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
supercedes 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
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