FDIC Federal Register Citations
March 23, 2006 (Volume 71, Number 56)]
[Rules and Regulations]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
Rules and Regulations
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of
Prices of new books are listed in the first FEDERAL REGISTER issue of each
SUMMARY: The FDIC is amending its deposit insurance regulations to
implement applicable revisions to the Federal Deposit Insurance Act
made by the Federal Deposit Insurance Reform Act of 2005 and the
Federal Deposit Insurance Reform Conforming Amendments Act of 2005. The
interim rule: Provides for consideration of inflation adjustments to
increase the current standard maximum deposit insurance amount of
$100,000 on a five-year cycle beginning in 2010; increases the deposit
insurance limit for certain retirement accounts from $100,000 to
$250,000, also subject to inflation adjustments; and provides per-
participant insurance coverage to employee benefit plan accounts, even
if the depository institution at which the deposits are placed is not
authorized to accept employee benefit plan deposits.
DATES: The interim rule is effective on April 1, 2006. Written comments
must be received by the FDIC on or before May 22, 2006.
ADDRESSES: You may submit comments by any of the following methods:
Agency Web site:
Follow the instructions for submitting comments. E-mail:
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments/Legal ESS, Federal Deposit Insurance Corporation, 550 17th
Street, NW., Washington, DC 20429.
Hand Delivered/Courier: The guard station at the rear of
the 550 17th Street Building (located on F Street), on business days
between 7 a.m. and 5 p.m.
Public Inspection: Comments may be inspected and
photocopied in the FDIC Public Information Center, 3501 North Fairfax
Drive, Room E-1002, Arlington, Virginia 22226, between 9 a.m. and 5
p.m. on business days.
Internet Posting: Comments received will be posted without
including any personal information provided.
FOR FURTHER INFORMATION CONTACT: Joseph A. DiNuzzo, Counsel, (202) 898-
7349, Legal Division, Federal Deposit Insurance Corporation,
Washington, DC 20429.
The Federal Deposit Insurance Reform Act of 2005 (``Reform Act'')
(Pub. L. 109-171) made three substantive changes to the insurance
coverage provisions of the Federal Deposit Insurance Act (12 U.S.C.
1813-1835a). First, section 2103(a) of the legislation provides for an
inflation index to be applied to the current maximum deposit insurance
amount of $100,000, defined in the Reform Act as the ``standard maximum
deposit insurance amount'' (``SMDIA''). Beginning April 1, 2010, and
every succeeding five years, subject to approval by the Board of
Directors of the FDIC and the National Credit Union Administration
Board (``NCUA''), the current SMDIA could be increased by a cost-of-
living adjustment. This adjustment is to be calculated according to the
Personal Consumption Expenditures Chain-type Index published by the
Department of Commerce and rounded down to the nearest $10,000. The
statute requires the FDIC and the NCUA to consider certain factors in
determining whether to increase the SMDIA. If the agencies determine
that an increase is warranted, the FDIC and the NCUA are required to
publish the new SMDIA in the Federal Register and provide a
corresponding report to Congress by April 5, 2010, and every succeeding
fifth year. Thereafter, the approved adjustment will automatically
occur unless a Congressional act provides otherwise and will take
effect on January 1st of the year immediately succeeding the year in
which the new amount is calculated.
Second, section 2103(c) of the Reform Act increases the deposit
insurance limit for certain retirement accounts from $100,000 to
$250,000, also subject to inflation adjustments, as described above.
The types of accounts within this category of coverage continue to be
comprised of: Individual retirement accounts (``IRAs'') described in
section 408(a) of the Internal Revenue Code (``IRC'') (26 U.S.C.
408(a)); eligible deferred compensation plan accounts described in
section 457 of the IRC (26 U.S.C. 457); and individual account plan
accounts defined in section 3(34) of the Employee Retirement Income
Security Act (``ERISA'') (29 U.S.C. 1002) and any plan described in
section 401(d) of the IRC, to the extent that participants and
beneficiaries under such plans have a right to direct the investment of
assets held in individual accounts maintained on their behalf by the
Third, section 2103(b) of the Reform Act provides per-participant
coverage to employee benefit plan accounts, even if the depository
institution at which the deposits are placed is not authorized to
accept employee benefit plan deposits. This coverage is referred to as
``pass-through'' coverage because the insurance passes through the
employee benefit plan administrator to each of the participants in the
plan. As discussed below, the Reform Act eliminates the former
requirement that an insured depository institution meet prescribed
capital requirements before employee benefit plan deposits accepted by
that institution would be eligible for pass-through coverage. As a
result of the legislation, pass-through coverage for employee benefit
deposits is no longer dependent on the capital level of the institution
where such deposits are placed.
Also, the Federal Deposit Insurance Reform Conforming Amendments
Act of 2005 (Pub. L. 109-173) (``Conforming Amendments Act'') created
the term ``government depositor'' in connection with public funds
described in and insured pursuant to section 11(a)(2) of the FDI Act.
12 U.S.C. 1821(a)(2). The Conforming Amendments Act provides that the
deposits of a government depositor shall be insured in an amount
up to the SMDIA, subject to the inflation adjustment described above.
The purpose of this rulemaking is to implement by regulation the
deposit insurance coverage revisions made by the Reform Act and the
Conforming Amendments Act. The interim rule amends the applicable
provisions of Part 330 of the FDIC's regulations, entitled Deposit
Insurance Regulations (12 CFR part 330).
II. The Interim Rule
A. The SMDIA
The interim rule adds a definition of ``standard maximum deposit
insurance amount'' to section 330.1 of the FDIC's regulations (12 CFR
330.1). Tracking the language of the Reform Act, the definition is
``$100,000 adjusted pursuant to subparagraph (F) of section 11(a)(1) of
the FDI Act (12 U.S.C. 1821 (a)(1)(F)).'' The revised subparagraph (F)
of section 11(a)(1) of the FDI Act provides the details of how, every
five years, the FDIC and the NCUA will consider and calculate the
inflation adjustment to the SMDIA. The new definition in section 330.1
also indicates that the current SMDIA is $100,000 and that the acronym
``SMDIA'' is used in Part 330 for the SMDIA. In addition, the
definition notes that all the examples of deposit insurance coverage in
Part 330 use the current SMDIA of $100,000.
In accordance with the addition of this definition, all references
in Part 330 to the current insurance amount of $100,000 are replaced by
the acronym ``SMDIA.'' This will avoid having to change the actual
SMDIA in each provision of the regulation whenever the SMDIA is
adjusted for inflation.
B. Retirement and Employee Benefit Plan Accounts
Section 330.14 is amended to reflect that pass-through coverage for
employee benefit plan accounts no longer hinges on the capital level of
the depository institution where such deposits are placed. Under the
former law, pass-through coverage for employee benefit plan deposits
was not available if the deposits were placed with an institution not
permitted to accept brokered deposits. Under section 29 of the FDI Act
(12 U.S.C. 1831f), only institutions that meet prescribed capital
requirements may accept brokered deposits. The Reform Act takes a
different approach. It prohibits insured institutions that are not
``well capitalized'' or ``adequately capitalized'' from accepting
employee benefit plan deposits. But, under the Reform Act, employee
benefit plan deposits accepted by any insured depository institution,
even those prohibited from accepting such deposits, are nonetheless
eligible for pass-through deposit insurance coverage.
This change in the deposit insurance rules will apply to all
employee benefit plan deposits, including employee benefit plan
deposits placed before the effective date of the interim rule and
irrespective of whether such deposits would have been eligible for
pass-through coverage under the former statute and rules. The other
requirements in section 330.14 of the FDIC's rules on the eligibility
of employee benefit plan deposits for pass-through insurance coverage
continue to apply. In particular, only the ``non-contingent'' interests
of plan participants in an applicable plan are eligible for pass-
through coverage. A ``non-contingent'' interest is an interest that can
be determined without the evaluation of contingencies other than life
Section 330.14 also is amended to indicate that the maximum
coverage for certain retirement accounts is now $250,000. These
retirement accounts continue to be comprised of IRAs (both traditional
IRAs and Roth IRAs); section 457 deferred compensation plan accounts;
``self-directed'' Keogh plan accounts (or ``HR 10'' accounts); and
``self-directed'' defined contribution plan accounts, which are
primarily 401(k) plan accounts. The term ``self-directed'' continues to
mean that the plan participants have the right to direct how their
funds are invested, including the ability to direct that the funds be
deposited at an FDIC-insured institution.
The regulatory burden associated with the capital-status
information requirements in Part 330 (section 330.14(h)) has been
eliminated because the insurance coverage of employee benefit plan
deposits no longer hinges on a depository institution's capital level.
C. Technical Revisions
The heading for section 330.15 has been changed from ``Public unit
accounts'' to ``Accounts held by government depositors'' to reflect the
technical change to the corresponding statutory provision made by the
Conforming Amendments Act (12 U.S.C. 1821(a)(2)). No substantive
changes are made to section 330.15.
Section 330.16 of Part 330 provides effective dates for past
revisions to Part 330. Although unrelated to the deposit insurance
reform legislation, section 330.16 is deleted because it is obsolete.
III. Rationale for Interim Rulemaking
The changes to the deposit insurance rules implemented by this
rulemaking will benefit depositors by increasing coverage for
retirement accounts and removing a limitation on the availability of
pass-through insurance coverage for employee benefit plan accounts. As
such, the FDIC wishes to amend its regulations to effect these changes
as soon as possible. Thus, the FDIC has determined that the public
notice and participation that ordinarily are required by the
Administrative Procedure Act (5 U.S.C. 553) before a regulation may
take effect would, in this case, be contrary to the public interest and
that good cause exists for waiving the customary 30-day delayed
effective date. Nevertheless, the FDIC desires to have the benefit of
public comment before adopting a permanent final rule and thus invites
interested parties to submit comments during a 60-day comment period.
In adopting a final regulation, the FDIC will revise the interim rule,
if appropriate, in light of the comments received on the interim rule.
IV. Paperwork Reduction Act
The interim rule will implement statutory changes to the FDIC's
deposit insurance regulations. It will not involve any new collections
of information pursuant to the Paperwork Reduction Act (44 U.S.C. 3501
et seq.). Consequently, no information collection has been submitted to
the Office of Management and Budget for review.
V. Regulatory Flexibility Act
A regulatory flexibility analysis is required only when an agency
must publish a notice of proposed rulemaking (5 U.S.C. 603, 604).
Because the revisions to Part 330 are published in interim final form
without a notice of proposed rulemaking, no regulatory flexibility
analysis is required.
VI. The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families
The FDIC has determined that the interim rule will not affect
family well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, enacted as part of the Omnibus
Consolidated and Emergency Supplemental Appropriations Act of 1999
(Pub. L. 105-277, 112 Stat. 2681).
VII. Small Business Regulatory Enforcement Fairness Act
The Office of Management and Budget has determined that the interim
not a ``major rule'' within the meaning of the relevant sections of the
Small Business Regulatory Enforcement Fairness Act of 1996 (``SBREFA'')
(5 U.S.C. 801 et seq.). As required by SBREFA, the FDIC will file the
appropriate reports with Congress and the General Accounting Office so
that the interim rule may be reviewed.
List of Subjects in 12 CFR Part 330
Bank deposit insurance, Banks, banking, Reporting and recordkeeping
requirements, Savings and loan associations, Trusts and trustees.
For the reasons stated above, the Board of Directors of the Federal
Deposit Insurance Corporation hereby amends part 330 of chapter III of
title 12 of the Code of Federal Regulations as follows:
PART 330--DEPOSIT INSURANCE COVERAGE
1. The authority citation for part 330 continues to read as follows:
2. Section 330.1 paragraphs (n), (o) and (p) are redesignated as (o),
(p) and (q), respectively, and a new paragraph (n) is added to read as
Sec. 330.1 Definitions.
* * * * *
(n) Standard maximum deposit insurance amount, referred to as ``the
SMDIA'' hereafter, means $100,000 adjusted pursuant to subparagraph (F)
of section 11(a)(1) of the FDI Act (12 U.S.C. 1821(a)(1)(F)). The
current SMDIA is $100,000. All the examples in this regulation use the
current SMDIA of $100,000.
Sec. 330.6 [Amended]
3. Section 330.6 paragraphs (a), (b), (c) and (d) are amended by
removing ``$100,000'' in each paragraph and adding in its place ``the
Sec. 330.7 [Amended]
4. Section 330.7 paragraph (e) is amended by removing ``$100,000'' and
adding in its place ``the SMDIA''.
Sec. 330.8 [Amended]
5. Section 330.8 paragraph (a) is amended by removing ``$100,000'' and
adding in its place ``the SMDIA''.
6. Section 330.9 paragraph (a) is amended by removing ``$200,000'' and
adding in its place ``twice the SMDIA'', and the first sentence in
paragraph (b) is revised to read as follows:
Sec. 330.9 Joint ownership accounts.
* * * * *
(b) Determination of insurance coverage. The interests of each co-
owner in all qualifying joint accounts shall be added together and the
total shall be insured up to the SMDIA. * * *
* * * * *
Sec. 330.10 [Amended]
7. Section 330.10 paragraphs (a), (c), (d) and (f)(3) are amended by
removing ``$100,000'' and adding in its place ``the SMDIA''.
Sec. 330.11 [Amended]
8. Section 330.11 is amended by removing ``$100,000'' in the four
places it appears and adding in its place ``the SMDIA''.
Sec. 330.12 [Amended]
9. In Section 330.12 paragraph (a) is amended by removing ``$100,000''
and adding in its place ``the SMDIA'', the reference to ``Sec.
330.1(o)'' in paragraph (a) is removed and ``Sec. 330.1(p)'' is added
in its place, and the reference in paragraph (b)(1) to ``Sec.
330.1(n)'' is removed and ``Sec. 330.1(o)'' is added in its place.
Sec. 330.13 [Amended]
10. Section 330.13 is amended by removing ``$100,000'' in the three
places it appears and adding in its place ``the SMDIA'' and the
reference in paragraph (a) to ``Sec. 330.1(p)'' is removed and ``Sec.
330.1(q)'' is added in its place.
11. In Sec. 330.14 paragraph (a) is revised, paragraphs (b) and (h)
are removed, and paragraphs (c), (d), (e), (f) and (g) are
redesignated, respectively, as (b), (c), (d), (e) and (f); newly
designated paragraphs (d) and (e) are amended by removing ``$100,000''
and adding in its place ``the SMDIA''; the reference to ``(c)(2)'' in
newly designated paragraph (c)(3) is removed and ``(b)(2)'' is added in
its place; and newly designated paragraph (b)(2) is revised.
The revisions read as follows:
Sec. 330.14 Retirement and other employee benefit plan accounts.
(a) ``Pass-through'' insurance. Any deposits of an employee benefit
plan or any eligible deferred compensation plan described in section
457 of the Internal Revenue Code of 1986 (26 U.S.C. 457) in an insured
depository institution shall be insured on a ``pass-through'' basis, in
the amount of up to the SMDIA for the non-contingent interest of each
plan participant, provided the rules in Sec. 330.5 are satisfied.
(b) * * *
(2) Certain retirement accounts. Deposits in an insured depository
institution made in connection with the following types of retirement
plans shall be aggregated and insured in the amount of up to $250,000
(A) Any individual retirement account described in section 408(a)
of the Internal Revenue Code of 1986 (26 U.S.C. 408(a)):
(B) Any eligible deferred compensation plan described in section
457 of the Internal Revenue Code of 1986 (12 U.S.C. 457); and
(C) Any individual account plan defined in section 3(34) of the
Employee Retirement Income Security Act (ERISA) (29 U.S.C. 1002) and
any plan described in section 401(d) of the Internal Revenue Code of
1986 (26 U.S.C. 401(d)), to the extent that participants and
beneficiaries under such plans have the right to direct the investment
of assets held in individual accounts maintained on their behalf by the
* * * * *
Sec. 330.15 [Amended]
12. Section 330.15 is amended by removing the heading ``Public unit
accounts'' and adding in its place ``Accounts held by government
depositors''; and ``$100,000'' is removed in the thirteen places it
appears and ``the SMDIA'' is added in its place.
Sec. 330.16 [Removed]
13. Section 330.16 is removed.
By order of the Board of Directors.
Dated at Washington DC, this 14th day of March, 2006.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
[FR Doc. 06-2779 Filed 3-22-06; 8:45 am]