Yes, we believe you may temporarily freeze social security payments after learning that the recipient has died for purposes of preserving possible post-death payments subject to reclamation by the U.S. Treasury, provided that your account agreement authorizes your institution to freeze these amounts and you return any required amounts (and release your freeze on the remaining amounts) in a timely manner.

The Treasury’s Green Book states that “under no circumstances should an RDFI hold benefit payments indefinitely in a suspense account . . . nor should benefit payments otherwise be held if any of the conditions apply on when to return a benefit payment.” However, we believe this language would not prevent you from temporarily freezing benefit payments to preserve them while you investigate whether they are post-death payments that must be returned to the Treasury.

The regulations governing federal benefit payments made by ACH transfer state that an RDFI is liable to the federal government “for the total amount of all benefit payments received after the RDFI becomes aware of the death . . . of a recipient.”  Additionally, the Green Book states that “it is up to each RDFI to consider its policy as an institution as to what steps it may wish to take, if any, upon learning of the death of a recipient in order to preserve funds in the account pending receipt of a Notice of Reclamation.”

As the Green Book permits you to take steps to preserve funds in an account pending the Notice of Reclamation after the recipient’s death, we believe that a bank may temporarily freeze funds in an account in that situation — if permitted by your account agreement. This approach may prevent losses, for example, by preventing a joint accountholder from removing post-death benefit payments before your bank receives a Notice of Reclamation from the Treasury for those funds. At the same time, because the Green Book does prohibit holding benefit payments “indefinitely in a suspense account,” we recommend acting quickly to determine which amounts must be returned and releasing your freeze on the remaining amounts.

For resources related to our guidance, please see:

• Green Book, Chapter 5, page 5-8 (“Under no circumstances should an RDFI hold benefit payments indefinitely in a suspense account, or by any other means, nor should benefit payments otherwise be held if any of the conditions apply on when to return a benefit payment. Holding benefit payments may constitute a breach of the RDFI’s warranty for the handling of federal government ACH payments under 31 CFR part 210 and could result in an RDFI’s inability to limit its liability.”)

• 31 CFR 210.10(a) (“An RDFI shall be liable to the Federal Government for the total amount of all benefit payments received after the death or legal incapacity of a recipient or the death of a beneficiary unless the RDFI has the right to limit its liability under § 210.11 of this part. An RDFI shall return any benefit payments received after the RDFI becomes aware of the death or legal incapacity of a recipient or the death of a beneficiary, regardless of the manner in which the RDFI discovers such information. If the RDFI learns of the death or legal incapacity of a recipient or death of a beneficiary from a source other than notice from the agency issuing payments to the recipient, the RDFI shall immediately notify the agency of the death or incapacity. The proper use of the R15 or R14 return reason code shall be deemed to constitute such notice.”)

• Green Book, Chapter 5, page 5-5 (“It is up to each RDFI to consider its policy as an institution as to what steps it may wish to take, if any, upon learning of the death of a recipient in order to preserve funds in the account pending receipt of a Notice of Reclamation.”)