National Credit Union Administration.
The National Credit Union Administration (NCUA) is revising its rules regarding a federal credit union's authority to act as trustee or custodian of pension plans. The revised rule permits federal credit unions in a territory, including the trust territories, or a possession of the United States, or the Commonwealth of Puerto Rico, to offer trustee or custodian services for Individual Retirement Accounts (IRAs), where otherwise permitted.
This rule is effective March 31, 2000.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Dianne M. Salva, Staff Attorney, Division of Operations, Office of General Counsel, at the above address or telephone: (703) 518-6540.End Further Info End Preamble Start Supplemental Information
NCUA published a proposal to revise its rules to permit federal credit unions in a territory, including the trust territories, or a possession of the United States, or the Commonwealth of Puerto Rico, to offer trustee or custodian services for Individual Retirement Accounts (IRAs), where otherwise permitted. 64 FR 55871, Oct. 15, 1999. NCUA received just one comment letter, which was strongly supportive of the proposal. The final regulation is unchanged from the proposal.
NCUA's legal analysis and a discussion of the rule's basis and purpose were set out in the proposed regulation. Id. Briefly summarized, the current regulation relies, in part, on the Internal Revenue Code (IRC), which applies only in the United States and the District of Columbia, effectively excluding FCUs in U.S. territories and possessions. In several territories and Start Printed Page 10934possessions, the income tax laws mirror the IRC or have provisions similar to the IRC that recognize FCUs as permissible trustees for IRAs. The final amendment allows FCUs in those U.S. territories and possessions to act as trustee or custodian for IRAs, where otherwise permitted. To ensure that IRAs in the territories and possessions are treated the same as IRAs in the United States, the final amendment modifies Part 745 to clarify that the accounts will be separately insured.
Paperwork Reduction Act
This regulation will impose no additional information collection, reporting or record keeping requirements.
Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act (RFA) (5 U.S.C. 605(b)), NCUA certifies that these amendments will not have a significant economic impact on a substantial number of small entities. NCUA expects that these regulations will not: (1) Have significant secondary or incidental effects on a substantial number of small entities; or (2) create any additional burden on small entities. These conclusions are based on the fact that the regulations merely extend the authority to offer a service to members. Accordingly, a regulatory flexibility analysis is not required.
Executive Order 13132 encourages independent regulatory agencies to consider the impact of their regulatory actions on state and local interests. In adherence to fundamental federalism principles, NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the Executive Order. Since this regulation will only apply to federal credit unions, it will not have a substantial direct effect on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.
Small Business Regulatory Enforcement Fairness Act
The Office of Management and Budget has determined that this rule is not major for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996.Start List of Subjects
List of Subjects
- Credit unions
- Trusts and trustees
- Credit unions
- Share insurance
- Trusts and trustees
By the National Credit Union Administration Board on February 24, 2000.
Secretary of the Board.
For the reasons set out in the preamble, the NCUA revises 12 CFR chapter VII to read as follows:End Amendment Part Start Part
PART 724—TRUSTEES AND CUSTODIANS OF PENSION PLANSEnd Part Start Amendment Part
1. The authority citation for part 724 continues to read as follows:End Amendment Part Start Amendment Part
2. In § 724.1, remove the first sentence and add 2 sentences in its place to read as follows:End Amendment Part
A federal credit union is authorized to act as trustee or custodian, and may receive reasonable compensation for so acting, under any written trust instrument or custodial agreement created or organized in the United States and forming part of a pension or profit-sharing plan which qualifies or qualified for specific tax treatment under sections 401(d), 408, 408A and 530 of the Internal Revenue Code (26 U.S.C. 401(d), 408, 408A and 530), for its members or groups of members, provided the funds of such plans are invested in share accounts or share certificate accounts of the federal credit union. Federal credit unions located in a territory, including the trust territories, or a possession of the United States, or the Commonwealth of Puerto Rico, are also authorized to act as trustee or custodian for such plans, if authorized under sections 401(d), 408, 408A and 530 of the Internal Revenue Code as applied to the territory or possession or under similar provisions of territorial law. * * *
PART 745—SHARE INSURANCE AND APPENDIXEnd Part Start Amendment Part
3. The authority citation for part 745 continues to read as follows:End Amendment Part Start Amendment Part
4. Amend § 745.9-2 by revising the first sentence of paragraph (a) to read as follows:End Amendment Part
(a) The present vested ascertainable interest of a participant or designated beneficiary in a trust or custodial account maintained pursuant to a pension or profit-sharing plan described under section 401(d) (Keogh account) or sections 408, 408A or 530 (IRA) of the Internal Revenue Code or similar provisions of law applicable to a U.S. territory or possession, will be insured up to $100,000 separately from other accounts of the participant or designated beneficiary. * * *
[FR Doc. 00-4853 Filed 2-29-00; 8:45 am]
BILLING CODE 7535-01-P