For employee benefit purposes, NCUA’s regulations allow FCUs to purchase investments that would otherwise be impermissible provided the benefit(s) funded by the investments meets the definition of “defined benefit plan” or “employee benefit plan” established in § 701.19, Benefits for employees of Federal credit unions.
Defined Benefit Plan
NCUA regulation § 701.19(f), Benefits for employees of Federal credit unions, Definitions, defines “a defined benefit plan” as having the same meaning as in 29 U.S.C. 1002(35).
These plans promise a specific monthly benefit at retirement. While these plans may state the promised benefit as an exact dollar amount, such as $100 per month at retirement, they more commonly calculate benefits using a formula that includes factors such as salary, beneficiary age, and number of years worked at the company. Retirement plans such as the FERS and the CSRS are examples of a defined benefit plan.
Employee Benefit Plan
NCUA regulation § 701.19(f), Benefits for employees of Federal credit unions, Definitions, defines “employee benefit plan” as defined in 29 U.S.C. 1002(3).
Most employee benefits fall in this broad category. Examples of such plans include:
- Medical, disability, and unemployment insurance
- Vacation benefits
- 401(k) plans
- 457(b) plans
- 457(f) plans
- Split-dollar life insurance (both endorsement and loan regime)
Last updated September 25, 2017
