4000 - Advisory Opinions
Deposit Insurance for Trusteed Employee Vacation Plans
January 19, 1994
Claude A. Rollin, Senior Counsel
This is in response to your letter, dated December 13, 1993, concerning the deposit insurance that would be provided by the FDIC for a trusteed employee vacation plan.
In answer to your question, if the employee vacation plan is an "employee benefit plan" within the meaning of section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. 1002, then the deposit accounts established by the plan would be insured pursuant to section 330.12 of the FDIC's regulations, 12 C.F.R. 330.12.
Under section 330.12, the non-contingent interest of each employee in the deposit account of an employee benefit plan is generally insured up to $100,000, provided the depository institution is able to accept brokered deposits at the time the deposit is made and certain recordkeeping requirements are satisfied. Enclosed for your reference is a copy of the most recent amendments to the deposit insurance regulations and an article describing how the most recent changes affect employee benefit plan accounts.
If the employee vacation plan does not qualify under section 3(3) of ERISA, then perhaps it is an irrevocable trust. The rules concerning the insurance provided for deposits of an irrevocable trust can be found in section 330.11 of the FDIC's regulations. 12 C.F.R. 330.11. Generally speaking, funds representing the non-contingent interest of a beneficiary in an irrevocable trust are separately insured up to $100,000, provided that certain recordkeeping requirements are satisfied. See the enclosed regulations for further details.
Finally, if the employee vacation plan is neither a plan which qualifies under section 3(3) of ERISA, nor an irrevocable trust, then perhaps you have an agency or custodial account which would be insured pursuant to section 330.6 of the FDIC's regulations, 12 C.F.R. 330.6. Under that section, each principal's or beneficiary's interest in an agency or custodial account is insured up to $100,000, provided that certain recordkeeping requirements are satisfied. The principal's or beneficiary's interest in the account would, however, be added to any other accounts he/she maintains in the same right and capacity at the same bank and the total would be insured up to $100,000.
The recordkeeping requirements appear in section 330.4 of the FDIC's regulations, 12 C.F.R. 330.4.Generally, that section requires that, in order for there to be "pass-through" or per-participant insurance coverage: (1) the deposit account records of the depository institution must expressly indicate the existence of some fiduciary relationship; and (2) the records of the depository institution or the depositor, maintained in good faith and in the regular course of business, must indicate the name and interest of each person in the account. Please refer to section 330.4 of our regulations for more specific information.
If you have any further questions or require any additional information, please contact me at (202) 898-3985.