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Beginning May 1, new applicants for federal benefits, including
those paid by the U.S. Railroad Retirement Board (RRB), are required to receive
them as electronic payments. Those already receiving benefit payments on that
date will have until March 1, 2013, to switch to a form of electronic payment.
This stems from a Department of the Treasury rule that was finalized in late
December 2010.
The most common form of electronic payment for railroad retirement, social
security and veterans benefits is through Direct Deposit, in which the amount is
automatically deposited in an individual's bank account. Starting May 1, when
people apply for benefits they will be asked to provide bank account
information.
The required information includes the type of account (checking or savings),
along with the financial institution's nine-digit routing transit number and the
account number. The latter two items are typically found at the bottom of a
check.
If an individual does not have a bank account, payments can be made through
Treasury's Direct Express® debit card. The benefit amount will automatically be
loaded onto the card, which carries a MasterCard® logo and functions as an
ordinary debit card. This includes cash withdrawals at a nationwide network of
automated teller machines and point-of-sale purchases at most merchants and
retailers.
By making electronic payments mandatory, the government will experience
significant cost savings. Since it only costs 10.5 cents to issue an electronic
payment, compared to $1.03 for a paper check, replacing the 136 million federal
benefit checks issued in a year with electronic payments will save the
government more than $120 million on an annual basis.
The RRB pays more than 90 percent of its benefits electronically, which is
higher than the government-wide average of about 80 percent. The agency has
promoted use of Direct Deposit for a number of years, stressing the benefits of
timeliness and security. Electronic payment ensures that benefits will be
deposited on the payment date, with no possibility of a paper check being lost
or stolen.
The RRB, along with other benefit-paying agencies, has been supporting
Treasury's Go Direct® public education campaign. The purpose of the campaign has
been to inform people about the new requirements, provide information about the
benefits of electronic payment, and facilitate their enrollment in one of the
electronic payment options.
While individuals already on the rolls as of May 1 of this year have until March
1, 2013, to convert to a form of electronic payment, the RRB encourages its
beneficiaries to sign up at their earliest convenience. Besides providing added
safety and convenience sooner, this will help avoid a last-minute rush just
before the deadline.
Additional information on the initiative, including answers to frequently asked
questions and various educational materials, can be accessed online at
www.GoDirect.org
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