If the credit union closes, will the accountholders get
dividends as well as what is in their accounts up to the
applicable insurance limits?
For the purpose of determining insurance coverage,
dividends earned and posted to the account for the
accounting period will be considered to be principal
and insured up to the maximum dollar limit. Dividends
earned or accrued, but not posted may be paid at the
discretion of NCUA. In making the determination of
whether to pay, NCUA will take into consideration
whether the failure to post was due to criminal
behavior or accounting errors, and it may require
the account holder to submit documentation supporting a
claim for unposted dividends not evident from the credit
What conditions must exist for a joint account to have separate joint insurance coverage.
To qualify as a joint account, the records of the credit union must reflect that
the account is a joint account. Each co-owner of the account must have personally signed
an account signature card and have the right of withdrawal on the same basis as the other co-owners,
but there are two exceptions to this rule:
When calculating the amount of insurance coverage for each co-owner, each co-owner is
considered to have equal of the funds in the account unless the credit union records
state otherwise, which is allowed in the case of tenancy in common under state law.
The order of the names on the account or the use of the phrase and/or does not affect
the insurance coverage provided on joint accounts. A joint owner does not have to be a
member of the credit union to receive insurance coverage.
Where state law limits a minors right of withdrawal, the account will still be insured as a joint account.
Where a member opens a share certificate, the signature of each co-owner is not required.
Does a revocable trust account have to be labeled in the title of the account as
Payable on Death (POD) or Living Trust in order to have separate insurance coverage?
NCUA does not require particular language in the title of accounts to show an account
is a revocable trust. While the agency clearly would prefer account titles to highlight
this fact, the insurance rules do not require such titling. But the agency has to be able
to ascertain from the credit union records that accounts are revocable trusts in order for
the accounts to get separate insurance coverage.
In the case of POD accounts, this is easy. If the POD line(s) are filled in on the account card,
the funds in the account are insured separately under the revocable trust rules in proportion to
those listed beneficiaries who are qualified beneficiaries (i.e. spouse, child, grandchild,
parent or sibling). The listed beneficiaries do not have to be members of the credit union.
In the case of a living trust account, there has to be some valid documentation to qualify for separate
insurance coverage. Since 2004, NCUA has not required that the credit unions account records for the
living trust disclose the beneficiaries by name. Credit unions are only required to indicate in their
records that the funds in the account are held in a formally established trust; NCUA will go beyond the
credit unions records and look at the trust agreement to determine the names of the beneficiaries in the
event that the credit union fails.
What conditions have to be met in order for an irrevocable trust to have separate insurance coverage?
Either the person who created the valid trust agreement and funds the account (called the grantor or settler)
or the beneficiary of the trust must be a member of the credit union. (There may be a third party who serves
as the trustee, but if only the trustee is a member of the credit union, the account wont be insured.) If
there is more than one grantor or more then one beneficiary, all the grantors or all the beneficiaries must
be members of the credit union.
In addition, for an irrevocable trust to be separately insured, the following conditions must be met:
(1) The existence of the trust relationship must be disclosed in the credit unions records along with
the names of the grantor(s) and any third-party trustee- there must be an account signature card executed
by the trustee indicating the fiduciary relationship; and (2) the beneficiarys interest in the trust must
be ascertainable from either the records of the credit union or the trustee, and must be noncontingent
(which means transferable on the death of all grantors). If it turns out that these conditions were not
all met at the time the federally insured credit union (or bank) fails, then the funds are insured along
the grantors other individual accounts (or along with other joint accounts if there is more then one grantor).
Can IRA account coverage be increased by adding a joint account holder or a beneficiary?
No. A members traditional and Roth IRA funds at the credit union are added together and
insured up to 250,000-separate from any other funds the member has in the credit union.
An IRA account cannot legally have joint owners, and the beneficiaries listed on an IRA
account are irrelevant in calculating the total insurance coverage. A few credit unions
may offer Keogh accounts, which are special qualified retirement plans for people who
are self-employed sole proprietors or partners. Keogh accounts are insured up to 250,000,
separate from any IRA accounts the member may have at the credit union.
There can be additional insurance coverage for profit-sharing and pension plan accounts
established by the employer and deposited in the credit union. Questions about insurance
coverage for these accounts should be referred to the appropriate person at the credit
union to answer.
What information does a credit union have to give its members about NCUA share insurance coverage?
In addition to posting the NCUA insurance logo, every federally insured credit union must have information
available at each branch and at main office to explain insurance coverage. This can be accomplished by have
one or more copies of NCUAs brochure Your Insured Funds available. A copy of this share insurance information
must be available to any member who requests for it.
For further information about share insurance coverage on individual, business and government accounts,
credit unions and members can go to NCUAs website at ncua.gov and click on Share Insurance. Credit
unions can address questions about share insurance to CUNAs Compliance staff by e-mailing firstname.lastname@example.org