[Federal Register Volume 65, Number 41 (Wednesday, March 1, 2000)]
[Rules and Regulations]
[Pages 10933-10934]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-4853]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Parts 724 and 745


Trustees and Custodians of Pension Plans; Share Insurance and 
Appendix

AGENCY: National Credit Union Administration.

ACTION: Final rule.

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SUMMARY: 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.

EFFECTIVE DATE: This rule is effective March 31, 2000.

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.

SUPPLEMENTARY 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

[[Page 10934]]

possessions, 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.

Regulatory Procedures

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

    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.

List of Subjects

12 CFR Part 724

    Credit unions, Pensions, Trusts and trustees.

12 CFR Part 745

    Credit unions, Pensions, Share insurance, Trusts and trustees.

By the National Credit Union Administration Board on February 24, 
2000.
Becky Baker,
Secretary of the Board.

    For the reasons set out in the preamble, the NCUA revises 12 CFR 
chapter VII to read as follows:

PART 724--TRUSTEES AND CUSTODIANS OF PENSION PLANS

    1. The authority citation for part 724 continues to read as 
follows:

    Authority: 12 U.S.C. 1757, 1765, 1766 and 1787.

    2. In Sec. 724.1, remove the first sentence and add 2 sentences in 
its place to read as follows:


Sec. 724.1  Federal credit unions acting as trustees and custodians of 
pension and retirement plans.

    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 APPENDIX

    3. The authority citation for part 745 continues to read as 
follows:

    Authority: 12 U.S.C. 1752(5), 1757, 1765, 1766, 1781, 1782, 
1787, 1789.

    4. Amend Sec. 745.9-2 by revising the first sentence of paragraph 
(a) to read as follows:


Sec. 745.9-2  IRA/Keogh Accounts.

    (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