"Your Insured Funds" NCUA brochure - North Island Credit Union

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An account in which such funds are invested is considered to be an individual account. An account established pursuant to a revocable trust arrangement is insured as a form of individual account and is treated under the rules previously discussed about Testamentary Accounts. Tradional IRAs and Roth IRAs are combined and insured up to $250,000, separately from Keogh accounts which are also insured to $250,000 as discussed in Queson 20. Although credit unions may serve as trustees or custodians for self-directed tradional IRAs, Roth IRAs, and Keogh accounts, once the funds in those accounts are taken out of the credit union, they are no longer insured. In the case of an employee rerement fund where only a poron of the fund is placed in a credit union account, the amount of insurance available to an individual parcipant on his interest in the account will be in proporon to his interest in the enre employee rerement fund. If, for example, the parcipant’s interest represents 10 percent of the enre plan funds, then he is presumed to have only a 10 percent interest in the plan account. Said another way, if a parcipant has vested interest of $10,000 in a municipal employees rerement plan and the trustee invested 25 percent of the total plan funds in a credit union, the parcipant would be insured for only $2,500 on that credit union account. There is an excepon, however. The parcipant would be insured for $10,000 if the trustee can document, through records maintained in the ordinary course of business, that individual beneficiary’s interest are segregated and the total vested interest of the parcipant was, in fact, invested in that account. 55
Example 1 Queson: Member S invests $90,000 in trust for B, the beneficiary. S also has an individual account containing $180,000 in the same credit union. What is the insurance coverage Answer: Both accounts are fully insured. The trust account is separately insured from the individual account. Example 2 Queson: S invests funds in trust for A, B, C, D, and E. A, B, and C are members of the credit union, D, E, and S are not. What is the insurance coverage Answer: This is an uninsurable account. Where there is more than one selor or more than one beneficiary, all the selors or all the beneficiaries must be members to establish this type of account. Since D, E and S are not members; this account cannot legally be established or insured. Example 3 (a) Queson: Member T invests $1,500,000 in trust for ABC Employees Rerement Fund. Some of the parcipants are members and some are not. What is the insurance coverage Answer: The account is insured as to the determinable interests of each parcipant to a maximum of $250,000 per parcipant regardless of credit union member status. Parcipant interests not capable of evaluaon shall be added together and insured to a maximum of $250,000 in the aggregate. 56
Page 1 and 2:
WHERE CAN I FIND MORE INFORMATION C
Page 4 and 5:
FORWARD The purpose of this booklet
Page 6: TABLE OF CONTENTS Share Insurance C
Page 9 and 10: A co-owner’s interest in all join
Page 11 and 12: is provided when the NCUA Board, th
Page 13 and 14: y opening a different type of accou
Page 15 and 16: up to $250,000. As co-owners, the i
Page 17 and 18: especve interest in the revocable t
Page 19 and 20: OTHER FREQUENTLY ASKED QUESTIONS 25
Page 21 and 22: insurance coverage will be provided
Page 23 and 24: A. SINGLE OWNERSHIP ACCOUNTS All fu
Page 25 and 26: Example 4 Queson: Member A holds a
Page 27 and 28: community property) is insured up t
Page 29 and 30: of survivorship. How much insurance
Page 31 and 32: the right to withdraw funds on the
Page 33 and 34: Family of Three The husband is insu
Page 35 and 36: • Informal revocable trusts - oen
Page 37 and 38: REVOCABLE TRUST INSURANCE COMPUTATI
Page 39 and 40: the dollar amount or percentage all
Page 41 and 42: Example 3 - Maximum insurance cover
Page 43 and 44: long as the primary or inial benefi
Page 45 and 46: Some living trusts give a beneficia
Page 47 and 48: uninsured. A’s individual account
Page 49 and 50: containing funds belonging to the p
Page 51 and 52: Example 3 Queson: A is Treasurer of
Page 53 and 54: separate insurance for each tribe.
Page 55: Tax Regulaons (26 C.F.R. 20-2031-10
Page 59 and 60: Answer: Each of A’s accounts woul
Page 61: Financial Notes 60
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"Your Insured Funds" NCUA brochure - North Island Credit Union

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