Protecting Your Social Security Benefits from Seizure: A Guide to the Regulations
Retirees should be aware that certain federal agencies have the authority to garnish Social Security benefits to collect specific debts. The Internal Revenue Service (IRS) and the U.S. Department of the Treasury, through the Treasury Offset Program (TOP), are the primary federal agencies that can garnish Social Security benefits.
Debts Subject to Garnishment
The IRS can garnish up to 15% of Social Security benefits to collect unpaid federal taxes, following collection procedures and notices. The Treasury Offset Program can garnish up to 15% of Social Security benefits to recover defaulted federal student loans, regardless of the benefit amount.
Garnishment can also occur for overdue court-ordered child support or alimony payments, with the total amount that can be garnished not exceeding 60% of benefits, but increasing to 65% if more than 12 weeks behind. Court-ordered criminal restitution related to federal crimes can also lead to garnishment.
Protected Social Security Benefits
Social Security benefits are generally protected from commercial creditors under federal law and the federal Consumer Credit Protection Act. Garnishment usually occurs only after other collection efforts fail and after specific legal notices have been issued.
If Social Security benefits are directly deposited into a bank account, federal regulations require banks to protect at least two months' worth of benefits from garnishment by most creditors. The law also shelters the total amount of all Social Security benefits and all other eligible federal benefit payments that have been directly deposited into that account or loaded onto a benefit debit card within the past two months.
Private creditors, such as credit card companies, personal lenders, or medical debt collectors, typically cannot take Social Security benefits to satisfy a debt.
Table of Garnishment Limits
| Federal Agency | Debt Type Allowed for Garnishment | Garnishment Limit on Social Security Benefits | |-------------------------------|----------------------------------------------------|----------------------------------------------------| | IRS (Federal Payment Levy Program) | Unpaid federal income taxes | Up to 15% of monthly benefits | | Treasury (Treasury Offset Program) | Defaulted federal student loans | Up to 15% of monthly benefits | | Federal Courts or Enforcement Agencies | Court-ordered child support, alimony, criminal restitution | Up to 65% of monthly benefits |
Seeking Legal Advice
If you have questions about garnishment or believe your benefits are being improperly garnished, consulting with a qualified attorney is recommended to understand your options and potentially challenge the action. It is essential to stay informed and take prompt action to protect your Social Security benefits.
[1] Social Security Administration. (n.d.). Garnishment of Social Security Benefits. Retrieved from https://www.ssa.gov/pubs/EN-05-10099.pdf
[2] Internal Revenue Service. (n.d.). Collection Action Program - Levy Program. Retrieved from https://www.irs.gov/businesses/small-businesses-self-employed/collection-action-program-levy-program
[3] U.S. Department of Education. (n.d.). Defaulted Student Loans. Retrieved from https://studentaid.gov/debt-relief/default
[4] Consumer Financial Protection Bureau. (n.d.). Social Security Benefits and Garnishment. Retrieved from https://www.consumerfinance.gov/ask-cfpb/can-social-security-benefits-be-garnished-to-pay-a-debt-en-2387/
[5] Federal Trade Commission. (n.d.). Social Security Benefits and Garnishment. Retrieved from https://www.consumer.ftc.gov/articles/0081-social-security-benefits-and-garnishment
In the realm of personal finance, it is crucial for retirees to recognize that the Internal Revenue Service (IRS) can garnish up to 15% of Social Security benefits to recover unpaid federal taxes. Similarly, the Treasury Offset Program (TOP) can garnish up to 15% of Social Security benefits to repay defaulted federal student loans, regardless of the benefit amount.
