Reminder: Unlimited Share Insurance Set to Expire Dec. 31

Temporary unlimited share insurance coverage for noninterest-bearing accounts (NIBTA) was one of the provisions that came out of the Dodd-Frank Act, and unless Congress passes legislation to amend the current rules, that coverage will no longer be available beginning Jan. 1, 2013. Despite the political battle taking place on Capitol Hill that could result in extended coverage, credit unions should prepare for this change.

The expiration of the unlimited share insurance program will mean several things to credit unions. The first is that funds held in noninterest-bearing transaction accounts will no longer have their own separate unlimited share insurance and will fall under National Credit Union Share Insurance Fund (NCUSIF) coverage. This will include funds belonging to the natural person credit unions that are held in accounts at corporate credit unions.

Essentially, this marks a return for credit unions to the way things were before the financial crisis, although the accounts will now be insured up to $250,000 instead of $100,000.

In addition, credit unions will need to remove the “Notice of Changes in Temporary NCUA Insurance Coverage for Transaction Accounts” signs being displayed in lobbies per 12 CFR 745.14.

A few financial institutions may have also amended their deposit agreements to reflect the unlimited share insurance, and all credit unions should double check their agreements to ensure that they either did not have any reference to the unlimited share insurance or that any reference accurately reflects the expiration of the unlimited share insurance.

The National Credit Union Administration (NCUA) did provide some guidance to credit unions in the Dec. 4 edition of The NCUA Report:

“Beginning on January 1, 2012, NCUA will no longer insure noninterest-bearing transaction accounts separately from other accounts or in excess of the standard $250,000 share insurance amount. As the statutory expiration date nears, NCUA encourages federally insured credit unions to take reasonable steps to notify their members of this change in coverage and to help members restructure their accounts to maximize share insurance coverage. NCUA plans to post additional information on its website to help credit unions and their members navigate this transition.”

The Federal Deposit Insurance Corporation (FDIC) issued a more detailed guidance to banks in November when it released Financial Institution Letter FIL-45-2012. Although the Dodd-Frank Act imposes no specific requirement to notify members of the expiration of the unlimited share insurance program, the FDIC is encouraging banks to notify their NIBTA customers as a prudent commercial practice. The FDIC is suggesting banks us any reasonable method of providing the notice to their clients, such as individual written notices or notices on regular account statements. The FDIC went as far as providing model language for the notices, which a credit union could easily modify if it wished to send similar notices to its NIBTA members.

Model Language for the Direct Notice to NIBTA Members:

Notice of Expiration of the Temporary Full NCUA Insurance Coverage for Noninterest-Bearing Transaction Accounts

By operation of federal law, beginning Jan. 1, 2013, funds deposited in a noninterest-bearing transaction account (including an Interest on Lawyer Trust Account) no longer will receive unlimited deposit insurance coverage by the National Credit Union Administration (NCUA). Beginning Jan. 1, 2013, all of a depositor’s accounts at an insured depository institution, including all noninterest-bearing transaction accounts, will be insured by the NCUA up to the standard maximum deposit insurance amount ($250,000) for each deposit insurance ownership category.

For more information about NCUA insurance coverage of noninterest-bearing transaction accounts, visit

Model Language for a Statement Message to Members:

NOTICE: By federal law, as of 1/1/2013, funds in a noninterest-bearing transaction account (including an IOLTA/IOLA) will no longer receive unlimited deposit insurance coverage, but will be NCUA-insured to the legal maximum of $250,000 for each ownership category. For more information, visit

As a reminder, because credit unions are not required to provide the notice, there is no 30-day advance-notice truth-in-savings requirement.


Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Compliance News, NCUA.