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NCUA Issues Interim Rule Amending Share Insurance Coverage
The NCUA Board has issued an interim final rule amending share insurance to clarify coverage and implement changes required by share insurance reform Congress enacted in February.
“I am pleased to see this much needed change in account protection,” said Chairman JoAnn Johnson. “I view this immediate increase in retirement savings coverage as taking a large step to protect member’s accounts and as a vital way to encourage retirement saving. As personal retirement accounts surpass $100,000, Americans want to know that their IRA and Keogh accounts in banks, thrifts and credit unions are federally insured and protected against loss.”
Effective April 1, 2006, the interim final rule provides the following:
- Increases share insurance limits to $250,000 for retirement accounts such as Traditional and
Roth IRAs (Individual Retirement Accounts) and Keogh accounts;
- Retains the $100,000 insurance limit for all other types of share accounts;
- Requires NCUA and FDIC to jointly determine if an inflation-adjusted increase is appropriate for insured accounts beginning in 2010 and every five years thereafter;
- Includes pass-through coverage on employee benefit plans while limiting acceptance of shares in employee benefit plans to insured credit unions that are well or adequately capitalized; and
- Clarifies coverage for qualified tuition programs, commonly referred to as 529 plans, and share accounts denominated in foreign currencies.
"In addition to the increased coverage resulting from the recently passed law, this rule provides important new flexibility for those credit unions servicing their members' needs abroad, as well as those assisting members who are trying to help pay their children's college tuition," Board Member Gigi Hyland said.
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