Protected Amount Calculation Examples (From Appendix 4 of The Guidelines for Garnishment of Accounts Containing Federal Benefit Payments)

The following examples illustrate the definition of protected amount:

Example 1: Account balance less than sum of benefit payments

1. A financial institution receives a garnishment order against an account holder for $2,000 on May 20.
2. The date of account review is the same day, May 20, when the opening balance in the account is $1,000.
3. The lookback period begins on May 19, the date preceding the date of account review, and ends on March 19, the corresponding date two months earlier.
4. The account review shows that two Federal benefit payments were deposited to the account during the lookback period totaling $2,500, one for $1,250 on Friday, April 30 and one for $1,250 on Tuesday, April 1.
5. Since the $1,000 balance in the account at the open of business on the date of account review is less than the $2,500 sum of benefit payments posted to the account during the lookback period, the financial institution establishes the protected amount at $1,000.

Example 2: Three benefit payments during lookback period

1. A financial institution receives a garnishment order against an account holder for $8,000 on December 2.
2. The date of account review is the same day, December 2, when the opening balance in the account is $5,000.
3. The lookback period begins on December 1, the date preceding the date of account review, and ends on October 1, the corresponding date two months earlier.
4. The account review shows that three Federal benefit payments were deposited to the account during the lookback period totaling $4,500, one for $1,500 on December 1, another for $1,500 on November 1, and a third for $1,500 on October 1.
5. Since the $4,500 sum of the three benefit payments posted to the account during the lookback period is less than the $5,000 balance in the account at the open of business on the date of account review, the financial institution establishes the protected amount at $4,500 and seizes the remaining $500 in the account consistent with State law.

Example 3: Intraday transactions

1. A financial institution receives a garnishment order against an account holder for $4,000 on Friday, September 10.
2. The date of account review is Monday, September 13, when the opening balance in the account is $6,000.
3. A cash withdrawal for $1,000 is processed after the open of business on September 13, but before the financial institution has performed the account review, and the balance in the account is $5,000 when the financial institution initiates an automated program to conduct the account review.
4. The lookback period begins on Sunday, September 12, the date preceding the date of account review, and ends on Monday, July 12, the corresponding date two months earlier.
5. The account review shows that two Federal benefit payments were deposited to the account during the lookback period totaling $3,000, one for $1,500 on Wednesday, July 21, and the other for $1,500 on Wednesday, August 18.
6. Since the $3,000 sum of the two benefit payments posted to the account during the lookback period is less than the $6,000 balance in the account at the open of business on the date of account review, the financial institution establishes the protected amount at $3,000 and, consistent with State law, freezes the $2,000 remaining in the account after the cash withdrawal.

Example 4: Benefit payment on date of account review

1. A financial institution receives a garnishment order against an account holder for $5,000 on Thursday July 1.
2. The date of account review is the same day, July 1, when the opening balance in the account is $3,000, and reflects a Federal benefit payment of $1,000 posted that day.
3. The lookback period begins on Wednesday, June 30, the date preceding the date of account review, and ends on Friday April 30, the corresponding date two months earlier.
4. The account review shows that two Federal benefit payments were deposited to the account during the lookback period totaling $2,000, one for $1,000 on Friday April 30 and one for $1,000 on Tuesday, June 1.
5. Since the $2,000 sum of the two benefit payments posted to the account during the lookback period is less than the $3,000 balance in the account at the open of business on the date of account review, notwithstanding the third Federal benefit payment posted on the date of account review, the financial institution establishes the protected amount at $2,000 and places a hold on the remaining $1,000 in the account in accordance with State law.

Example 5: Account co-owners with benefit payments

1. A financial institution receives a garnishment order against an account holder for $3,800 on March 22.
2. The date of account review is the same day, March 22, when the opening balance in the account is $7,000.
3. The lookback period begins on March 21, the date preceding the date of account review, and ends on January 21, the corresponding date two months earlier.
4. The account review shows that four Federal benefit payments were deposited to the account during the lookback period totaling $7,000.
5. Two of these benefit payments, totaling $3,000, were made to the account holder against whom the garnishment order was issued.
6. The other two payments, totaling $4,000, were made to a co-owner of the account.
7. Since the financial institution must perform the account review based only on the presence of benefit payments, without regard to the existence of co-owners on the account or payments to multiple beneficiaries or under multiple programs, the financial institution establishes the protected amount at $7,000, equal to the sum of the four benefit payments posted to the account during the lookback period.
8. Since $7,000 is also the balance in the account on the date of account review, there are no additional funds in the account which can be frozen.