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Direct Deposit (Electronic Funds Transfer)

Garnishment of Accounts Containing Federal Benefit Payments Frequently Asked Questions

NOTE:  Economic impact payments under the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (second round) are exempt from garnishment.   These economic impact payments are generally treated in the same manner as federal benefit payments that are exempt from garnishment, but there are some differences.  Financial institutions are advised to consult with their legal counsel on this topic if they have questions.

The Department of the Treasury, the Social Security Administration (SSA), the Department of Veterans Affairs (VA), the Railroad Retirement Board (RRB) and the Office of Personnel Management (OPM) are issuing a Final Rule (31 CFR Part 212) to amend their regulations governing the garnishment of certain exempt federal benefit payments that are directly deposited to accounts at financial institutions.

Specifically, the exempt federal benefit payments include: Social Security payments, Supplemental Security Income (SSI) payments, VA benefits, Federal Railroad retirement benefits, Federal Railroad unemployment and sickness benefits, Civil Service Retirement System benefits and Federal Employees Retirement System benefits.

A list of federal benefit payments disbursed by Treasury that are protected under the rulemaking is provided in Appendix One of the Guidelines for Garnishment of Accounts Containing Federal Benefit Payments at Garnishment Guideline June 2013.

Download Garnishment Guidelines June 2013 

Treasury will encode "XX" in positions 54-55 of the Company Entry Description Field and "2" in the Originator Status Code Field of the Batch Header Record of the direct deposit entry. The garnishment exemption identifiers encoded in the Company Entry Description Field can be used to identify exempt federal benefit payments both in an automated processing environment and in an environment in which the financial institution relies on a visual search. In the instance of a visual search, the financial institution will rely on the exemption identifiers printed on the account statement.

Last modified 12/23/22