76 FR 9939 (Volume 76, Number 36) Garnishment of Accounts Containing Federal Benefit Payments

Treasure D-t, Fiscal Service, SSA, VA, RRB, OPM

Interim Final Rule effective May 1, 2011. Comments must be received on or before May 24, 2011.

Financial institutions that receive garnishment orders must first determine if the United States or a State child support enforcement agency is the plaintiff that obtained the order. If so, the fin institutions follow the standard operating procedure appropriate when processing garnishment orders. If neither United States nor a State child support enforcement agency is the plaintiff, the fin institutions must identify the individual against whom the garnishment order has been issued, must determine what accounts the individual has opened with the fin institution, must review the account history for the prior two-month period to determine whether, during this "lookback period", one or more exempt benefit payments were directly deposited to the account.

The financial institution must allow the account holder to have access to an amount equal to the lesser of the sum of exempt payments directly deposited to the account during the lookback period or the balance of the account on the date of the account review ("protected amount"). Fin institutions must notify the account holder that a garnishment order was received and explain what a garnishment order is. The notice must identify the account(s) against which garnishment order(s) was issued and the amounts subject to freeze (if any).

The financial institutions may only charge a garnishment fee against the funds in the account in excess of the protected amount and may not charge or collect a garnishment fee after the date of account review.

Federal banking agencies will enforce the rule. There is no private right of action. The rule exempts any contradicting state or local laws.

The following benefits are exempt from garnishment orders under the rule: Social Security benefits, SSI, VA benefits, federal RR benefits, Civil Service Retirement System benefits, Federal Employee Retirement System benefits.

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