Bulletin No. 2005-13-CU

In the matter of Trustees and Custodians of Tax Deferred Plans

Issued and entered this 10th day of June 2005
By Linda A. Watters, Commissioner

This bulletin supersedes Bulletin No. 86-1.

The purpose of this bulletin is to establish minimum safety and soundness standards for credit unions offering individual retirement accounts (IRA), self-employed retirement plans (KEOGH), self-directed IRA or KEOGH accounts or other tax-deferred plans, such as health savings accounts. Section 401(2)(n) of the Michigan Credit Union Act, 2003 PA 215, as amended, MCL 490.401(2)(n), enables domestic credit unions to act as trustees or custodians of retirement accounts or other accounts of its members permitting tax deferrals under federal or state law. The following items are minimum requirements:

  1. The pension plan must qualify for specific tax treatment under federal or state law. All funds held in a trustee or custodial capacity must be maintained in accordance with applicable laws and rules and regulations.
  2. The credit union shall maintain individual records for each participant that show, in detail, all transactions relating to the funds of each participant or beneficiary.
  3. In the case of self-directed IRA or KEOGH accounts, any subsequent transfer of funds or other assets must be solely at the discretion of the member. The credit union shall exercise no investment discretion and provide no investment advice with respect to plan assets. The Credit Union must clearly notify the member that National Credit Union Administration Share Insurance Fund coverage is limited only to funds held in share or deposit accounts of the credit union. A credit union may be compensated for acting as trustee or custodian of each account and, in addition, may receive compensation for effecting the purchase or sale of each investment except share or deposit accounts issued by the credit union.

Any questions regarding this bulletin should be directed to:

Office of Financial and Insurance Services
Credit Union Division
611 West Ottawa Street
P.O. Box 30220
Lansing, Michigan 48909-7720

Phone: (517) 373-6930
Toll Free: (877) 999-6442

Signed: Linda A. Watters
Commissioner of Financial and Insurance Services