ALEXANDRIA, Va.-NCUA permits federal credit unions to adopt an inactive accounts policy, but does not allow for federal credit unions to rely on state laws in these matters, a recent NCUA legal opinion letter (03-0855) read. NCUA Associate General Counsel Sheila Albin wrote that the Federal Credit Union Act provides federal credit unions "exclusive authority to determine the terms, rates and conditions of member accounts, subject only to limitations prescribed by the NCUA Board." This particular request for clarification came from Louisiana, which has a statute allowing credit unions to credit inactive accounts under $100 to a reserve account after the institution has been unable to contact the member for a period of two years. Albin said NCUA's regulations allow federal credit unions to set up an inactive accounts policy "that would be equivalent to this state law provision, as long as the policy does not conflict with other federal laws, state escheat laws, or its contractual obligations." The federal credit union must also disclose the policy to its members. Federal regulations that credit unions should consider include those relating to accuracy in advertising and the Truth in Savings Act, as well as the Federal Credit Union Bylaws regarding the member's right to bring an account up to par before membership is terminated, Albin suggested. Interest and dividends must be paid on an account until it is closed under TISA, but a dormant account policy could require closure of the inactive account before ceasing dividend accrual.

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