Recent NCUA Rules Changes for Insurance Coverage

Permanent increase in basic NCUA insurance amount

A temporary increase from $100,000 to $250,000 was effective from October 3, 2008, through December 31, 2009. On May 20, 2009, the temporary increase was extended through December 31, 2013. And on July 22, 2010, the $250,000 federal insurance protection became permanent.

New Basic NCUA Share Insurance Limits for Common Ownership Types*

/Individual Accounts (owned by one person with no beneficaries) - $250,000 per member

Joint Accounts (two or more persons with no beneficiaries) - $250,000 per co-owner

Revocable Trust (ITF/POD) Accounts - $250,000 per member per beneficiary subject to specific limitations and requirements

Corporation/Partnership/Organization Accounts - $250,000

Government Accounts - $250,000 for share draft accounts, and $250,000 for share certificate and regular share accounts for a public unit/political subdivision located in the same state as the federally insured credit union. $250,000 for any public unit/political subdivision NOT located in the same state as the federally insured credit union.

**For information on the requirements for these ownership categories, click on the Frequently Asked Questions section and/or Glossary of the Share Insurance Estimator.

Note: IRAs and certain other retirement accounts will continue to be insured up to $250,000 after December 31, 2009, in accordance with the Deposit Insurance Reform Act of 2005.

New NCUA Rules for Revocable Trust Deposits

NCUA has adopted new rules that simplify how revocable trusts are insured. The new rules, which became effective on September 26, 2008, ensure that a revocable trust owner has at least as much coverage as he or she had under the former revocable trust account rules. The new rules change the calculation of coverage for revocable trusts in two significant ways:

First, the new rules provide that the owner of a revocable trust deposit is eligible to receive per-beneficiary coverage for any beneficiary named in the revocable trust, as long as the beneficiary is an individual, a charity or another nonprofit organization (recognized as such in the Internal Revenue Code).

Second, the new rules provide for a streamlined method of calculating insurance coverage depending on the number of beneficiaries who are entitled to receive the deposits when the trust owner (or owners) dies. Specifically, the rules provide that:

• For Revocable Trusts with Five or Fewer Beneficiaries: All revocable trusts belonging to one trust owner are insured up to $250,000 times the number of beneficiaries. For example, if a revocable trust owner has one beneficiary, his or her maximum coverage is $250,000 for all trust funds at the same insured credit union. If a revocable trust owner has five beneficiaries, his or her maximum coverage is $1,250,000 for all trust funds at the same insured credit union.
• For Revocable Trusts with Six or More Beneficiaries: All revocable trust funds belonging to one trust owner are insured to the greater of either $1,250,000 or the aggregate amount of all the beneficiaries’ actual proportional interests in the revocable trust(s), up to a maximum of $250,000 per beneficiary.