June 5, 1990
TO: PENSION MEMBERS NO. 27-90
RE: 457 PLAN PASS-THROUGH INSURANCE PROPOSED
__________________________________________________________
As you recall, the Federal Deposit Insurance Corporation
("FDIC") recently approved final regulations which would insure
deposits of plans which qualify under section 457 of the Internal
Revenue Code ("457 Plans") in the amount of $100,000 in the
aggregate. (See Institute Memorandum to Pension Members No. 22-
90 dated May 11, 1990.) The FDIC provided for a transition
period until January 29, 1992 during which 457 Plan deposits in
thrift institutions formerly covered by the FSLIC would be
insured by the FDIC in the amount of $100,000 per 457 Plan
participant. This transition rule was designed prevent a mass
withdrawal of 457 Plan accounts from thrifts and to allow
Congress to pass legislation which would permanently provide for
FDIC insurance up to $100,000 for each 457 Plan participant.
In response to the FDIC regulations, Senator Metzenbaum
introduced H.R. 2694, the Deferred Compensation Plan Participant
Protection Act of 1990, which is attached hereto with the
accompanying Record statement. The bill would give the FDIC the
statutory authority to provide insurance coverage in the amount
of $100,000 to each 457 Plan participant, whether 457 Plan
accounts are held in banks or thrift institutions.
We will keep you informed of further developments.
W. Richard Mason
Assistant General Counsel
Attachment