ALEXANDRIA, Va. – NCUA has the authority under amendments to the Federal Credit Union Act concerning deposit insurance coverage to also permit pass-through deposit insurance coverage on employee benefit plan accounts, according to two national trade associations.

“[B]ased upon the language of the Conforming Amendments Act, NAFCU believes that NCUA possesses the necessary authority to extend pass-through insurance coverage to non-members. Therefore, NAFCU supports a final regulation providing full share deposit insurance coverage to non-member employee interests in employee benefit plan accounts,” NAFCU President and CEO Fred Becker wrote. “However, NAFCU believes that coverage should be permitted only in cases where either the employer or the trustee of the employee benefit plan is a member of the credit union.”

NAFCU did not support the minimum member percentage option NCUA presented, but if that was decided upon, it should be no higher than 10%.

CUNA agreed that pass-through coverage for these plans is appropriate. However, CUNA Senior Assistant General Counsel Jeff Bloch wrote, “We also understand the necessity for membership restrictions, such as requiring the plan trustee or employer sponsoring the plan to be a member. Another possibility to consider would be to extend pass-through coverage to nonmembers, provided such plan participants are eligible for membership.”

The Iowa Credit Union League also said pass-through coverage was appropriate and the fact that the credit unions accepting employee benefit plans must be “well” or “adequately” capitalized further safeguards the NCUSIF.