Answer by John Burnett: Your wording suggests that the Social Security payments arrive as direct deposit ACH credits. If you knew the customer died before the entry arrived, you should have flagged the account to return any federal recurring payments, and the deposit should be returned, regardless of the date of death.
If the date of death was in the previous month (the month for which the payment was received) or earlier, there was no entitlement to the payment. If the customer died in the current month (the month in which the payment is received), there is entitlement, and SSA will send the payment back out once it determines whom it should be payable to (usually the estate of the deceased).
Answer by Ken Golliher: As John indicates, the analysis required has become simpler. From the SSA web site:
If the deceased was receiving Social Security benefits, you must return the benefit received for the month of death or any later months. For example, if the person dies in July, you must return the benefit paid in August. If benefits were paid by direct deposit, contact the bank or other financial institution. Request that any funds received for the month of death or later be returned to Social Security. If the benefits were paid by check, do not cash any checks received for the month in which the person dies or later. Return the checks to Social Security as soon as possible.
First published on BankersOnline.com 4/25/11