ALEXANDRIA, Va. — NCUA recently clarified that federal credit unions may match deposits to special employee savings accounts as an employee benefit if the arrangement meets certain regulatory requirements.
In a Feb. 23 opinion letter, the agency said NCUA's Truth in Savings Act regulation allows a FCU to offer benefits, "to its employees and officers who are compensated in conformance with the Act and the bylaws," however, the benefits, "must be reasonable given the FCU's size, financial conditions, and the duties of the employees."
The FCU in question intended to offer a matching deposit to employees who invest up to $20.00 monthly into an individual, special savings account. No withdrawals would be permitted until the end of employment at the FCU and no other monies would be commingled with these funds. The FCU also intended to deposit the matching funds at the end of the year and pay all applicable taxes.
The regulator cautioned that the Employee Retirement Income Security Act of 1974 "may be triggered due to restrictions on withdrawals tied to an employee's employment with the FCU." Since the FCU will pay applicable taxes, tax and ERISA matters are outside NCUA jurisdiction so the agency advised seeking counsel on these matters.
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