|
[Main Tabs]
[Table of Contents - 4000]
[Index]
[Previous Page]
[Next Page]
[Search]
4000 - Advisory Opinions
Pass-Through Coverage: Applicability to a Multi-Employer Health
and Welfare Plan Funded Through Collective Bargaining Agreements
FDIC--94--46
September 21, 1994
Joseph A. DiNuzzo, Counsel
This is in response to your letter of June 29, 1994, on the
availability of "pass-through" deposit insurance coverage under
section 11(a) of the Federal Deposit Insurance Act
(12 U.S.C. 1821(a)) and
section 330.12 of the FDIC's insurance regulations (12 C.F.R. 330.12)
to deposits of the ("Fund").
As described in your letter, the Fund is a multi-employer health and
welfare plan funded through collective bargaining agreements between
labor organizations and employers in the hotel and restaurant industry.
The Fund consists of several "fund units" organized by geographic
region, each of which provides its own individual plan of benefits. The
overall administration of the Fund is conducted through one central
fund office. The Fund sometimes maintains deposit account balances
substantially over $100,000 in a single insured depository institution.
The specific question posed in your letter is whether the Fund's
deposits in any single insured depository institution are eligible for
"pass-through" insurance coverage or whether the total insured
amount would be limited to $100,000 per institution. You argue that
"pass-through" insurance coverage should be deemed available for
such deposits because the FDIC Improvement Act of 1991 (Pub. L. No.
102--242) ("FDICIA") expanded the scope of employee benefit plans
eligible for "pass-through" coverage to include welfare benefit
plans. You note, however, that, although FDICIA does not apply the
"present-vested-and-ascertainable-interest" restriction to
welfare plans, the FDIC's amended insurance regulations fail to exempt
plans from the "noncontingent interest" restriction.
This issue is addressed specifically in the Federal Register
notice in which the FDIC issued the final rule adopting the
revised deposit insurance regulations based on the applicable
provisions in FDICIA (58 Fed. Reg. 29952, 29953 (May 25,
1993)). In the preamble to the final rule the FDIC Board of Directors
noted that the definition of the term "employee benefit plans" in
FDICIA was broader than the FDIC's then-current
definition
{{2-28-95 p.4900}}of that term; thus, the deposits of
employee welfare benefit plans, which traditionally had been entitled
to deposit insurance only up to $100,000 per plan, could be entitled to
insurance up to $100,000 per participant. The preamble stated, however,
that:
Whether or not a particular [employee welfare benefit] plan
will actually be entitled to coverage on a per-participant basis will
depend on whether the interests of the participants are ascertainable.
This is because the FDIC has determined to retain its current
requirement that the interest of each plan participant be a
"non-contingent interest" in order to be recognized for deposit
insurance purposes.
As noted in your letter, the "non-contingency" requirement
also is stated in the regulation (12 C.F.R. 330.12(a)).
The FDIC's long-standing definition of "non-contingent
interest" is provided in section 330.12(g)(3). It is a fairly finite
definition requiring that a participant's interest be capable of
determination (quantification) by utilizing the present worth tables in
the Federal Estate Tax regulations issued by the Internal Revenue
Service. It does not include the "insurance coverage benefit"
discussed in your letter. Thus, the insurance coverage of the Fund's
deposits would be based on whether each participant's interest
satisfied the "non-contingency" requirement in section 330.12(a)
of the FDIC's regulations.
We believe that the requirements for pass-through insurance coverage
in section 330.12 of the FDIC's regulations (and the definitions
provided therein) are fully consistent with the applicable FDICIA
provisions. Feel free to contact us with any other questions or
comments on this matter.
[Main Tabs]
[Table of Contents - 4000]
[Index]
[Previous Page]
[Next Page]
[Search]
|
