U n i t e d S t a t e s G o v e r n m e n t

M e m o r a n d u m

FORM 0-1191 (1-92)

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

MAY 3 02000

TO

FROM

SUBJECT

This memorandum addresses whether the Railroad Retirement Board (Board) has 

authority to offset an annuitant's monthly annuity to satisfy a debt owed to another 

federal agency. Specifically, in compliance with the Debt Collection Improvement Act 

(DCIA), the Department of Veterans Affairs (VA) submitted a request to the 

Department of Treasury (Treasury) seeking collection of an outstanding debt owed to 

that agency. However, Treasury advised the VA that because it could not determine 

the amount of the annuitant's monthly annuity under the Railroad Retirement Act that 

is not subject to administrative offset, Treasury could not honor the VA's request. 

Therefore, the VA submitted its request directly to the Board. Our review of the 

request from the VA and discussions with you and your staff has raised the question 

as to whether the DCIA or the Railroad Retirement Act authorizes the Board to offset 

an annuitant's monthly annuity under the Railroad Retirement Act to satisfy a debt 

owed to another federal agency.

After the head of an executive agency attempts collection from a debtor under section 

31 U.S.C. §3711(a) and has provided the debtor with due process rights (31 U.S.C. 

§3716(a)), the agency may transfer or refer a delinquent debt to Treasury or its 

designated disbursing official. Section 3716(a) of Title 31 of the U.S. Code states in 

part:

(a) After trying to collect a claim from a person under section 3711 (a) of this 

title, the head of an executive, judicial, or legislative agency may collect the 

claim by administrative offset****.

Section 3716(c)(1)(A) clarifies w hat entities have authority to offset a payment 

released to the debtor. Section 3 7 1 6(c)(1)(A) states:

(c)(1)(A) Except as otherwise provided in this subsection, a disbursing official 

of the Department of Treasury, the Department of Defense, the United States

L-2000-18

Ronald Russo

Acting Director of Policy and Systems

Steven 

General

Administrative Offset 

Debt Collection Improvement Act

A. Barthola 

C o u n se l//
Postal Service, or any other government corporation, or any disbursing official 

of the United States designated by the Secretary of the Treasury, shall offset 

at least annually the amount of a payment which a paym ent certifying agency 

has certified to the disbursing official for disbursement, by an am ount equal to 

the amount of a claim which a creditor agency has certified to the Secretary of 

the Treasury pursuant to this subsection.

Section 3716 further states that notwithstanding any other provision of law, including 

section 14 of the Railroad Retirement Act (45 U.S.C. § 231m ), all benefits payable 

under the Railroad Retirement Act are subject to administrative offset, except the Tier 

II component of a railroad annuity. 31 U.S.C. § 3 7 1 6(c)(3)(A)(i)(lll). Section 3716 

(c)(3)(A)(i)(lll) thus overrides the general prohibition in section 14 of the Railroad 

Retirement Act against assigning, garnishing, attaching or otherw ise subjecting a 

railroad retirement annuity to legal process.

As stated earlier, the VA initially referred the delinquent debt to Treasury; however, 

Treasury advised the VA that Treasury could not determine the amount of the railroad 

annuitant's annuity under the Railroad Retirement Act that is subject to administrative 

offset. Thus, the VA submitted its request directly to the Board. However, for the 

reasons explained below, it is our opinion that the Board does not have authority to 

offset an annuitant's railroad retirement annuity to satisfy a debt which the annuitant 

owes to another federal agency.

Section 3716 (c)(1)(A) specifically states which federal agencies have authorization 

under the DCIA to offset a payment to a debtor. The Railroad Retirement Board is not 

included in that statutory provision. Nor has the Secretary of Treasury designated the 

Board as a disbursing official. Therefore, we must look to the Railroad Retirement Act 

to determine whether the Board has authority to offset the annuitant's annuity.

Section 14 of the Railroad Retirement Act (45 U.S.C. § 231m ) sets forth the 

limitations of assigning an annuitant's annuity under that Act. Section 14(a) of the 

Railroad Retirement Act states:

(a) Except as provided in subsection (b) of this section and the Internal Revenue 

Code of 1954 [26 USCS § 1 et seq.], notwithstanding any other law of the 

United States, or of any State, territory, or the District of Columbia, no annuity 

or supplemental annuity shall be assignable or be subject to any tax or to 

garnishment, attachment, or other legal process under any circum stances 

whatsoever, nor shall the payment thereof be anticipated [.]

The only exception to the applicability of section 14(a) is provided in subsection (b) of 

section 14. Section 14(b)(2) states:
(b)(2) This section shall not operate to prohibit the characterization or treatm ent 

of th at portion of an annuity under this Act which is not com puted under 

section 3(a), 4(a), or 4(f) of this Act [45 USCS § 231(b)(a), 231 c(a) or (f)], or 

any portion of a supplemental annuity under this Act, as community property 

for the purposes of, or property subject to, distribution in accordance with a 

court decree of divorce, annulment, or legal separation or the term s of any 

court-approved property settlem ent incident to any such court decree. The 

Board shall make payments of such portions in accordance with any such 

characterization or treatm ent or any such decree or settlem ent.

Pursuant to section 14(b)(2) of the Railroad Retirement Act, the Board m ust honor a 

court decree of divorce, annulment or legal separation that partitions the railroad 

employee's divisible component of his annuity under the Railroad Retirement Act. The 

Board must also honor a garnishment order that pertains to alimony or child support. 

Section 14 of the Railroad Retirement Act does not authorize the Board to offset a 

railroad employee's annuity under that Act for any purpose other than those which are 

specified in section 14(b)(2). Thus, the Railroad Retirement Act would prohibit the 

Board from offsetting a railroad employee's annuity to satisfy a debt owed to another 

federal agency.

K D Johnson:kdj:scm :kd/^ 6 

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