[Federal Register Volume 63, Number 90 (Monday, May 11, 1998)]
[Rules and Regulations]
[Pages 25750-25764]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11987]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 330

RIN 3064-AB73


Simplification of Deposit Insurance Rules

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Final rule.

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SUMMARY: The FDIC is revising its deposit insurance regulations by 
adopting three substantive amendments and numerous technical 
amendments. The purpose of these amendments is to increase the public's 
understanding of the regulations through simplification. The 
substantive amendments in the final rule will: Relax the FDIC's 
recordkeeping requirements for certain agency or fiduciary accounts; 
create a six-month ``grace period'' following the death of a depositor 
for the restructuring of accounts; and clarify the insurance coverage 
of revocable trust accounts when an account is held by the depositor 
pursuant to a formal ``living trust'' agreement.

EFFECTIVE DATE: July 1, 1998.

FOR FURTHER INFORMATION CONTACT: Christopher L. Hencke, Counsel, (202) 
898-8839, or Joseph A. DiNuzzo, Senior Counsel, (202) 898-7349, Legal 
Division, Federal Deposit Insurance Corporation, 550 17th Street, N.W., 
Washington, D.C. 20429.

SUPPLEMENTARY INFORMATION:

I. Background

    Simplifying the deposit insurance regulations is one of the FDIC's 
corporate operating projects under its Strategic Plan. The purpose is 
to promote public understanding of deposit insurance and, particularly, 
to clarify and illustrate rules that have been misunderstood. The 
public's misunderstanding of certain of the rules has been reflected in 
the large volume of letters and phone calls received by the FDIC 
concerning deposit insurance. Also, this simplification effort is in 
furtherance of section 303(a) of the Riegle Community Development and 
Regulatory Improvement Act of 1994, 12 U.S.C. 4803(a), requiring the 
federal banking agencies to reduce regulatory burden and improve 
efficiency.
    The FDIC's insurance regulations are codified at 12 CFR part 330. 
In recent years, the FDIC has revised these regulations twice (not 
including a third revision that dealt only with certain disclosure 
requirements). In 1980, following the termination of the Federal 
Savings and Loan Insurance Corporation (FSLIC), the FDIC issued uniform 
regulations applicable to deposits in all insured depository 
institutions including those previously insured by the FSLIC. The 
issuance of uniform regulations was mandated by the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) 
(Pub. L. 101-73 (1989)). In 1993, the FDIC revised the rules applicable 
to the deposits of employee benefit plans and retirement plans. This 
revision was mandated by the Federal Deposit Insurance Corporation 
Improvement Act of 1991 (FDICIA) (Pub. L. 102-242 (1991)). 
Notwithstanding these relatively recent revisions, the Board of 
Directors (Board) believes that the final rule is necessary for the 
purpose of simplification.
    All revisions to the insurance regulations must be consistent with 
section 11(a) of the Federal Deposit Insurance Act (FDI Act), 12 U.S.C. 
1821(a). Section 11(a) provides that deposits maintained by a depositor 
in the same capacity and the same right at the same insured depository 
institution must be aggregated and insured up to $100,000. The FDI Act 
does not define ``depositor'', ``capacity'' or ``right''. Through the 
insurance regulations, the FDIC has implemented these terms by 
recognizing different categories of accounts based on ownership. Each 
type of account is entitled to separate insurance up to the $100,000 
limit if it satisfies certain requirements. For example, single 
ownership accounts owned by a particular depositor are not added to 
qualifying joint accounts partly owned by the same depositor.
    The final rule is the product of a process that began in May of 
1996. At that time, the FDIC published an Advance Notice of Proposed 
Rulemaking (ANPR). See 61 FR 25596 (May 22, 1996). The ANPR was 
followed, in May of 1997, by the publication of a proposed rule. See 62 
FR 26435 (May 14, 1997). The evolution of the final rule is discussed 
in greater detail below.
    The final rule does not complete the FDIC's simplification efforts. 
As discussed below, the FDIC is still studying other possible revisions 
to its

[[Page 25751]]

insurance regulations pertaining to joint accounts and ``payable-on-
death'' accounts.

II. The Proposed Rule

    Through the ANPR (61 FR 25596), the FDIC broadly solicited comments 
on how the insurance regulations could be simplified. Also, the FDIC 
sought comments on a number of specific revisions. The comment period 
ended on August 20, 1996. Almost all of the comments (sixty-eight in 
number) supported the FDIC's simplification efforts.
    The FDIC did not include some of the revisions mentioned in the 
ANPR in the proposed rule (62 FR 26435). In particular, the proposed 
rule did not include revisions that would: (1) Eliminate the first step 
in the two-step process for determining the insurance coverage of joint 
accounts under current Sec. 330.7 (new Sec. 330.9); and (2) expand the 
list of qualifying beneficiaries for revocable trust accounts under 
current Sec. 330.8 (new Sec. 330.10). In publishing the proposed rule, 
the FDIC explained that these revisions required additional study. 
Before deciding on these revisions, the Board wished to learn more 
about the extent to which the revisions would affect the scope of 
deposit insurance coverage.
    The proposed rule suggested three substantive revisions to the 
insurance regulations: (1) Relaxing the recordkeeping rules for 
fiduciary accounts; (2) providing a ``grace period'' following the 
death of a depositor; and (3) clarifying the operation of the revocable 
trust account rules in cases in which an account is held by a depositor 
in connection with a ``living trust.'' Each of these revisions is 
discussed in detail below.

A. Recordkeeping Rules for Fiduciary Accounts

    The FDIC's recordkeeping rules are largely premised on the concept 
of ``pass-through'' insurance. If an agent on behalf of a principal 
deposits funds at an insured depository institution, the FDIC does not 
treat the agent as the owner of the deposit for purposes of the 
$100,000 insurance limit. Rather, the FDIC insures the funds to the 
principal or actual owner. In other words, the insurance coverage 
``passes through'' the agent to the owner. See 12 CFR 330.6 (new 
330.7).
    The fact that agency accounts are insured on a ``pass-through'' 
basis does not mean that agency accounts represent a separate category 
of ownership or that agency accounts are entitled to insurance up to 
$100,000 separate from all other accounts. On the contrary, agency 
accounts are subject to aggregation with any other accounts maintained 
by or for the principal in the same right and capacity at the same 
insured depository institution. For example, funds in an account held 
by an agent for a principal, in the principal's single ownership 
capacity, will be aggregated with any single ownership accounts held 
directly by the principal.
    ``Pass-through'' insurance as described above is subject to an 
important qualification. Under section 12(c) of the FDI Act (12 U.S.C. 
1822(c)), the FDIC is not required to recognize as the owner of a 
deposit any person whose interest is not disclosed on the records of 
the failed depository institution. In other words, in the absence of 
adequate disclosure, an account held by an agent is not entitled to 
``pass-through'' insurance coverage. The FDIC has implemented section 
12(c) by establishing certain recordkeeping rules for accounts held by 
agents or fiduciaries.
    Under the FDIC's recordkeeping rules, the deposit account records 
of the failed depository institution must expressly disclose, by way of 
specific references, the existence of any fiduciary relationship 
including, but not limited to, relationships involving a trustee, 
agent, nominee, guardian, executor or custodian, pursuant to which 
funds in an account are deposited and on which a claim for insurance 
coverage is based. See 12 CFR 330.4(b)(1) (new 330.5(b)(1)). Assuming 
such disclosure, the details of the relationship and the interests of 
other parties in the account must be ascertainable either from the 
deposit account records of the insured depository institution or from 
records maintained, in good faith and in the regular course of 
business, by the depositor or by some person or entity that has 
undertaken to maintain such records for the depositor. See 12 CFR 
330.4(b)(2) (new 330.5(b)(2)).
    The rules quoted above are based upon a basic principle: In paying 
insurance, the FDIC is entitled to rely on the account records of the 
failed depository institution. If the FDIC, in its sole discretion, 
determines that the deposit account records of the insured depository 
institution are clear and unambiguous, those records are considered 
binding on the depositor, and no other records shall be considered, as 
to the manner in which the funds are owned. See 12 CFR 330.4(a)(1). In 
other words, under the current regulations, the account records must be 
unclear or ambiguous before the FDIC will consider evidence outside of 
the account records in determining the ownership of an account.
    The FDIC's strict reliance on the account records serves multiple 
purposes. First, it enables the FDIC to estimate the amount of insured 
deposits when considering resolution options for a failing insured 
depository institution. Speed and accuracy in accounting for the assets 
and liabilities of the failing institution are critical when the 
institution is resolved through a purchase and assumption agreement 
(i.e., a transfer of some assets and liabilities, including the deposit 
liabilities, to a healthy depository institution). Second, strict 
reliance on the account records enables the FDIC to pay insurance very 
quickly following the failure of an institution. If the FDIC could not 
rely on the records, depositors would not receive their insurance until 
the FDIC had completed a lengthy investigation as to the actual legal 
ownership of the accounts. Third, strict reliance on the records 
discourages the making of fraudulent claims for insurance. If 
depositors were not bound by the account records, some depositors over 
the $100,000 limit might be tempted to fabricate outside evidence (such 
as agency or trust agreements) as to the actual ownership of their 
accounts.
    For the reasons stated above, the insurance regulations 
purposefully restrict the FDIC's ability to consider outside evidence 
(i.e., evidence outside of the deposit account records) in determining 
the ownership of an account for insurance purposes. Again, under the 
current or unrevised regulations, outside evidence will not be 
considered unless the FDIC determines--in its own discretion--that the 
account records are unclear or ambiguous.
    At times, the restrictions on the FDIC's ability to consider 
outside evidence has produced results that could be viewed as severe. 
At one failed bank, for example, a deposit account was held by a title 
company as agent for customers who were buying or selling houses. 
Because the bank's deposit account records did not indicate the agency 
nature of the account, the funds were deemed to be owned by the title 
company and insured to a limit of $100,000. The funds were not insured 
up to $100,000 on a ``pass-through'' basis for the interest of each 
customer (in aggregation with any other account(s) that each customer 
might have held at the same bank). This result was severe because the 
name of the agent by itself was suggestive of a possible agency or 
fiduciary relationship.
    The proposed rule addressed the problem by adding a provision to 
the

[[Page 25752]]

regulations that would relax the FDIC's recordkeeping requirements in 
certain situations. Specifically, the proposed rule provided that the 
FDIC would be free to consider outside evidence of ownership if the 
titling of the deposit account and the underlying deposit account 
records sufficiently indicate the existence of a fiduciary 
relationship. Examples of accounts covered by the proposed rule would 
be accounts in the name of escrow agents or title companies.
    In requesting comments on this part of the proposed rule, the FDIC 
also requested comments on the recordkeeping requirements applicable to 
accounts held by multiple levels of fiduciaries. See 12 CFR 330.4(b)(3) 
(new 330.5(b)(3)). These requirements specify two methods for 
disclosing such multi-tiered relationships. Under the second method, 
according to the current regulations, the deposit account records must 
state that the depositor is acting in a fiduciary capacity on behalf of 
certain persons or entities who may, in turn, be acting in a fiduciary 
capacity for others. See 12 CFR 330.4(b)(3)(ii)(A). In complying with 
this requirement, fiduciaries have opened accounts with awkward and 
unwieldy account titles. To alleviate this problem, the FDIC proposed 
to require--under the second method--that the account records merely 
indicate that there are multiple levels of fiduciary relationships.

B. ``Grace Period'' Following the Death of a Depositor

    The second substantive revision included in the proposed rule was 
the creation of a ``grace period'' following the death of a depositor. 
Under the deposit contract or applicable state law, the death of a 
depositor may result in an immediate and automatic change in ownership 
of the deposit account. This is significant for insurance purposes 
because deposit insurance is based primarily on legal ownership. Though 
ownership under state law is not sufficient for, or decisive in, 
determining deposit insurance coverage, the regulations provide that 
ownership under state law of deposited funds is a necessary condition 
for deposit insurance. See 12 CFR 330.3(h) (new 330.3(h)).
    Under the current regulations, the FDIC presumes--for certain types 
of accounts--that the ownership of the account changes immediately upon 
the death of a depositor. This presumption is applied to accounts 
characterized by survivorship rights, i.e., joint accounts and 
revocable trust or ``payable-on-death'' (POD) accounts. For the sake of 
uniformity, the FDIC applies this presumption irrespective of the laws 
of the state in which the depository institution is located. In some 
cases, following the death of a depositor, the presumption will cause a 
dramatic decrease in deposit insurance coverage.
    For example, a husband and wife could hold a joint account, a joint 
revocable trust (or POD) account for the benefit of their child, and 
two individual accounts in their respective names. Assuming the 
satisfaction of all applicable requirements, these four accounts could 
be insured up to a total of $500,000. Upon the death of either the 
husband or wife, however, the surviving spouse would become the sole 
owner of the joint account and the joint revocable trust account. Under 
the FDIC's established interpretation of the current regulations, the 
joint account would be transformed into a single ownership account 
subject to aggregation with the surviving spouse's individual account. 
(The single ownership account in the name of the deceased spouse would 
continue to be insured separately from the other accounts.) Moreover, 
the maximum coverage of the joint revocable trust account would be 
reduced from $200,000 to $100,000 (i.e., $100,000 for each combination 
of settlors and qualifying beneficiaries). In total, the maximum 
coverage of the four accounts would be reduced--immediately upon the 
death of the husband or wife--from $500,000 to $300,000.
    If the depository institution failed before the surviving spouse 
restructured the accounts or transferred funds to another institution, 
in the example above, the loss to the surviving spouse could be very 
substantial. (For the single ownership account in the name of the 
deceased spouse, the insurance money would be paid to the trustee of 
the decedent's estate.)
    The interpretation described above has been criticized as 
``penalizing'' the survivors of deceased depositors. Some people have 
complained that the immediate restructuring of an account upon the 
death of a depositor may not be practicable. For example, in order to 
restructure an account, the survivor of an accountholder may be 
required to present proof of the accountholder's death to the 
depository institution. Also, during a time of grief, the survivors may 
not view the restructuring of bank accounts as a matter of high 
priority.
    Another criticism of the FDIC's interpretation of the current 
regulations is that some state laws might not provide for the immediate 
change in ownership presumed by the FDIC.
    In response to the criticisms and concerns described above, the 
proposed rule created a ``grace period'' of six months following the 
death of a depositor. During this ``grace period,'' the insurance 
coverage of the decedent's accounts would not change unless the 
accounts were restructured by those authorized to take such action. 
Because the six-month ``grace period'' was not intended to reduce 
coverage, the proposed rule also provided that the ``grace period'' 
would not be applied if its application would result in a decrease in 
deposit insurance coverage.
    The six-month ``grace period'' prescribed by the proposed rule was 
consistent with a policy applied by the former FSLIC. The rationale of 
that policy was to ``lessen hardship.''
    In publishing the proposed rule, the FDIC specifically requested 
comments as to whether six months was the appropriate length of time 
for the ``grace period.''

C. The Insurance Coverage of ``Living Trust'' Accounts

    The third substantive revision included in the proposed rule was 
the insertion into the regulations of language clarifying the insurance 
coverage of accounts held pursuant to ``living trust'' agreements. A 
``living trust'' is a formal revocable trust in which the owner retains 
control of the trust assets during his or her lifetime. Upon the 
owner's death, the trust generally becomes irrevocable.
    As a type of revocable trust account, a ``living trust'' account is 
subject to the rules prescribed by Sec. 330.8 (new Sec. 330.10). 
Subject to the requirements discussed below, that section of the 
regulations provides that funds deposited in a revocable trust account 
(also referred to as a ``payable-on-death'' or ``POD'' account or 
``Totten trust'' account) shall be insured up to $100,000 for the 
prospective interest of each of the owner's designated beneficiaries. 
Such insurance is separate from the insurance coverage afforded to any 
single ownership accounts held by the owner or beneficiary at the same 
insured depository institution. The revocable trust account will not be 
entitled to such separate insurance, however, unless the account 
satisfies certain requirements. First, each of the designated 
beneficiaries must be the owner's spouse, child or grandchild. Second, 
the beneficiaries must be specifically named (i.e., named by name) in 
the account records of the depository institution. Third, the title of 
the account must include a term such as ``in trust for'' or ``payable-
on-death to'' (or any acronym therefor). Fourth, the revocable trust 
agreement must provide unequivocally that the funds shall belong to the 
designated beneficiaries

[[Page 25753]]

upon the death of the owner. See 12 CFR 330.8(a) (new 330.10(a)).
    In many cases, the trust agreement is simply the signature card for 
the account. Generally, in these cases, the fourth requirement above 
does not present a problem because the signature card will not include 
any conditions upon the interests of the designated beneficiaries. In 
other words, the signature card--in simple language--will provide that 
the funds shall belong to the beneficiaries upon the death of the 
owner. In contrast, most formal ``living trust'' agreements provide 
that the funds might belong to the beneficiaries depending upon various 
conditions. The FDIC refers to such conditions as ``defeating 
contingencies'' if they create the possibility that the beneficiaries 
or the estate or heirs of the beneficiaries will never receive the 
funds following the death of the owner. In the presence of a 
``defeating contingency,'' the revocable trust account will not be 
entitled to separate insurance coverage under Sec. 330.8 (new 
Sec. 330.10). Rather, the account will be aggregated with any single 
ownership accounts held by the owner at the same insured depository 
institution.
    The subject of ``defeating contingencies'' is explained at length 
in FDIC Advisory Opinion 94-32 (May 18, 1994). That advisory opinion is 
entitled ``Guidelines for Insurance Coverage of Revocable Trust 
Accounts (Including `Living Trust' Accounts).'' Though this advisory 
opinion is available upon request, the FDIC continues to receive 
numerous inquiries regarding the insurance coverage of ``living trust'' 
accounts. Moreover, even people who have read the Guidelines often 
remain confused about the coverage of such accounts.
    In response to the public's confusion, the proposed rule inserted 
clarifying language into the regulations. Specifically, the proposed 
rule stated that the presence of a ``defeating contingency'' in a 
``living trust'' agreement would prevent the account from receiving 
separate insurance coverage (i.e., separate from any single ownership 
accounts held by the owner at the same insured depository institution).

III. The Final Rule

    The FDIC received twenty-six written comments on the proposed rule. 
Most of the comments were submitted by depository institutions or their 
holding companies. Several comments were submitted by bankers' 
associations; several others were submitted by financial services 
companies. The FDIC also received a small number of comments from 
individuals and one comment from a building company. The comments are 
discussed below as they relate to the various components of the final 
rule.

A. Recordkeeping Rules for Fiduciary Accounts

    Sixteen commenters addressed the proposed relaxation of the FDIC's 
recordkeeping requirements for agency or fiduciary accounts. All of the 
commenters expressed support for the proposed rule but some also 
expressed reservations. The concern expressed by some commenters was 
that the proposed rule might impose additional recordkeeping 
obligations or other regulatory burdens on insured depository 
institutions. The FDIC does not intend to create any such additional 
burdens. The proposed rule was directed at the FDIC itself and not at 
depository institutions. As previously explained, the proposed rule 
granted greater flexibility to the FDIC in considering outside evidence 
(i.e., evidence other than the deposit account records) in determining 
the ownership of an account. Specifically, the proposed rule provided 
that the FDIC would be free to consider outside evidence if the FDIC 
determined, in its sole discretion, that the titling of the account and 
the underlying deposit account records sufficiently indicate the 
existence of a fiduciary relationship. Examples are accounts in the 
names of escrow agents, title companies or entities (or nominees of 
such entities) whose primary business is to hold--for safekeeping 
reasons--deposits of others.
    The Board has decided to adopt, in the final rule, the proposed 
revision to its recordkeeping requirements. As revised, these 
requirements will be codified at Sec. 330.5. The revised requirements 
will increase the FDIC's ability to pay insurance to the real owners of 
some deposits without undercutting the general rule that unambiguous 
deposit account records of a failed depository institution are binding 
on depositors.
    Also, the final rule includes two revisions to the recordkeeping 
requirements applicable to accounts held by multiple levels of 
fiduciaries. As revised, these requirements will be codified at 
paragraph (b)(3) of Sec. 330.5. First, the FDIC has changed the 
regulation to clarify that there are two and not three methods of 
satisfying these recordkeeping requirements. Second, in connection with 
the second method of satisfying the requirements, the FDIC has removed 
the necessity of stating in the account records that the depositor is 
acting in a fiduciary capacity on behalf of certain persons or entities 
who may, in turn, be acting in a fiduciary capacity for others. 
Instead, the deposit account records must expressly indicate that there 
are multiple levels of fiduciary relationships. The FDIC has made this 
change in recognition of the fact that fiduciaries have been placing 
the required information in the titles of deposit accounts. As a result 
of this revision, the titles of multi-tiered fiduciary accounts should 
be less unwieldy. Several commenters expressed support for this 
provision.

B. ``Grace Period'' Following the Death of a Depositor

    Nineteen commenters addressed the proposed creation of a six-month 
``grace period'' following the death of a depositor. As previously 
explained, this ``grace period'' primarily would affect the insurance 
coverage of deposit accounts with survivorship rights (i.e., joint 
accounts and revocable trust or ``payable-on-death'' accounts). During 
this ``grace period,'' the insurance coverage of such accounts would 
not change unless the accounts are restructured by those authorized to 
take such action. The FDIC would apply the ``grace period'' only if its 
application would increase rather than decrease deposit insurance 
coverage.
    Only one commenter opposed the creation of a ``grace period.'' That 
commenter stated that deposit insurance should be based on the 
ownership of accounts. If ownership changes upon the death of a 
depositor, in the opinion of this commenter, the insurance coverage 
also should change. Another commenter did not oppose a ``grace period'' 
but expressed concern that it would create additional recordkeeping 
obligations on the depository institution. A third commenter supported 
a ``grace period'' but favored a ninety-day period as opposed to a six-
month period. With the exceptions noted above, the commenters supported 
the proposed rule.
    The Board has decided to adopt the proposed creation of a six-month 
``grace period.'' The rule will be codified at paragraph (j) of 
Sec. 330.3. The FDIC believes that the ``grace period'' is consistent 
with the general principle that insurance coverage is based on 
ownership but also based on the satisfaction of recordkeeping 
requirements. Following the death of a depositor, the actual ownership 
of an account will not be reflected by the account records unless the 
account is restructured. For example, a joint account immediately 
following the death of one of two co-owners will

[[Page 25754]]

appear to remain a joint account. By themselves, the account records 
will not indicate that the account is a single ownership account until 
the account has been restructured by the survivor. The FDIC's strict 
reliance on ownership, under these circumstances, contrasts with the 
FDIC's general reliance on the account records.
    The FDIC believes that a six-month ``grace period'' will create an 
equitable balance between ownership and recordkeeping in cases 
involving deceased depositors. Also, the FDIC does not believe that the 
``grace period'' will create any recordkeeping burdens on the 
depository institution because the ``grace period'' is directed solely 
at the FDIC itself and the survivors of deceased depositors. The FDIC 
would apply the ``grace period'' only after the depository institution 
had failed.
    In the case of a revocable trust account, the ``grace period'' will 
be triggered by the death of the owner but not by the death of a 
beneficiary. Similarly, in the case of an irrevocable trust account, 
the ``grace period'' will be triggered by the death of the legal owner 
or settlor but not by the death of a beneficiary. The death of the 
settlor may or may not be significant under the terms of the 
irrevocable trust agreement.
    Under many ``living trust'' agreements (discussed in greater detail 
below), a revocable trust becomes irrevocable upon the death of the 
owner. Through the operation of the ``grace period,'' such ``living 
trust'' accounts that qualify as revocable trust accounts for insurance 
purposes could be insured up to six months as revocable trust 
accounts--rather than irrevocable trust accounts--notwithstanding the 
death of the owner.
    As mentioned above, only one commenter thought that six months was 
not the appropriate length of time for the ``grace period.'' That 
commenter favored a period of ninety days. As noted by other 
commenters, however, a six-month period is consistent with the six-
month period of ``separate insurance'' following the assumption of the 
deposits of one insured depository institution by another insured 
depository institution (e.g., a merger). See 12 U.S.C. 1818(q). The 
FDIC agrees with the majority of the commenters that a period of six 
months is reasonable.

C. The Insurance Coverage of ``Living Trust'' Accounts

    Twelve commenters addressed the proposed insertion into the 
regulations of language clarifying the insurance coverage of revocable 
trust accounts held pursuant to ``living trust'' agreements. As 
previously explained, this language would state expressly that the 
presence of a ``defeating contingency'' in the ``living trust'' 
agreement would prevent the account from receiving separate insurance 
coverage (i.e., separate from any single ownership accounts held by the 
owner at the same insured depository institution).
    Ten commenters supported the proposed revision as a means of 
reducing depositors' confusion regarding the coverage of such accounts. 
The other two commenters did not oppose the insertion of clarifying 
language into the regulations but urged the FDIC to take stronger 
measures. Specifically, they urged the FDIC to abolish the concept of 
``defeating contingencies'' altogether so that a ``living trust'' 
account would be entitled to separate insurance coverage irrespective 
of any such contingencies. The approach recommended by these commenters 
would represent an abrupt departure from the FDIC's established 
interpretation of the regulations. See FDIC Advisory Opinion 94-32 (May 
18, 1994), entitled ``Guidelines for Insurance Coverage of Revocable 
Trust Accounts (Including `Living Trust' Accounts).'' Though this 
approach would remove one source of confusion regarding the operation 
of the insurance regulations, the recommended approach could create 
other problems. For example, an owner's ``living trust'' agreement with 
various contingencies could specify that one qualifying beneficiary 
could assume ownership of the trust funds under one set of 
circumstances but that two qualifying beneficiaries (or no qualifying 
beneficiaries) could assume ownership of the funds under another set of 
circumstances. Following the failure of the depository institution, the 
FDIC would be faced with the problem of deciding whether the maximum 
separate insurance coverage of the account is $100,000 (one qualifying 
beneficiary) or $200,000 (two qualifying beneficiaries).
    At this time, the FDIC is not prepared to abandon its long-standing 
interpretation of its regulations regarding the insurance coverage of 
``living trust'' accounts. As a means of reducing some of the confusion 
surrounding these accounts, however, the Board has adopted--in the 
final rule--the proposed clarifying language. This language will be 
codified at paragraph (f) of Sec. 330.10.

IV. Comments on Other Aspects of the Proposed Rule

    In addition to addressing the three substantive revisions discussed 
above, some commenters addressed other aspects of the proposed rule. 
For example, several commenters applauded the insertion into the 
regulations of examples. Another commenter criticized the renumbering 
of the sections. Specifically, this commenter stated that the 
renumbering of the sections will affect the accuracy of training 
materials. Though this concern is understandable, the FDIC believes 
that renumbering is necessary as a means of increasing depositors' 
understanding of certain rules. For example, the placement of current 
paragraph (g) of Sec. 330.3 in new Sec. 330.4 will highlight this rule 
governing the continuation of separate deposit insurance after merger 
of insured depository institutions.
    A number of commenters addressed the revisions in the ANPR that 
were not included in the proposed rule. Notably, several voiced 
disappointment that the FDIC had not included in the proposed rule 
revisions to the joint account and POD account rules. They emphasized 
that the current joint account rules, in particular, are very confusing 
to both the industry and the public. The Board is mindful of these 
comments and has instructed the staff to continue studying the policy, 
economic and other implications of amending the joint account and POD 
account rules. If the Board determines that such amendments are 
warranted, it will authorize the issuance of a proposed rule to obtain 
public comment on specific changes to those rules.
    A comment regarding the insurance coverage of annuity contract 
accounts is addressed below in connection with new Sec. 330.8.

V. Section-by-Section Discussion of the Final Rule

Section 330.1--Definitions

    This section has been expanded to include some definitions 
currently placed in other sections of part 330. Also, ``Corporation'' 
has been defined as the FDIC.

Section 330.2--Purpose

    This section has been reduced by eliminating a narrative 
description of the FDIC's authority to issue deposit insurance 
regulations. This information is unnecessary.

Section 330.3--General principles

    This section has been amended in several ways. First, examples have 
been added to illustrate some of the general principles. Second, in 
recognition of its importance, current paragraph (g) of Sec. 330.3 has 
been moved from this

[[Page 25755]]

section to new Sec. 330.4 dealing with the continuation of separate 
deposit insurance after merger of insured depository institutions. 
Third, current Sec. 330.13 has been added to this section as new 
paragraph (g) dealing with bank investment contracts. Fourth, a new 
provision has been added to provide the survivors of deceased 
depositors with a six-month ``grace period'' for the restructuring of 
accounts. The provision is new paragraph (j). It is discussed in detail 
above.

Section 330.4--Continuation of separate deposit insurance after merger 
of insured depository institutions

    This is a new section composed of the provisions in current 
paragraph (g) of Sec. 330.3. It addresses the deposit insurance 
implications of bank mergers and acquisitions. The placement of the 
rule in a separate section of the regulations should make the rule more 
accessible.

Section 330.5--Recognition of deposit ownership and recordkeeping 
requirements

    This section is current Sec. 330.4 with two substantive amendments. 
First, the FDIC's recordkeeping requirements have been amended by 
adding an exception to the general rule that the deposit account 
records of a depository institution must expressly disclose the 
existence of a fiduciary relationship in order for the FDIC to 
recognize the fiduciary nature of the account. The exception provides 
that the general requirement would not apply if the FDIC determines, in 
its sole discretion, that the titling of the account and the underlying 
deposit account records of the depository institution indicate the 
existence of a fiduciary relationship. The section specifies that the 
exception might apply, for example, where the deposit account title or 
records indicate that the account is held by an escrow agent, title 
company, or an entity (or its agent or nominee) whose business is to 
hold, for safekeeping reasons, deposits for others. Second, the 
recordkeeping requirements for accounts held pursuant to multi-tiered 
fiduciary relationships (current paragraph (b)(3) of Sec. 330.3 and new 
paragraph (b)(3) of Sec. 330.5) have been modified so that the titles 
of such accounts can be less unwieldy. These revisions are discussed 
above.

Section 330.6--Single ownership accounts

    This section is current Sec. 330.5. The definition of a ``sole 
proprietorship'' has been moved from this section to new Sec. 330.1. 
Also, in the section dealing with a decedent's account, a cross-
reference has been added to new paragraph (j) of Sec. 330.3. The latter 
provides a six-month ``grace period'' for the restructuring of accounts 
following the death of a depositor.

Section 330.7--Accounts held by an agent, nominee, guardian, custodian 
or conservator

    This section is current Sec. 330.6. The provision on mortgage 
servicing accounts has been clarified to indicate that such accounts 
are not entitled to separate insurance. Rather, they are insured as 
custodial or agency accounts subject to aggregation with other accounts 
held by the owner at the same insured depository institution. Also, the 
provisions on annuity contract accounts have been moved from this 
section to new Sec. 330.8.

Section 330.8--Annuity contract accounts

    This is a new section composed of the provisions in current 
paragraph (f) of Sec. 330.6. Under this section, funds held by an 
insurance company for the sole purpose of funding life insurance or 
annuity contracts are insured up to $100,000 per annuitant if certain 
requirements are satisfied. The FDIC is placing this rule in a separate 
section of the regulations--rather than keeping the rule in the section 
dealing with the ``pass-through'' coverage of agency accounts--because 
annuity contract accounts represent a separate category of insurance. 
Also, in stating that such accounts shall be insured separately in the 
amount of up to $100,000 per annuitant, the FDIC is adding the word 
``separately.''
    One commenter objected to the addition of the word ``separately.'' 
In the opinion of this commenter, the addition of this word would 
result in a windfall for insurance companies by creating a new category 
of insured deposits.
    Subject to the requirements in the regulation, the FDIC's long-
standing staff position is that annuity contract accounts represent a 
separate category of insured deposits. In other words, the revision 
does not create a new category of insured deposits but simply clarifies 
the existing coverage of such accounts. The need for such clarification 
is emphasized by the comment.
    While adding the word ``separately,'' the FDIC has removed the 
phrase ``different right and capacity.'' The phrase is unnecessary and 
confusing.

Section 330.9--Joint ownership accounts

    This section is current Sec. 330.7. Though it has not been changed 
substantively, the section has been clarified through the addition of 
several examples.

Section 330.10--Revocable trust accounts

    This section is current Sec. 330.8. For the purpose of 
clarification, the section has been rephrased and examples have been 
added. Also, a paragraph has been added to clarify the insurance 
coverage of revocable trust accounts held pursuant to formal ``living 
trust'' agreements. The paragraph states specifically that the presence 
of a ``defeating contingency'' in the trust agreement would prevent a 
beneficiary's interest from receiving separate insurance under this 
section. The addition of this new paragraph is explained in detail 
above.

Section 330.11--Accounts of a corporation, partnership or 
unincorporated association

    This section is current Sec. 330.9. The definition of ``independent 
activity'' has been moved from this section to Sec. 330.1.

Section 330.12--Accounts held by a depository institution as the 
trustee of an irrevocable trust

    This section is current Sec. 330.10. The modifications are slight 
and not substantive.

Section 330.13--Irrevocable trust accounts

    This section is current Sec. 330.11. The definitions of ``trust 
interest'' and ``non-contingent trust interest'' have been moved from 
this section to Sec. 330.1.

Section 330.14--Retirement and other employee benefit plan accounts

    This section is current Sec. 330.12. It is unchanged except for the 
deletion of current paragraph (h)(2)(ii) of Sec. 330.12, which required 
a notice to certain depositors within ten business days after July 1, 
1995. That provision is obsolete.

Section 330.15--Public unit accounts

    This section is current Sec. 330.14. It is essentially unchanged.

Section 330.16--Effective dates

    Changes have been made to this section to indicate that the 
designated effective dates apply to former changes to part 330. The 
FDIC has retained this information in part 330 because the effective 
dates might be relevant in connection with time deposits issued prior 
to December 19, 1991, until the maturity date of such deposits.
    In addition to the changes explained above, two sections have been

[[Page 25756]]

eliminated by the final rule. First, current Sec. 330.13 (``Bank 
investment contracts'') has been reduced and moved to new paragraph (g) 
of Sec. 330.3. Second, current Sec. 330.15 (``Notice to depositors'') 
has been removed altogether as unnecessary.

VI. Paperwork Reduction Act

    No collection of information pursuant to the Paperwork Reduction 
Act is contained in the final rule. Consequently, no information has 
been submitted to the Office of Management and Budget for review.

VII. Regulatory Flexibility Act

    The Board of Directors certifies that the final rule will not have 
a significant economic impact on a substantial number of small 
businesses within the meaning of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.). The revisions to the deposit insurance rules will 
impose no new reporting, recordkeeping or other compliance requirements 
upon those entities. Accordingly, the Act's requirements relating to an 
initial and final regulatory flexibility analysis are not applicable.

VIII. Small Business Regulatory Enforcement Fairness Act

    The Office of Management and Budget has determined that the final 
rule is not a ``major rule'' within the meaning of the relevant 
sections of the Small Business Regulatory Enforcement Fairness Act of 
1996 (SBREFA) (5 U.S.C. 801 et seq.). As required by SBREFA, the FDIC 
will file the appropriate reports with Congress and the General 
Accounting Office so that the final rule may be reviewed. The effective 
date is July 1, 1998.

List of Subjects in 12 CFR Part 330

    Bank deposit insurance, Banks, Banking, Reporting and recordkeeping 
requirements, Savings and loan associations, Trusts and trustees.

    The Board of Directors of the Federal Deposit Insurance Corporation 
hereby revises part 330 of chapter III of title 12 of the Code of 
Federal Regulations to read as follows:

PART 330--DEPOSIT INSURANCE COVERAGE

Sec.
330.1  Definitions.
330.2  Purpose.
330.3  General principles.
330.4  Continuation of separate deposit insurance after merger of 
insured depository institutions.
330.5  Recognition of deposit ownership and recordkeeping 
requirements.
330.6  Single ownership accounts.
330.7  Accounts held by an agent, nominee, guardian, custodian or 
conservator.
330.8  Annuity contract accounts.
330.9  Joint ownership accounts.
330.10  Revocable trust accounts.
330.11  Accounts of a corporation, partnership or unincorporated 
association.
330.12  Accounts held by a depository institution as the trustee of 
an irrevocable trust.
330.13  Irrevocable trust accounts.
330.14  Retirement and other employee benefit plan accounts.
330.15  Public unit accounts.
330.16  Effective dates.

    Authority: 12 U.S.C. 1813(l), 1813(m), 1817(i), 1818(q), 
1819(Tenth), 1820(f), 1821(a), 1822(c).


Sec. 330.1  Definitions.

    For the purposes of this part:
    (a) Act means the Federal Deposit Insurance Act (12 U.S.C. 1811 et 
seq.).
    (b) Corporation means the Federal Deposit Insurance Corporation.
    (c) Default has the same meaning as provided under section 3(x) of 
the Act (12 U.S.C. 1813(x)).
    (d) Deposit has the same meaning as provided under section 3(l) of 
the Act (12 U.S.C. 1813(l)).
    (e) Deposit account records means account ledgers, signature cards, 
certificates of deposit, passbooks, corporate resolutions authorizing 
accounts in the possession of the insured depository institution and 
other books and records of the insured depository institution, 
including records maintained by computer, which relate to the insured 
depository institution's deposit taking function, but does not mean 
account statements, deposit slips, items deposited or cancelled checks.
    (f) FDIC means the Federal Deposit Insurance Corporation.
    (g) Independent activity. A corporation, partnership or 
unincorporated association shall be deemed to be engaged in an 
``independent activity'' if the entity is operated primarily for some 
purpose other than to increase deposit insurance.
    (h) Insured branch means a branch of a foreign bank any deposits in 
which are insured in accordance with the provisions of the Act.
    (i) Insured deposit has the same meaning as that provided under 
section 3(m)(1) of the Act (12 U.S.C. 1813(m)(1)).
    (j) Insured depository institution is any depository institution 
whose deposits are insured pursuant to the Act, including a foreign 
bank having an insured branch.
    (k) Natural person means a human being.
    (l) Non-contingent trust interest means a trust interest capable of 
determination without evaluation of contingencies except for those 
covered by the present worth tables and rules of calculation for their 
use set forth in Sec. 20.2031-7 of the Federal Estate Tax Regulations 
(26 CFR 20.2031-7) or any similar present worth or life expectancy 
tables which may be adopted by the Internal Revenue Service.
    (m) Sole proprietorship means a form of business in which one 
person owns all the assets of the business, in contrast to a 
partnership or corporation.
    (n) Trust estate means the determinable and beneficial interest of 
a beneficiary or principal in trust funds but does not include the 
beneficial interest of an heir or devisee in a decedent's estate.
    (o) Trust funds means funds held by an insured depository 
institution as trustee pursuant to any irrevocable trust established 
pursuant to any statute or written trust agreement.
    (p) Trust interest means the interest of a beneficiary in an 
irrevocable express trust (other than an employee benefit plan) created 
either by written trust instrument or by statute, but does not include 
any interest retained by the settlor.


Sec. 330.2  Purpose.

    The purpose of this part is to clarify the rules and define the 
terms necessary to afford deposit insurance coverage under the Act and 
provide rules for the recognition of deposit ownership in various 
circumstances.


Sec. 330.3  General principles.

    (a) Ownership rights and capacities. The insurance coverage 
provided by the Act and this part is based upon the ownership rights 
and capacities in which deposit accounts are maintained at insured 
depository institutions. All deposits in an insured depository 
institution which are maintained in the same right and capacity (by or 
for the benefit of a particular depositor or depositors) shall be added 
together and insured in accordance with this part. Deposits maintained 
in different rights and capacities, as recognized under this part, 
shall be insured separately from each other.

    (Example: Single ownership accounts and joint ownership accounts 
are insured separately from each other.)

    (b) Deposits maintained in separate insured depository institutions 
or in separate branches of the same insured depository institution. Any 
deposit accounts maintained by a depositor at one insured depository 
institution are insured separately from, and without regard to, any 
deposit accounts that the same depositor maintains at any other

[[Page 25757]]

separately chartered and insured depository institution, even if two or 
more separately chartered and insured depository institutions are 
affiliated through common ownership.

    (Example: Deposits held by the same individual at two different 
banks owned by the same bank holding company would be insured 
separately, per bank.)

    The deposit accounts of a depositor maintained in the same right 
and capacity at different branches or offices of the same insured 
depository institution are not separately insured; rather they shall be 
added together and insured in accordance with this part.
    (c) Deposits maintained by foreigners and deposits denominated in 
foreign currency. The availability of deposit insurance is not limited 
to citizens and residents of the United States. Any person or entity 
that maintains deposits in an insured depository institution is 
entitled to the deposit insurance provided by the Act and this part. In 
addition, deposits denominated in a foreign currency shall be insured 
in accordance with this part. Deposit insurance for such deposits shall 
be determined and paid in the amount of United States dollars that is 
equivalent in value to the amount of the deposit denominated in the 
foreign currency as of close of business on the date of default of the 
insured depository institution. The exchange rates to be used for such 
conversions are the 12 PM rates (the ``noon buying rates for cable 
transfers'') quoted for major currencies by the Federal Reserve Bank of 
New York on the date of default of the insured depository institution, 
unless the deposit agreement specifies that some other widely 
recognized exchange rates are to be used for all purposes under that 
agreement, in which case, the rates so specified shall be used for such 
conversions.
    (d) Deposits in insured branches of foreign banks. Deposits in an 
insured branch of a foreign bank which are payable by contract in the 
United States shall be insured in accordance with this part, except 
that any deposits to the credit of the foreign bank, or any office, 
branch, agency or any wholly owned subsidiary of the foreign bank, 
shall not be insured. All deposits held by a depositor in the same 
right and capacity in more than one insured branch of the same foreign 
bank shall be added together for the purpose of determining the amount 
of deposit insurance.
    (e) Deposits payable solely outside of the United States and 
certain other locations. Any obligation of an insured depository 
institution which is payable solely at an office of such institution 
located outside the States of the United States, the District of 
Columbia, Puerto Rico, Guam, the Commonwealth of the Northern Mariana 
Islands, American Samoa, the Trust Territory of the Pacific Islands, 
and the Virgin Islands, is not a deposit for the purposes of this part.
    (f) International banking facility deposits. An ``international 
banking facility time deposit,'' as defined by the Board of Governors 
of the Federal Reserve System in Regulation D (12 CFR 204.8(a)(2)), or 
in any successor regulation, is not a deposit for the purposes of this 
part.
    (g) Bank investment contracts. As required by section 11(a)(8) of 
the Act (12 U.S.C. 1821(a)(8)), any liability arising under any 
investment contract between any insured depository institution and any 
employee benefit plan which expressly permits ``benefit responsive 
withdrawals or transfers'' (as defined in section 11(a)(8) of the Act) 
are not insured deposits for purposes of this part. The term 
``substantial penalty or adjustment'' used in section 11(a)(8) of the 
Act means, in the case of a deposit having an original term which 
exceeds one year, all interest earned on the amount withdrawn from the 
date of deposit or for six months, whichever is less; or, in the case 
of a deposit having an original term of one year or less, all interest 
earned on the amount withdrawn from the date of deposit or three 
months, whichever is less.
    (h) Application of state or local law to deposit insurance 
determinations. In general, deposit insurance is for the benefit of the 
owner or owners of funds on deposit. However, while ownership under 
state law of deposited funds is a necessary condition for deposit 
insurance, ownership under state law is not sufficient for, or decisive 
in, determining deposit insurance coverage. Deposit insurance coverage 
is also a function of the deposit account records of the insured 
depository institution, of recordkeeping requirements, and of other 
provisions of this part, which, in the interest of uniform national 
rules for deposit insurance coverage, are controlling for purposes of 
determining deposit insurance coverage.
    (i) Determination of the amount of a deposit--(1) General rule. The 
amount of a deposit is the balance of principal and interest 
unconditionally credited to the deposit account as of the date of 
default of the insured depository institution, plus the ascertainable 
amount of interest to that date, accrued at the contract rate (or the 
anticipated or announced interest or dividend rate), which the insured 
depository institution in default would have paid if the deposit had 
matured on that date and the insured depository institution had not 
failed. In the absence of any such announced or anticipated interest or 
dividend rate, the rate for this purpose shall be whatever rate was 
paid in the immediately preceding payment period.
    (2) Discounted certificates of deposit. The amount of a certificate 
of deposit sold by an insured depository institution at a discount from 
its face value is its original purchase price plus the amount of 
accrued earnings calculated by compounding interest annually at the 
rate necessary to increase the original purchase price to the maturity 
value over the life of the certificate.
    (3) Waiver of minimum requirements. In the case of a deposit with a 
fixed payment date, fixed or minimum term, or a qualifying or notice 
period that has not expired as of such date, interest thereon to the 
date of closing shall be computed according to the terms of the deposit 
contract as if interest had been credited and as if the deposit could 
have been withdrawn on such date without any penalty or reduction in 
the rate of earnings.
    (j) Continuation of insurance coverage following the death of a 
deposit owner. The death of a deposit owner shall not affect the 
insurance coverage of the deposit for a period of six months following 
the owner's death unless the deposit account is restructured. The 
operation of this grace period, however, shall not result in a 
reduction of coverage. If an account is not restructured within six 
months after the owner's death, the insurance shall be provided on the 
basis of actual ownership in accordance with the provisions of 
Sec. 330.5(a)(1).


Sec. 330.4  Continuation of separate deposit insurance after merger of 
insured depository institutions.

    Whenever the liabilities of one or more insured depository 
institutions for deposits are assumed by another insured depository 
institution, whether by merger, consolidation, other statutory 
assumption or contract:
    (a) The insured status of the institutions whose liabilities have 
been assumed terminates on the date of receipt by the FDIC of 
satisfactory evidence of the assumption; and
    (b) The separate insurance of deposits assumed continues for six 
months from the date the assumption takes effect or, in the case of a 
time deposit, the earliest maturity date after the six-month period. In 
the case of time deposits which mature within six months of the date 
the deposits are assumed and which are renewed at the same dollar 
amount (either with or without accrued

[[Page 25758]]

interest having been added to the principal amount) and for the same 
term as the original deposit, the separate insurance applies to the 
renewed deposits until the first maturity date after the six-month 
period. Time deposits that mature within six months of the deposit 
assumption and that are renewed on any other basis, or that are not 
renewed and thereby become demand deposits, are separately insured only 
until the end of the six-month period.


Sec. 330.5  Recognition of deposit ownership and recordkeeping 
requirements.

    (a) Recognition of deposit ownership--(1) Evidence of deposit 
ownership. Except as indicated in this paragraph (a)(1) or as provided 
in Sec. 330.3(j), in determining the amount of insurance available to 
each depositor, the FDIC shall presume that deposited funds are 
actually owned in the manner indicated on the deposit account records 
of the insured depository institution. If the FDIC, in its sole 
discretion, determines that the deposit account records of the insured 
depository institution are clear and unambiguous, those records shall 
be considered binding on the depositor, and the FDIC shall consider no 
other records on the manner in which the funds are owned. If the 
deposit account records are ambiguous or unclear on the manner in which 
the funds are owned, then the FDIC may, in its sole discretion, 
consider evidence other than the deposit account records of the insured 
depository institution for the purpose of establishing the manner in 
which the funds are owned. Despite the general requirements of this 
paragraph (a)(1), if the FDIC has reason to believe that the insured 
depository institution's deposit account records misrepresent the 
actual ownership of deposited funds and such misrepresentation would 
increase deposit insurance coverage, the FDIC may consider all 
available evidence and pay claims for insured deposits on the basis of 
the actual rather than the misrepresented ownership.
    (2) Recognition of deposit ownership in custodial accounts. In the 
case of custodial deposits, the interest of each beneficial owner may 
be determined on a fractional or percentage basis. This may be 
accomplished in any manner which indicates that where the funds of an 
owner are commingled with other funds held in a custodial capacity and 
a portion thereof is placed on deposit in one or more insured 
depository institutions without allocation, the owner's insured 
interest in the deposit in any one insured depository institution would 
represent, at any given time, the same fractional share as his or her 
share of the total commingled funds.
    (b) Recordkeeping requirements--(1) Disclosure of fiduciary 
relationships. The ``deposit account records'' (as defined in 
Sec. 330.1(e)) of an insured depository institution must expressly 
disclose, by way of specific references, the existence of any fiduciary 
relationship including, but not limited to, relationships involving a 
trustee, agent, nominee, guardian, executor or custodian, pursuant to 
which funds in an account are deposited and on which a claim for 
insurance coverage is based. No claim for insurance coverage based on a 
fiduciary relationship will be recognized if no fiduciary relationship 
is evident from the deposit account records of the insured depository 
institution. The general requirement for the express indication that 
the account is held in a fiduciary capacity will not apply, however, in 
instances where the FDIC determines, in its sole discretion, that the 
titling of the deposit account and the underlying deposit account 
records sufficiently indicate the existence of a fiduciary 
relationship. This exception may apply, for example, where the deposit 
account title or records indicate that the account is held by an escrow 
agent, title company or a company whose business is to hold deposits 
and securities for others.
    (2) Details of fiduciary relationships. If the deposit account 
records of an insured depository institution disclose the existence of 
a relationship which might provide a basis for additional insurance 
(including the exception provided for in paragraph (b)(1) of this 
section), the details of the relationship and the interests of other 
parties in the account must be ascertainable either from the deposit 
account records of the insured depository institution or from records 
maintained, in good faith and in the regular course of business, by the 
depositor or by some person or entity that has undertaken to maintain 
such records for the depositor.
    (3) Multi-tiered fiduciary relationships. In deposit accounts where 
there are multiple levels of fiduciary relationships, there are two 
methods of satisfying paragraphs (b)(1) and (b)(2) of this section to 
obtain insurance coverage for the interests of the true beneficial 
owners of a deposit account.
    (i) One method is to:
    (A) Expressly indicate, on the deposit account records of the 
insured depository institution, the existence of each and every level 
of fiduciary relationships; and
    (B) Disclose, at each level, the name(s) and interest(s) of the 
person(s) on whose behalf the party at that level is acting.
    (ii) An alternative method is to:
    (A) Expressly indicate, on the deposit account records of the 
insured depository institution, that there are multiple levels of 
fiduciary relationships;
    (B) Disclose the existence of additional levels of fiduciary 
relationships in records, maintained in good faith and in the regular 
course of business, by parties at subsequent levels; and
    (C) Disclose, at each of the levels, the name(s) and interest(s) of 
the person(s) on whose behalf the party at that level is acting. No 
person or entity in the chain of parties will be permitted to claim 
that they are acting in a fiduciary capacity for others unless the 
possible existence of such a relationship is revealed at some previous 
level in the chain.
    (4) Exceptions to recordkeeping requirements--(i) Deposits 
evidenced by negotiable instruments. If any deposit obligation of an 
insured depository institution is evidenced by a negotiable certificate 
of deposit, negotiable draft, negotiable cashier's or officer's check, 
negotiable certified check, negotiable traveler's check, letter of 
credit or other negotiable instrument, the FDIC will recognize the 
owner of such deposit obligation for all purposes of claim for insured 
deposits to the same extent as if his or her name and interest were 
disclosed on the records of the insured depository institution; 
provided, that the instrument was in fact negotiated to such owner 
prior to the date of default of the insured depository institution. The 
owner must provide affirmative proof of such negotiation, in a form 
satisfactory to the FDIC, to substantiate his or her claim. Receipt of 
a negotiable instrument directly from the insured depository 
institution in default shall, in no event, be considered a negotiation 
of said instrument for purposes of this provision.
    (ii) Deposit obligations for payment of items forwarded for 
collection by depository institution acting as agent. Where an insured 
depository institution in default has become obligated for the payment 
of items forwarded for collection by a depository institution acting 
solely as agent, the FDIC will recognize the holders of such items for 
all purposes of claim for insured deposits to the same extent as if 
their name(s) and interest(s) were disclosed as depositors on the 
deposit account records of the insured depository institution, when 
such claim for insured deposits, if otherwise payable, has been

[[Page 25759]]

established by the execution and delivery of prescribed forms. The FDIC 
will recognize such depository institution forwarding such items for 
the holders thereof as agent for such holders for the purpose of making 
an assignment to the FDIC of their rights against the insured 
depository institution in default and for the purpose of receiving 
payment on their behalf.


Sec. 330.6  Single ownership accounts.

    (a) Individual accounts. Funds owned by a natural person and 
deposited in one or more deposit accounts in his or her own name shall 
be added together and insured up to $100,000 in the aggregate. 
Exception: Despite the general requirement in this paragraph (a), if 
more than one natural person has the right to withdraw funds from an 
individual account (excluding persons who have the right to withdraw by 
virtue of a Power of Attorney), the account shall be treated as a joint 
ownership account (although not necessarily a qualifying joint account) 
and shall be insured in accordance with the provisions of Sec. 330.9, 
unless the deposit account records clearly indicate, to the 
satisfaction of the FDIC, that the funds are owned by one individual 
and that other signatories on the account are merely authorized to 
withdraw funds on behalf of the owner.
    (b) Sole proprietorship accounts. Funds owned by a business which 
is a ``sole proprietorship'' (as defined in Sec. 330.1(m)) and 
deposited in one or more deposit accounts in the name of the business 
shall be treated as the individual account(s) of the person who is the 
sole proprietor, added to any other individual accounts of that person, 
and insured up to $100,000 in the aggregate.
    (c) Single-name accounts containing community property funds. 
Community property funds deposited into one or more deposit accounts in 
the name of one member of a husband-wife community shall be treated as 
the individual account(s) of the named member, added to any other 
individual accounts of that person, and insured up to $100,000 in the 
aggregate.
    (d) Accounts of a decedent and accounts held by executors or 
administrators of a decedent's estate. Funds held in the name of a 
decedent or in the name of the executor, administrator, or other 
personal representative of his or her estate and deposited into one or 
more deposit accounts shall be added together and insured up to 
$100,000 in the aggregate; provided, however, that nothing in this 
paragraph (d) shall affect the operation of Sec. 330.3(j). The deposit 
insurance provided by this paragraph (d) shall be separate from any 
insurance coverage provided for the individual deposit accounts of the 
executor, administrator, other personal representative or the 
beneficiaries of the estate.


Sec. 330.7  Accounts held by an agent, nominee, guardian, custodian or 
conservator.

    (a) Agency or nominee accounts. Funds owned by a principal or 
principals and deposited into one or more deposit accounts in the name 
of an agent, custodian or nominee, shall be insured to the same extent 
as if deposited in the name of the principal(s). When such funds are 
deposited by an insured depository institution acting as a trustee of 
an irrevocable trust, the insurance coverage shall be governed by the 
provisions of Sec. 330.13.
    (b) Guardian, custodian or conservator accounts. Funds held by a 
guardian, custodian, or conservator for the benefit of his or her ward, 
or for the benefit of a minor under the Uniform Gifts to Minors Act, 
and deposited into one or more accounts in the name of the guardian, 
custodian or conservator shall, for purposes of this part, be deemed to 
be agency or nominee accounts and shall be insured in accordance with 
paragraph (a) of this section.
    (c) Accounts held by fiduciaries on behalf of two or more persons. 
Funds held by an agent, nominee, guardian, custodian, conservator or 
loan servicer, on behalf of two or more persons jointly, shall be 
treated as a joint ownership account and shall be insured in accordance 
with the provisions of Sec. 330.9.
    (d) Mortgage servicing accounts. Accounts maintained by a mortgage 
servicer, in a custodial or other fiduciary capacity, which are 
comprised of payments by mortgagors of principal and interest, shall be 
insured in accordance with paragraph (a) of this section for the 
interest of each owner (mortgagee, investor or security holder) in such 
accounts. Accounts maintained by a mortgage servicer, in a custodial or 
other fiduciary capacity, which are comprised of payments by mortgagors 
of taxes and insurance premiums shall be added together and insured in 
accordance with paragraph (a) of this section for the ownership 
interest of each mortgagor in such accounts.
    (e) Custodian accounts for American Indians. Paragraph (a) of this 
section shall not apply to any interest an individual American Indian 
may have in funds deposited by the Bureau of Indian Affairs of the 
United States Department of the Interior (the ``BIA'') on behalf of 
that person pursuant to 25 U.S.C. 162(a), or by any other disbursing 
agent of the United States on behalf of that person pursuant to similar 
authority, in an insured depository institution. The interest of each 
American Indian in all such accounts maintained at the same insured 
depository institution shall be added together and insured, up to 
$100,000, separately from any other accounts maintained by that person 
in the same insured depository institution.


Sec. 330.8  Annuity contract accounts.

    (a) Funds held by an insurance company or other corporation in a 
deposit account for the sole purpose of funding life insurance or 
annuity contracts and any benefits incidental to such contracts, shall 
be insured separately in the amount of up to $100,000 per annuitant, 
provided that, pursuant to a state statute:
    (1) The corporation establishes a separate account for such funds;
    (2) The account cannot be charged with the liabilities arising out 
of any other business of the corporation; and
    (3) The account cannot be invaded by other creditors of the 
corporation in the event that the corporation becomes insolvent and its 
assets are liquidated.
    (b) Such insurance coverage shall be separate from the insurance 
provided for any other accounts maintained by the corporation or the 
annuitants at the same insured depository institution.


Sec. 330.9  Joint ownership accounts.

    (a) Separate insurance coverage. Qualifying joint accounts, whether 
owned as joint tenants with right of survivorship, as tenants in common 
or as tenants by the entirety, shall be insured separately from any 
individually owned (single ownership) deposit accounts maintained by 
the co-owners.

    (Example: If A has a single ownership account and also is a 
joint owner of a qualifying joint account, A's interest in the joint 
account would be insured separately from his or her interest in the 
individual account.) Qualifying joint accounts in the names of both 
husband and wife which are comprised of community property funds 
shall be added together and insured up to $100,000, separately from 
any funds deposited into accounts bearing their individual names.

    (b) Determination of insurance coverage. Step one: all qualifying 
joint accounts owned by the same combination of individuals shall be 
added together; the aggregate amount is insurable up to a limit of 
$100,000.

    (Example: A qualifying joint account owned by ``A&B'' would be 
added to a

[[Page 25760]]

qualifying joint account owned by ``B&A'' and the insurable limit on 
the combined balances in those accounts would be $100,000. Moreover, 
the insurable limit on a single qualifying joint account owned by 
``A&B'' would be $100,000. Thus, any qualifying joint account (or 
group of qualifying joint accounts owned by the same combination of 
persons) with a balance over $100,000 will be over the insurance 
limit.)

    Step two: the interests of each co-owner in all qualifying joint 
accounts, whether owned by the same or different combinations of 
persons, shall then be added together and the total shall be insured up 
to $100,000.

    (Example: ``A&B'' have a qualifying joint account with a balance 
of $100,000; ``A&C'' have a qualifying joint account with a balance 
of $150,000; and ``A&D'' have a qualifying joint account with a 
balance of $100,000. The balance in the account owned by ``A&C'' 
exceeds $100,000, so under step one the excess amount, $50,000, 
would be uninsured. A's combined ownership interests in the 
insurable amounts in the accounts would be $150,000, of which under 
step two $100,000 would be insured and $50,000 would be uninsured; 
B's ownership interest would be $50,000, all of which would be 
insured; C's insurable ownership interest would be $50,000, all of 
which would be insured; and D's ownership interest would be $50,000, 
all of which would be insured.)

    (c) Qualifying joint accounts. (1) A joint deposit account shall be 
deemed to be a qualifying joint account, for purposes of this section, 
only if:
    (i) All co-owners of the funds in the account are ``natural 
persons'' (as defined in Sec. 330.1(k)); and
    (ii) Each co-owner has personally signed a deposit account 
signature card; and
    (iii) Each co-owner possesses withdrawal rights on the same basis.
    (2) The signature-card requirement of paragraph (c)(1)(ii) of this 
section shall not apply to certificates of deposit, to any deposit 
obligation evidenced by a negotiable instrument, or to any account 
maintained by an agent, nominee, guardian, custodian or conservator on 
behalf of two or more persons.
    (3) All deposit accounts that satisfy the criteria in paragraph 
(c)(1) of this section, and those accounts that come within the 
exception provided for in paragraph (c)(2) of this section, shall be 
deemed to be jointly owned provided that, in accordance with the 
provisions of Sec. 330.5(a), the FDIC determines that the deposit 
account records of the insured depository institution are clear and 
unambiguous as to the ownership of the accounts. If the deposit account 
records are ambiguous or unclear as to the manner in which the deposit 
accounts are owned, then the FDIC may, in its sole discretion, consider 
evidence other than the deposit account records of the insured 
depository institution for the purpose of establishing the manner in 
which the funds are owned. The signatures of two or more persons on the 
deposit account signature card or the names of two or more persons on a 
certificate of deposit or other deposit instrument shall be conclusive 
evidence that the account is a joint account (although not necessarily 
a qualifying joint account) unless the deposit records as a whole are 
ambiguous and some other evidence indicates, to the satisfaction of the 
FDIC, that there is a contrary ownership capacity.
    (d) Nonqualifying joint accounts. A deposit account held in two or 
more names which is not a qualifying joint account, for purposes of 
this section, shall be treated as being owned by each named owner, as 
an individual, corporation, partnership, or unincorporated association, 
as the case may be, and the actual ownership interest of each 
individual or entity in such account shall be added to any other single 
ownership accounts of such individual or other accounts of such entity, 
and shall be insured in accordance with the provisions of this part 
governing the insurance of such accounts.
    (e) Determination of interests. The interests of the co-owners of 
qualifying joint accounts, held as tenants in common, shall be deemed 
equal, unless otherwise stated in the depository institution's deposit 
account records. This section applies regardless of whether the 
conjunction ``and'' or ``or'' is used in the title of a joint deposit 
account, even when both terms are used, such as in the case of a joint 
deposit account with three or more co-owners.


Sec. 330.10  Revocable trust accounts.

    (a) General rule. Funds owned by an individual and deposited into 
an account evidencing an intention that upon the death of the owner the 
funds shall belong to one or more qualifying beneficiaries shall be 
insured in the amount of up to $100,000 in the aggregate as to each 
such named qualifying beneficiary, separately from any other accounts 
of the owner or the beneficiaries. For purposes of this provision, the 
term ``qualifying beneficiaries'' means the owner's spouse, child/
children or grandchild/grandchildren.

    (Example: If A establishes a qualifying account payable upon 
death to his spouse, two children and one grandchild, assuming 
compliance with the requirements of this provision, the account 
would be insured up to $400,000 separately from any other different 
types of accounts either A or the beneficiaries may have with the 
same depository institution.)

    Accounts covered by this provision are commonly referred to as 
tentative or ``Totten trust'' accounts, ``payable-on-death'' accounts, 
or revocable trust accounts.
    (b) Required intention. The required intention in paragraph (a) of 
this section that upon the owner's death the funds shall belong to one 
or more qualifying beneficiaries must be manifested in the title of the 
account using commonly accepted terms such as, but not limited to, ``in 
trust for,'' ``as trustee for,'' ``payable-on-death to,'' or any 
acronym therefor. In addition, the beneficiaries must be specifically 
named in the deposit account records of the insured depository 
institution. The settlor of a revocable trust account shall be presumed 
to own the funds deposited into the account.
    (c) Interests of nonqualifying beneficiaries. If a named 
beneficiary of an account covered by this section is not a qualifying 
beneficiary, the funds corresponding to that beneficiary shall be 
treated as individually owned (single ownership) accounts of such 
owner(s), aggregated with any other single ownership accounts of such 
owner(s), and insured up to $100,000 per owner.

    (Examples: If A establishes an account payable upon death to his 
or her nephew, the account would be insured as a single ownership 
account owned by A. Similarly, if B establishes an account payable 
upon death to her husband, son and nephew, two-thirds of the account 
balance would be eligible for POD coverage up to $200,000 
corresponding to the two qualifying beneficiaries (i.e., the spouse 
and child). The amount corresponding to the non-qualifying 
beneficiary (i.e., the nephew) would be deemed to be owned by B in 
her single ownership capacity and insured accordingly.)

    (d) Joint revocable trust accounts. Where an account described in 
paragraph (a) of this section is established by more than one owner and 
held for the benefit of others, some or all of whom are within the 
qualifying degree of kinship, the respective interests of each owner 
(which shall be deemed equal unless otherwise stated in the insured 
depository institution's deposit account records) held for the benefit 
of each qualifying beneficiary shall be separately insured up to 
$100,000. However, where a husband and a wife establish a revocable 
trust account naming themselves as the sole beneficiaries, such account 
shall not be insured according to the provisions of this section but 
shall instead be insured

[[Page 25761]]

in accordance with the joint account provisions of Sec. 330.9.
    (e) Definition of ``children'' and ``grandchildren''. For the 
purpose of establishing the qualifying degree of kinship set forth in 
paragraph (a) of this section, the term ``children'' includes any 
biological, adopted and step-children of the owner and 
``grandchildren'' includes biological, adopted, or step-children of any 
of the owner's children.
    (f) Living trusts. This section also applies to revocable trust 
accounts held in connection with a so-called ``living trust,'' a formal 
trust which an owner creates and retains control over during his or her 
lifetime. If a named beneficiary in a living trust is a qualifying 
beneficiary under this section, then the deposit account held in 
connection with the living trust may be eligible for deposit insurance 
under this section, assuming compliance with all the provisions of this 
part. If, however, for example, the living trust includes a ``defeating 
contingency'' relative to that beneficiary's interest in the trust 
assets, then insurance coverage under this section would not be 
provided. For purposes of this section, a ``defeating contingency'' is 
defined as a condition which would prevent the beneficiary from 
acquiring a vested and non-contingent interest in the funds in the 
deposit account upon the owner's death.


Sec. 330.11  Accounts of a corporation, partnership or unincorporated 
association.

    (a) Corporate accounts. (1) The deposit accounts of a corporation 
engaged in any ``independent activity'' (as defined in Sec. 330.1(g)) 
shall be added together and insured up to $100,000 in the aggregate. If 
a corporation has divisions or units which are not separately 
incorporated, the deposit accounts of those divisions or units shall be 
added to any other deposit accounts of the corporation. If a 
corporation maintains deposit accounts in a representative or fiduciary 
capacity, such accounts shall not be treated as the deposit accounts of 
the corporation but shall be treated as fiduciary accounts and insured 
in accordance with the provisions of Sec. 330.7.
    (2) Notwithstanding any other provision of this part, any trust or 
other business arrangement which has filed or is required to file a 
registration statement with the Securities and Exchange Commission 
pursuant to section 8 of the Investment Company Act of 1940 or that 
would be required so to register but for the fact it is not created 
under the laws of the United States or a state or but for sections 
2(b), 3(c)(1), or 6(a)(1) of that act shall be deemed to be a 
corporation for purposes of determining deposit insurance coverage.
    (b) Partnership accounts. The deposit accounts of a partnership 
engaged in any ``independent activity'' (as defined in Sec. 330.1(g)) 
shall be added together and insured up to $100,000 in the aggregate. 
Such insurance coverage shall be separate from any insurance provided 
for individually owned (single ownership) accounts maintained by the 
individual partners. A partnership shall be deemed to exist, for 
purposes of this paragraph, any time there is an association of two or 
more persons or entities formed to carry on, as co-owners, an 
unincorporated business for profit.
    (c) Unincorporated association accounts. The deposit accounts of an 
unincorporated association engaged in any independent activity shall be 
added together and insured up to $100,000 in the aggregate, separately 
from the accounts of the person(s) or entity(ies) comprising the 
unincorporated association. An unincorporated association shall be 
deemed to exist, for purposes of this paragraph, whenever there is an 
association of two or more persons formed for some religious, 
educational, charitable, social or other noncommercial purpose.
    (d) Non-qualifying entities. The deposit accounts of an entity 
which is not engaged in an ``independent activity'' (as defined in 
Sec. 330.1(g)) shall be deemed to be owned by the person or persons 
owning the corporation or comprising the partnership or unincorporated 
association, and, for deposit insurance purposes, the interest of each 
person in such a deposit account shall be added to any other deposit 
accounts individually owned by that person and insured up to $100,000 
in the aggregate.


Sec. 330.12  Accounts held by a depository institution as the trustee 
of an irrevocable trust.

    (a) Separate insurance coverage. ``Trust funds'' (as defined in 
Sec. 330.1(o)) held by an insured depository institution in its 
capacity as trustee of an irrevocable trust, whether held in its trust 
department, held or deposited in any other department of the fiduciary 
institution, or deposited by the fiduciary institution in another 
insured depository institution, shall be insured up to $100,000 for 
each owner or beneficiary represented. This insurance shall be separate 
from, and in addition to, the insurance provided for any other deposits 
of the owners or the beneficiaries.
    (b) Determination of interests. The insurance for funds held by an 
insured depository institution in its capacity as trustee of an 
irrevocable trust shall be determined in accordance with the following 
provisions:
    (1) Allocated funds of a trust estate. If trust funds of a 
particular ``trust estate'' (as defined in Sec. 330.1(n)) are allocated 
by the fiduciary and deposited, the insurance with respect to such 
trust estate shall be determined by ascertaining the amount of its 
funds allocated, deposited and remaining to the credit of the claimant 
as fiduciary at the insured depository institution in default.
    (2) Interest of a trust estate in unallocated trust funds. If funds 
of a particular trust estate are commingled with funds of other trust 
estates and deposited by the fiduciary institution in one or more 
insured depository institutions to the credit of the depository 
institution as fiduciary, without allocation of specific amounts from a 
particular trust estate to an account in such institution(s), the 
percentage interest of that trust estate in the unallocated deposits in 
any institution in default is the same as that trust estate's 
percentage interest in the entire commingled investment pool.
    (c) Limitation on applicability. This section shall not apply to 
deposits of trust funds belonging to a trust which is classified as a 
corporation under Sec. 330.11(a)(2).


Sec. 330.13  Irrevocable trust accounts.

    (a) General rule. Funds representing the ``non-contingent trust 
interest(s)'' (as defined in Sec. 330.1(l)) of a beneficiary deposited 
into one or more deposit accounts established pursuant to one or more 
irrevocable trust agreements created by the same settlor(s) 
(grantor(s)) shall be added together and insured up to $100,000 in the 
aggregate. Such insurance coverage shall be separate from the coverage 
provided for other accounts maintained by the settlor(s), trustee(s) or 
beneficiary(ies) of the irrevocable trust(s) at the same insured 
depository institution. Each ``trust interest'' (as defined in 
Sec. 330.1(p)) in any irrevocable trust established by two or more 
settlors shall be deemed to be derived from each settlor pro rata to 
his or her contribution to the trust.
    (b) Treatment of contingent trust interests. In the case of any 
trust in which certain trust interests do not qualify as non-contingent 
trust interests, the funds representing those interests shall be added 
together and insured up to $100,000 in the aggregate. Such insurance 
coverage shall be in addition to the coverage provided for the funds

[[Page 25762]]

representing non-contingent trust interests which are insured pursuant 
to paragraph (a) of this section.
    (c) Commingled accounts of bankruptcy trustees. Whenever a 
bankruptcy trustee appointed under Title 11 of the United States Code 
commingles the funds of various bankruptcy estates in the same account 
at an insured depository institution, the funds of each Title 11 
bankruptcy estate will be added together and insured up to $100,000, 
separately from the funds of any other such estate.


Sec. 330.14  Retirement and other employee benefit plan accounts.

    (a) ``Pass-through'' insurance. Except as provided in paragraph (b) 
of this section, any deposits of an employee benefit plan or of any 
eligible deferred compensation plan described in section 457 of the 
Internal Revenue Code of 1986 (26 U.S.C. 457) in an insured depository 
institution shall be insured on a ``pass-through'' basis, in the amount 
of up to $100,000 for the non-contingent interest of each plan 
participant, provided that the FDIC's recordkeeping requirements, as 
prescribed in Sec. 330.5, are satisfied.
    (b) Exception. ``Pass-through'' insurance shall not be provided 
pursuant to paragraph (a) of this section with respect to any deposit 
accepted by an insured depository institution which, at the time the 
deposit is accepted, may not accept brokered deposits pursuant to 
section 29 of the Act (12 U.S.C. 1831f) unless, at the time the deposit 
is accepted:
    (1) The institution meets each applicable capital standard; and
    (2) The depositor receives a written statement from the institution 
indicating that such deposits are eligible for insurance coverage on a 
``pass-through'' basis.
    (c) Aggregation--(1) Multiple plans. Funds representing the non-
contingent interests of a beneficiary in an employee benefit plan, or 
eligible deferred compensation plan described in section 457 of the 
Internal Revenue Code of 1986 (26 U.S.C. 457), which are deposited in 
one or more deposit accounts shall be aggregated with any other 
deposited funds representing such interests of the same beneficiary in 
other employee benefit plans, or eligible deferred compensation plans 
described in section 457 of the Internal Revenue Code of 1986, 
established by the same employer or employee organization.
    (2) Certain retirement accounts. (i) Deposits in an insured 
depository institution made in connection with the following types of 
retirement plans shall be aggregated and insured in the amount of up to 
$100,000 per participant:
    (A) Any individual retirement account described in section 408(a) 
of the Internal Revenue Code of 1986 (26 U.S.C. 408(a));
    (B) Any eligible deferred compensation plan described in section 
457 of the Internal Revenue Code of 1986 (26 U.S.C. 457); and
    (C) Any individual account plan defined in section 3(34) of the 
Employee Retirement Income Security Act (ERISA) (29 U.S.C. 1002) and 
any plan described in section 401(d) of the Internal Revenue Code of 
1986 (26 U.S.C. 401(d)), to the extent that participants and 
beneficiaries under such plans have the right to direct the investment 
of assets held in individual accounts maintained on their behalf by the 
plans.
    (ii) The provisions of this paragraph (c) shall not apply with 
respect to the deposits of any employee benefit plan, or eligible 
deferred compensation plan described in section 457 of the Internal 
Revenue Code of 1986, which is not entitled to ``pass-through'' 
insurance pursuant to paragraph (b) of this section. Such deposits 
shall be aggregated and insured in the amount of $100,000 per plan.
    (d) Determination of interests--(1) Defined contribution plans. The 
value of an employee's non-contingent interest in a defined 
contribution plan shall be deemed to be the employee's account balance 
as of the date of default of the insured depository institution, 
regardless of whether said amount was derived, in whole or in part, 
from contributions of the employee and/or the employer to the account.
    (2) Defined benefit plans. The value of an employee's non-
contingent interest in a defined benefit plan shall be deemed to be the 
present value of the employee's interest in the plan, evaluated in 
accordance with the method of calculation ordinarily used under such 
plan, as of the date of default of the insured depository institution.
    (3) Amounts taken into account. For the purposes of applying the 
rule under paragraph (c)(2) of this section, only the present vested 
and ascertainable interests of each participant in an employee benefit 
plan or ``457 Plan,'' excluding any remainder interest created by, or 
as a result of, the plan, shall be taken into account in determining 
the amount of deposit insurance accorded to the deposits of the plan.
    (e) Treatment of contingent interests. In the event that employees' 
interests in an employee benefit plan are not capable of evaluation in 
accordance with the provisions of this section, or an account 
established for any such plan includes amounts for future participants 
in the plan, payment by the FDIC with respect to all such interests 
shall not exceed $100,000 in the aggregate.
    (f) Overfunded pension plan deposits. Any portion of an employee 
benefit plan's deposits which is not attributable to the interests of 
the beneficiaries under the plan shall be deemed attributable to the 
overfunded portion of the plan's assets and shall be aggregated and 
insured up to $100,000, separately from any other deposits.
    (g) Definitions of ``depositor'', ``employee benefit plan'', 
``employee organization'' and ``non-contingent interest''. Except as 
otherwise indicated in this section, for purposes of this section:
    (1) The term depositor means the person(s) administering or 
managing an employee benefit plan.
    (2) The term employee benefit plan has the same meaning given to 
such term in section 3(3) of the Employee Retirement Income Security 
Act of 1974 (ERISA) (29 U.S.C. 1002) and includes any plan described in 
section 401(d) of the Internal Revenue Code of 1986.
    (3) The term employee organization means any labor union, 
organization, employee representation committee, association, group, or 
plan, in which employees participate and which exists for the purpose, 
in whole or in part, of dealing with employers concerning an employee 
benefit plan, or other matters incidental to employment relationships; 
or any employees' beneficiary association organized for the purpose, in 
whole or in part, of establishing such a plan.
    (4) The term non-contingent interest means an interest capable of 
determination without evaluation of contingencies except for those 
covered by the present worth tables and rules of calculation for their 
use set forth in Sec. 20.2031-7 of the Federal Estate Tax Regulations 
(26 CFR 20.2031-7) or any similar present worth or life expectancy 
tables as may be published by the Internal Revenue Service.
    (h) Disclosure of capital status--(1) Disclosure upon request. An 
insured depository institution shall, upon request, provide a clear and 
conspicuous written notice to any depositor of employee benefit plan 
funds of the institution's leverage ratio, Tier 1 risk-based capital 
ratio, total risk-based capital ratio and prompt corrective action 
(PCA) capital category, as defined in the regulations of the 
institution's primary federal regulator, and whether, in the depository 
institution's judgment, employee benefit

[[Page 25763]]

plan deposits made with the institution, at the time the information is 
requested, would be eligible for ``pass-through'' insurance coverage 
under paragraphs (a) and (b) of this section. Such notice shall be 
provided within five business days after receipt of the request for 
disclosure.
    (2) Disclosure upon opening of an account. An insured depository 
institution shall, upon the opening of any account comprised of 
employee benefit plan funds, provide a clear and conspicuous written 
notice to the depositor consisting of an accurate explanation of the 
requirements for ``pass-through'' deposit insurance coverage provided 
in paragraphs (a) and (b) of this section; the institution's PCA 
capital category; and a determination of whether or not, in the 
depository institution's judgment, the funds being deposited are 
eligible for ``pass-through'' insurance coverage.
    (3) Disclosure when ``pass-through'' coverage is no longer 
available. Whenever new, rolled-over or renewed employee benefit plan 
deposits placed with an insured depository institution would no longer 
be eligible for ``pass-through'' insurance coverage, the institution 
shall provide a clear and conspicuous written notice to all existing 
depositors of employee benefit plan funds of its new PCA capital 
category, if applicable, and that new, rolled-over or renewed deposits 
of employee benefit plan funds made after the applicable date shall not 
be eligible for ``pass-through'' insurance coverage under paragraphs 
(a) and (b) of this section. Such written notice shall be provided 
within ten business days after the institution receives notice or is 
deemed to have notice that it is no longer permitted to accept brokered 
deposits under section 29 of the Act and the institution no longer 
meets the requirements in paragraph (b) of this section.
    (4) Definition of ``employee benefit plan''. For purposes of this 
paragraph (h), the term ``employee benefit plan'' has the same meaning 
as provided under paragraph (g)(2) of this section but also includes 
any eligible deferred compensation plans described in section 457 of 
the Internal Revenue Code of 1986 (26 U.S.C. 457).


Sec. 330.15  Public unit accounts.

    (a) Extent of insurance coverage--(1) Accounts of the United 
States. Each official custodian of funds of the United States lawfully 
depositing such funds in an insured depository institution shall be 
separately insured in the amount of:
    (i) Up to $100,000 in the aggregate for all time and savings 
deposits; and
    (ii) Up to $100,000 in the aggregate for all demand deposits.
    (2) Accounts of a state, county, municipality or political 
subdivision. (i) Each official custodian of funds of any state of the 
United States, or any county, municipality, or political subdivision 
thereof, lawfully depositing such funds in an insured depository 
institution in the state comprising the public unit or wherein the 
public unit is located (including any insured depository institution 
having a branch in said state) shall be separately insured in the 
amount of:
    (A) Up to $100,000 in the aggregate for all time and savings 
deposits; and
    (B) Up to $100,000 in the aggregate for all demand deposits.
    (ii) In addition, each such official custodian depositing such 
funds in an insured depository institution outside of the state 
comprising the public unit or wherein the public unit is located, shall 
be insured in the amount of up to $100,000 in the aggregate for all 
deposits, regardless of whether they are time, savings or demand 
deposits.
    (3) Accounts of the District of Columbia. (i) Each official 
custodian of funds of the District of Columbia lawfully depositing such 
funds in an insured depository institution in the District of Columbia 
(including an insured depository institution having a branch in the 
District of Columbia) shall be separately insured in the amount of:
    (A) Up to $100,000 in the aggregate for all time and savings 
deposits; and
    (B) Up to $100,000 in the aggregate for all demand deposits.
    (ii) In addition, each such official custodian depositing such 
funds in an insured depository institution outside of the District of 
Columbia shall be insured in the amount of up to $100,000 in the 
aggregate for all deposits, regardless of whether they are time, 
savings or demand deposits.
    (4) Accounts of the Commonwealth of Puerto Rico and other 
government possessions and territories. (i) Each official custodian of 
funds of the Commonwealth of Puerto Rico, the Virgin Islands, American 
Samoa, the Trust Territory of the Pacific Islands, Guam, or The 
Commonwealth of the Northern Mariana Islands, or of any county, 
municipality, or political subdivision thereof lawfully depositing such 
funds in an insured depository institution in Puerto Rico, the Virgin 
Islands, American Samoa, the Trust Territory of the Pacific Islands, 
Guam, or The Commonwealth of the Northern Mariana Islands, 
respectively, shall be separately insured in the amount of:
    (A) Up to $100,000 in the aggregate for all time and savings 
deposits; and
    (B) Up to $100,000 in the aggregate for all demand deposits.
    (ii) In addition, each such official custodian depositing such 
funds in an insured depository institution outside of the commonwealth, 
possession or territory comprising the public unit or wherein the 
public unit is located, shall be insured in the amount of up to 
$100,000 in the aggregate for all deposits, regardless of whether they 
are time, savings or demand deposits.
    (5) Accounts of an Indian tribe. Each official custodian of funds 
of an Indian tribe (as defined in 25 U.S.C. 1452(c)), including an 
agency thereof having official custody of tribal funds, lawfully 
depositing the same in an insured depository institution shall be 
separately insured in the amount of:
    (i) Up to $100,000 in the aggregate for all time and savings 
deposits; and
    (ii) Up to $100,000 in the aggregate for all demand deposits.
    (b) Rules relating to the ``official custodian''--(1) 
Qualifications for an ``official custodian''. In order to qualify as an 
``official custodian'' for the purposes of paragraph (a) of this 
section, such custodian must have plenary authority, including control, 
over funds owned by the public unit which the custodian is appointed or 
elected to serve. Control of public funds includes possession, as well 
as the authority to establish accounts for such funds in insured 
depository institutions and to make deposits, withdrawals, and 
disbursements of such funds.
    (2) Official custodian of the funds of more than one public unit. 
For the purposes of paragraph (a) of this section, if the same person 
is an official custodian of the funds of more than one public unit, he 
or she shall be separately insured with respect to the funds held by 
him or her for each such public unit, but shall not be separately 
insured by virtue of holding different offices in such public unit or, 
except as provided in paragraph (c) of this section, holding such funds 
for different purposes.
    (3) Split of authority or control over public unit funds. If the 
exercise of authority or control over the funds of a public unit 
requires action by, or the consent of, two or more officers, employees, 
or agents of such public unit, then they will be treated as one 
``official custodian'' for the purposes of this section.
    (c) Public bond issues. Where an officer, agent or employee of a 
public unit has custody of certain funds which by law or under a bond 
indenture are required to be set aside to discharge a debt owed to the 
holders of notes or bonds issued by the public unit, any deposit of 
such funds in an insured

[[Page 25764]]

depository institution shall be deemed to be a deposit by a trustee of 
trust funds of which the noteholders or bondholders are pro rata 
beneficiaries, and the beneficial interest of each noteholder or 
bondholder in the deposit shall be separately insured up to $100,000.
    (d) Definition of ``political subdivision''. The term ``political 
subdivision'' includes drainage, irrigation, navigation, improvement, 
levee, sanitary, school or power districts, and bridge or port 
authorities and other special districts created by state statute or 
compacts between the states. It also includes any subdivision of a 
public unit mentioned in paragraphs (a)(2), (a)(3) and (a)(4) of this 
section or any principal department of such public unit:
    (1) The creation of which subdivision or department has been 
expressly authorized by the law of such public unit;
    (2) To which some functions of government have been delegated by 
such law; and
    (3) Which is empowered to exercise exclusive control over funds for 
its exclusive use.


Sec. 330.16  Effective dates.

    (a) Prior effective dates. Former Secs. 330.1(j), 330.10(a), 
330.12(c), 330.12(d)(3) and 330.13 (see 12 CFR part 330, as revised 
January 1, 1998) became effective on December 19, 1993.
    (b) Time deposits. Except with respect to the provisions in former 
Sec. 330.12 (a) and (b) (see 12 CFR part 330, as revised January 1, 
l998) and current Sec. 330.14(a) and (b), any time deposits made before 
December 19, 1991 that do not mature until after December 19, 1993, 
shall be subject to the rules as they existed on the date the deposits 
were made. Any time deposits made after December 19, 1991 but before 
December 19, 1993, shall be subject to the rules as they existed on the 
date the deposits were made. Any rollover or renewal of such time 
deposits prior to December 19, 1993 shall subject those deposits to the 
rules in effect on the date of such rollover or renewal. With respect 
to time deposits which mature only after a prescribed notice period, 
the provisions of this part shall be effective on the earliest possible 
maturity date after June 24, 1993 assuming (solely for purposes of this 
section) that notice had been given on that date.

    By order of the Board of Directors.

    Dated at Washington, D.C., this 28th day of April, 1998.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 98-11987 Filed 5-8-98; 8:45 am]
BILLING CODE 6714-01-P