Topic: Social Security Payments
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We received a letter from Accuity Asset Verification Services, which presents itself as a vendor that verifies assets of applicants for various federal and state benefit programs. We haven’t seen official correspondence from any Illinois agencies on this program, and we are leery of moving from participation by snail mail to electronic verification. Do you have insight on this program?
We believe that Accuity is the vendor providing Medicaid asset verification services to the Illinois Department of Human Services. Accuity has provided its services in Illinois for the last ten years, and it has sent letters over those years requesting that our members switch to an electronic method to complete its asset verification requests. Recent…
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We received an Illinois tax levy requiring us to freeze a customer’s funds. This customer recently received social security funds for her minor daughter due to the death of the father. Are we prohibited from freezing these funds, since they must be used for the benefit of the minor child?
Yes, we believe you would be prohibited from freezing social security funds pursuant to an Illinois tax levy. The Social Security Act prohibits social security benefit payments from being “subject to execution, levy, attachment, garnishment, or other legal process.” Additionally, the regulations addressing the garnishment of accounts containing federal benefit payments (such as social security…
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How long is an Illinois bank required to retain legal documents such as tax levies, garnishments, circuit court notices of hearings, citations to discover assets, and savings bond forms? We believe we need to keep them for seven years.
We do not believe there is a record retention requirement that applies to all “legal documents.” Below is a list of recommended retention periods for the specific items mentioned in your question. However, if these documents are relevant to litigation, we recommend applying a longer retention period, regardless of the document type. Documents Related to…
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An assisted living facility in our area has representative payee status for two of our customers who have died, and the representative payee has asked us to determine how the customers’ remaining funds should be handled. We returned the customers’ social security deposits on notification of their deaths, but we believe that the representative payee is responsible for determining whether there are representatives for their estates or contacting an attorney or probate court for disbursement of their remaining funds. What, if any, obligations does our bank have at this point? Also, should the account remain titled as originally set up, with the assisted living company listed as representative payee?
We do not believe that your bank has any obligations with respect to your deceased customers’ funds until representatives of their estates come forward, or the accounts become abandoned property. Federal law requires banks to return any social security benefits received after a beneficiary has died (either for the month of death or after the…
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Are we allowed to freeze social security payments after learning that the recipient has died? If so, how can we do this and still comply with Section 5-8 of the Green Book, which prohibits a receiving depository financial institution (RDFI) from holding benefit payments “indefinitely in a suspense account”?
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…
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We have a contractual right of setoff against a loan customer with a deposit account at our bank that receives Supplemental Security Income (SSI) and pension payments. We have been freezing the pension payments as soon as they hit the account and leaving the protected SSI payments alone. However, there’s more money in the account that has been sitting there since before the customer defaulted and our right to setoff arose. How can we determine which account funds can be setoff and which are protected when the funds are commingled? Can we follow the “lookback” provisions for garnishment of federal benefit payments, or should we only offset funds going forward that we know are not protected? Also, do the same procedures apply to other government benefits, such as social security?
We do not believe it is possible to distinguish SSI or other protected funds from unprotected funds once they have been commingled, and we do not believe the guidance on garnishing federal benefit payments is applicable to a contractual right of setoff. Consequently, we recommend only offsetting unprotected funds at the time of deposit, when…
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We received a writ of garnishment for a customer with two checking accounts at our bank. The only deposits are Social Security benefits, which are directly deposited into the first account then transferred to the second account (and sometimes transferred back to the first account). Are Social Security benefits exempt from garnishment? If so, do they lose this exempt status when transferred out of the original account where they were first deposited?
Yes, Social Security benefits directly deposited into a checking account generally are exempt from garnishment for the two-month period after they are deposited, but we believe these funds lose their exempt status once transferred out of the original account into which they were deposited. Social Security benefits generally are considered “protected amounts” that may not…
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Can a representative payee deposit a personal check payable to the supplemental security income (SSI) beneficiary and other funds into a representative payee account, assuming the funds are used for the benefit of the SSI beneficiary and the representative can properly account for the funds?
No, we do not recommend allowing a representative payee to deposit funds unrelated to social security into a representative payee account, as a representative payee does not have the authority to handle such funds on behalf of the beneficiary. The Social Security Administration’s (SSA) “Guide for Representative Payees” notes, “[w]e appoint a representative payee to…
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When a customer overdraws their account by spending more than their balance, can their social security deposits be used to set-off the negative balance and pay any overdraft fees? Is there any difference if the overdraft is due to fraud, such as a romance or loan scam?
We believe that you may exercise a valid right of setoff to cover overdrafts and pay overdraft fees using funds in a customer’s account that consist of social security benefits — provided that your deposit account agreement allows for a contractual right of setoff. The Social Security Act prohibits social security benefit payments from being…
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We have a customer who is a retired attorney and no longer maintains a business or IOLTA account. He wishes to deposit a Treasury check made payable to “John Doe ATTY FOR Client Doe.” The description on the check reads “SOC SEC for INS,” and our customer says the funds are his fees for representing a client in a Social Security dispute. Is our customer’s signature enough to endorse this check, or is the client’s signature required to complete the endorsement? We would typically require a check like this to be deposited into an IOLTA account. Generally, when a check is made out to Person A for Person B, what type of endorsement is required?
We believe only the attorney’s signature is required to endorse this check. The Social Security Administration (SSA) has published guidance stating that when it issues fee payments either by check or direct deposit to attorneys who have represented Social Security claimants, the check may read, for example: “John Altmeyer ATTY FOR James Crandle.” Since the…