FDIC Law, Regulations, Related Acts
4000 - Advisory Opinions
Pledge of Assets and Insurance Coverage of 401(k) Plan Funds Deposited by Trustee
July 19, 1993
Walter P. Doyle, Counsel
Thank you for your July 2 letter regarding insurance coverage of deposits in your bank made by you as trustee of your bank's 401(k) plan for employees.
Since you have sole discretion as to the choice of investments for the 401(k) funds, you ask whether your personal IRA accounts at your bank would be aggregated with your personal interest in the 401(k) plan funds on deposit at your bank. Since the 401(k) plan as you describe it would not be "self-directed" as to all participants, your sole investment control of all 401(k) funds as trustee of the plan would not trigger aggregation of your personal interest therein with your IRA funds deposited at your bank, according to an interpretation followed by our Legal Division.
Your second question is whether FDIC's March 23, 1993 policy statement on avoidance of security interests would cover a pledge of assets by your bank to secure interests of individual 401(k) participants in deposits at your bank exceeding $100,000 per participant. You note that the policy statement specifically excludes security interests where insiders of the institution granting the interest are the secured parties. The statement also excludes other security agreements that do not represent arm's length transactions. In our opinion, therefore, the policy statement does not seem to provide "safe harbor" protection for the contemplated pledge arrangement.
Please let us know if we can be of further assistance.