improve their credit score. Removing your child will not affect your credit score. The impact on your child’s credit score will depend on how well they manage their own credit.
If you’ve been building your credit by opening credit cards yourself and paying them off on time, the impact should be minimal. Ideally, you’ll also have a good repayment history on installment loans like mortgages, student loans, and car loans to build your credit.
If you don’t use credit much and have a small credit history (typically fewer than five accounts on your credit report), the damage could be more severe. In that case, we recommend delaying removing them as an authorized user until you open another line of credit. Your customers need to know that they don’t have to get in debt to have good credit. They just need to use their credit cards sparingly and pay off their balances in full.
I have a 457(b) instead of a 401(k). Do they provide the same coverage?
Dear Liz: As an employee of a public sector organization that offers 457(b) accounts, it’s helpful to know whether these accounts are insured in the same way as 401(k)s.
answer: Employer-sponsored tax-deferred 457(b) accounts are very similar to 401(k)s. Both allow employees to make pre-tax contributions to a retirement account that can be invested for future growth. Although the accounts are not insured like bank accounts, the funds are held in a separate trust that is protected from creditors.
What is “substantial” in Uncle Sam’s eyes?
Dear Liz: I am retired and qualify for both the Extraordinary Income Exclusion and the Government Pension Exclusion. In a recent column, you said that someone who had 30 years of “substantial income” from a job that withheld Social Security taxes does not qualify for the Extraordinary Income Exclusion. I contributed to Social Security for 32 years. How do you determine whether these annual incomes were “substantial”?
answer: The Social Security Administration has a two-page pamphlet on the extraordinary income exclusion provision that you can get online or request one from the agency by calling (800) 772-1213. The pamphlet provides a table of the annual earnings needed to be considered substantial. For example, in 1992, that amount was $10,350. In 2024, it’s $31,275. If you create a My Social Security online account (which we recommend you do), you can compare that amount to what you earned during the years you contributed to the system.
The Social Security Administration has already done this and concluded that you are covered by this provision. This provision reduces your benefits, but does not eliminate them, because you have benefits from jobs for which you did not pay contributions to the Social Security Administration. You can, however, contact the Social Security Administration to have it corrected. You will likely need some kind of proof, such as pay stubs or W2s, so it’s a good idea to keep good records over the years.
Should I mail my rent check or pay through an app?
Dear Liz: I pay my rent by check (yes, I know the risks), and my landlord wants me to use Zelle, but this has its drawbacks — some people have had money taken out of their bank accounts — and I’ve heard that peer-to-peer money transfer apps should only be used by friends and family, not for business or large sums of money.
answer: As you know, Zelle payments are instant. If you send money to the wrong person, you could be out of luck. Federal law protects you if your account is hacked, but it doesn’t protect you if you make a mistake or are tricked into sending money to a scammer. (Zelle does investigate fraud claims, however, and may refund your money if you were tricked.)
While many people are comfortable using Zelle or other payment systems to send money to people and businesses they know well, some are not. If you continue to use checks, make sure to mail them in person at the post office or use a delivery service that provides tracking numbers, such as Fedex. Monitor your accounts closely and set up alerts to notify you when checks over a certain amount are cashed. Be especially careful if you continue to send paper checks, as there has been a surge in scams related to stolen checks.
Liz Weston, CFP, is a personal finance columnist. Please send your questions to 3940 Laurel Canyon, No. 238, Studio City, CA 91604 or through our “Contact Us” form. translation:.
