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4000 - Advisory Opinions

Insurance Coverage for Deposits of a Pension Plan


January 5, 1988

Claude A. Rollin, Attorney

This is in response to your letter of December 22, 1984, in which you request information concerning FDIC insurance coverage for the deposits of a pension plan.

FDIC regulations provide that the determinable interest of each participant in a deposit account held as an asset of a trusteed employee benefit plan is insured up to $100,000, without regard to whether or not the interest of each participant has fully vested. This per-participant coverage is separate from the insurance coverage for other accounts established by or for the settlor, trustee or participants in different rights and capacities at the same bank. However, if a beneficiary has interests in more than one trust account in the same bank and those accounts are established pursuant to trusts created by the same settlor then all of those interests are aggregated and insured on a combined basis up to a maximum of $100,000.

To obtain this per-participant coverage, certain recordkeeping requirements must be satisfied. The records of the bank must disclose the fiduciary nature of the deposit account, i.e., provide a "red flag" that indicates the account contains funds of a pension plan. In addition, the records of either the bank or the fiduciary depositor, maintained in good faith and in the regular course of business, must show the allocable interest of each participant under the plan. Records maintained by a third party in some contractual or agency capacity with the depositor (e.g., by the plan administrator or actuary) will suffice.

If the foregoing requirements are met, the determinable interest of each participant in the deposit account of a pension plan would be insured up to $100,000, without regard to any individual deposits the participants may have in the same bank. Any determinable interest of a participant which exceeds $100,000 would not be insured. As a final note, I would add that an employee's interests in pension and profit-sharing plans established by the same employer would be regarded as being held in the same right and capacity and thus would be aggregated for deposit insurance purposes.

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