The National Credit Union Administration (NCUA) is the United States federal agency that charters and supervises federal credit unions and insures savings in federal and most state-chartered credit unions across the country through the National Credit Union Share Insurance Fund (NCUSIF), a federal fund backed by the full faith and credit of the United States government.
On those bases, NCUA believes it may be appropriate to extend full coverage to all participants in an employee benefit plan if a plan trustee or the employer sponsoring the plan is a member or if some percentage of plan participants are members, for example, 25%.
NCUA's Office of General Counsel (OGC) issued a legal opinion concluding that NCUA's insurance rules provide pass-through coverage to a 529 program participant if the participant is a member of the federally insured credit union where the 529 program account is maintained and if the account is properly titled.
NCUA insurance regulations require a participant to be a member of the credit union or otherwise eligible to maintain an insured account in the credit union.
The NCUA is required to "prescribe, by regulation, a definition for the term 'well-defined local community, neighborhood, or rural district.'" Previously, NCUA had limited community charters to those within a single, geographically-defined area where residents interact.
The NCUA has established three specific criteria that must be met by an applicant for a community based credit union charter: (1) the geographic boundaries must be clearly defined; (2) evidence must be provided establishing the well-defined community; and (3) the residents must have common interests or interact.
While the NCUA does acknowledge that "a larger population in a large geographic area may not meet NCUA community chartering requirements, and that "the burden of demonstrating interaction and/or common interests will be greater than the evidence necessary for a smaller and less densely populated area, setting the bar at 300,000 is much too high.
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