U n i t e d S t a t e s G o v e r n m e n t FORM 0 -1 1 5 1 (1 -9 2 )

M e m o r a n d u m R a i l r o a d R e t i r e m e n t b o a r d

£ - 86-33

JUL191996

TO Marian Powers Gibson 

Director of Legislative Affairs

FROM Catherine C. Cook d f f 

General Counsel

SUBJECT Implementation of Direct Deposit Requirement 

for Receipt of Railroad Retirement Benefits

This is in response to your request for clarification as to whether section 31001(x) of the 

Debt Collection Improvement Act of 1996 requires direct deposit (EFT) of Federal benefit 

payments for all claimants "eligible" for such benefits after July 25, 1996, or whether EFT is 

required for all claimants who "file" for benefits after July 25, 1996. Claimants eligible for 

Federal benefits after July 25, 1996, are the first of two classes of benefit claimants who will 

^ be affected by the new EFT requirement. The second class of claimants includes all other 

individuals in receipt of Federal payments. For the second class of individuals, EFT will be 

required after January 1, 1999.

Section 31001(x) of the Debt Collection Improvement Act of 1996 amended Title 31 of the 

United States Code at section 3332, in pertinent part, as follows:

The term "Federal payment" is defined in amended 31 U.S.C. §§ 3332(j) as including 

Federal benefit payments from Federal agencies.

The term "eligible" is not defined in the Act, but amended 31 U.S.C. § 3332(i) authorizes 

the Secretary of the Treasury to issue regulations as necessary to implement the section. The 

advance copy of Treasury’s temporary regulations, issued in June, 1996, states that an 

individual eligible for a Federal benefit is "An individual who applies for benefit payment on 

or after July 26, 1996 [emphasis supplied]." Under the Board’s regulations at 20 CFR § 

217.2, the terms "apply" and "file" are defined as "to sign a form or statement that the 

Railroad Retirement Board accepts as an application."

(e)(1) * * * all Federal payments to a recipient who becomes

eligible for that type of payment after 90 days after the date 

of the enactment of the Debt Collection Improvement Act of 1996 

shall be made by electronic funds transfer.
Director of Legislative Affairs

Accordingly, under the advance copy of the Treasury Department’s temporary regulations, 

railroad retirement benefit claimants who "file" for a benefit after July 26, 1995, must 

receive their benefit payments through EFT. Amended 31 U.S.C. § 3332(g) requires 

claimants to furnish to the agency the information necessary to implement the EFT of benefit 

payments. The advance copy of the temporary regulations is effective beginning July 26, 

1996, and Treasury has drafted an interim rule that is currently pending approval. Our 

contacts at Treasury have stated that the interim rule does not make any changes to the 

temporary rule with respect to EFT of Federal payments. Treasury expects to issue a final 

rule on the subject by July 1997.

Until and unless the Treasury Department issues regulations stating otherwise, the only 

exception to the EFT requirement for recipients of Federal benefits is contained in amended

The head of a federal agency shall, with respect to Federal 

payments made or authorized by the agency, waive the application 

of paragraph (1) to a recipient of those payments upon receipt 

of written certification from the recipient that the recipient 

does not have an account with a financial institution or an 

authorized payment agent.

Accordingly, the EFT requirement may only be waived for those benefit claimants who do 

not have an account with a financial institution (or an authorized payment agent) and who 

request waiver on those grounds from the Board.

cc: Director of Administration

Director of Programs 

Director of Public Affairs

Denise LeSeur-Waechter, Chief, RRA Payment Analysis and Systems

CCCbok: S ABartholow: ALChaney: ale: scm 

GIBSEFT.LOP

Exception

31 U.S.C. § 3332(e)(2):