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May 11, 1990
TO: PENSION MEMBERS NO. 22-90
UNIT INVESTMENT TRUST MEMBERS NO. 26-90
SEC RULES MEMBERS NO. 37-90
RE: FDIC FINALIZES AMENDMENTS TO REGULATIONS CONCERNING
PASS-THROUGH INSURANCE
__________________________________________________________
The Federal Deposit Insurance Corporation ("FDIC") has
approved final amendments to the FDIC's deposit insurance
regulations. (See Institute Memorandum to Pension Members No. 1-
90, Unit Investment Trust members No. 1-90 and SEC Rules
Committee No. 2-90, dated January 8, 1990.) A copy of the final
regulations are attached.
The final regulations withdrew the rule proposed last year
which would have resulted in unit investment trust deposits being
insured on a "pass-through" basis up to $100,000 for the interest
of each beneficiary in the deposits. The FDIC indicated that
there were "no compelling reasons" for such pass-through and that
Congress had expressed concern about such an expansion.
Furthermore, the FDIC's recent report to Congress on pass-through
deposit insurance noted that units in unit investment trusts are
sold to sophisticated investors who are not in need of deposit
insurance protection. Based on these reasons, the FDIC withdrew
its earlier proposal to extend pass-through insurance to unit
investment trust deposits.
With regard to deferred compensation plans which qualify
under section 457 of the Internal Revenue Code ("457 Plans"), the
final regulations provide that 457 Plan deposits will be insured
in the amount of $100,000 in the aggregate per employer,
regardless of the number of participants. This is a change for
accounts previously insured by the FSLIC, which covered 457 Plan
accounts on a per-participant basis. However, until January 29,
1992, the FDIC will insure 457 Plan deposits in savings
associations for up to $100,000 per participant in the interest
of maintaining stable funding for thrift institutions affected by
the change from former FSLIC rules. In addition, any 457 Plan
time deposits that mature prior to January 29, 1992 and that are
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renewed on the same terms and conditions will continue to be
insured on a per-participant basis until the first maturity date
after January 29, 1992.
W. Richard Mason
Assistant General Counsel
Attachment