Notification of Change (NOC) is a method used by a financial institution to notify a Federal agency to correct or change account information in an entry the Federal agency processed through the ACH. For example, a routing number change resulting from the merging of two financial institutions may require one of the institutions to initiate an NOC to the respective Federal agency to make the appropriate RTN change to their recurring payment files. NOCs are used for Federal government (both civilian and military) payments that are made on a recurring basis. Examples include:
- Social Security Administration (SSA)
- Supplemental Security Income (SSI)
- Department of Veterans Affairs (VA)
- Office of Personnel Management (OPM)
- Railroad Retirement Board (RRB)
- Federal Salary
Conversely, NOCs should not be used in the following circumstances:
- Title/ownership of account
- Interest of the recipient or beneficiary in the account
- Where the recipient is changing accounts from one financial institution to another
- Account information for one-time payments (e.g., IRS Electronic Tax Refunds)
- Change in the name of the recipient (e.g. following marriage)
Under these circumstances, the recipient must complete a new Direct Deposit authorization.
Over the past several years, many financial institutions have been contacting SSA’s local offices directly to make changes to account information on recurring benefit payments. However, SSA does not have the resources to continue this exception process and will therefore have to discontinue these services immediately. As a result, financial institutions wishing to make changes to account information of SSA recurring payments must begin using the NOC process in accordance with the National Automated Clearinghouse Association (NACHA) rules and guidelines prescribed in Treasury’s GreenBook, the Federal government’s guide for financial institutions processing Federal government ACH payments.
For more information on processing NOCs for Federal government payments, please visit the Green Book website.
Here are a few reminders on the Treasury’s rule regarding the protection of federal benefits from garnishment that went into effect last year:
- Prior to acting on the garnishment order and not later than two business days following receipt of the order, the credit union must examine the order to determine if the United States or a State child support enforcement agency has attached or included a Notice of Right to Garnish Federal Benefits. If the Notice is included then you are not required to comply with this rule.
- No later than two business days from receipt of the order, the credit union must perform an account review. If the account review shows that a benefit payment was not directly deposited in the past two months, then follow normal practices when receiving garnishments. If a benefit payment or payments were directly deposited into the account within the past two months, the credit union must determine the protected amount.
- The protected amount is the lesser of the sum of all benefits payments posted to the account in the past two months, or the balance in the account at the open of business on the day you review the account. The credit union must ensure that the member has full access to the protected amount. Once the protected amount is determined, the credit union must protect the amount from the garnishment order. Any amounts above the protected amount are subject to garnishment.
For example: A credit union receives a garnishment order against an account holder for $2,000. The credit union reviews the account that day and the opening balance is $1,000. The account review shows that two Federal benefit payments were deposited during the past 2 months totaling $2,500. Since the balance in the account at the open of business on the day the account was reviewed is less than $2,500, the credit union must protect the opening balance of $1,000 from the garnishment order.
Also check with your compliance or legal counsel on state law requirements as they pertain to garnishments, including what must be included in the Notice to Account Holder, whether their state law contains more protections, and how the state and federal laws relate to one another. For more information, refer to the Treasury’s Garnishment Guidelines available at http://www.fms.treas.gov/greenbook/guidelines_garnish0311.pdf.