NCUA Increases Protection on Retirement Accounts

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.

“I am pleased that NCUA and FDIC are implementing deposit insurance changes recently signed into law by President Bush,” said Vice Chairman Hood. “As the amount of deposits in retirement accounts top $100,000, Congress and President Bush want to ensure that retirement funds are fully protected, backed by the federal deposit insurance funds at NCUA and the FDIC. What’s more, adding the provision enabling NCUA and FDIC to jointly review the insurance protection level every five years will ensure deposited funds remain fully protected now and in the future.”

The National Credit Union Administration charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates the National Credit Union Share Insurance Fund, insuring the accounts of nearly 85 million account holders in all federal credit unions and the majority of state-chartered credit unions. NCUA’s operation is funded by credit unions, not federal tax dollars.

If you have any questions about the increase in account protection, please contact your local branch.