In the second legal opinion letter published this year addressing “other similar escrow account” share insurance coverage, the federal regulator of credit unions has determined that a particular 529 savings account offered by a state-chartered, federally insured credit union in North Carolina appears to qualify for pass-through coverage by the National Credit Union Share Insurance Fund.
Writing to the State Employees’ Credit Union (Raleigh, N.C.), NCUA General Counsel Michael McKenna, in a letter dated this August but apparently just posted to the NCUA website Tuesday, the subject 529 account, if offered in North Carolina by SECU, “qualifies to receive pass-through share insurance coverage as an ‘other similar escrow account.’” He wrote that this is based largely on SECU’s factual representations regarding the nature and structure of the particular account, the structure of the North Carolina State government and its political subdivisions and agents, and applicable North Carolina state law.
“If qualifying, the account would be eligible for National Credit Union Share Insurance Fund coverage on a pass-through basis (pass-through share insurance coverage) due to the credit union membership of the State Education Assistance Authority (Authority), a political subdivision of the State of North Carolina, and its agent, the College Foundation, Inc. (Foundation), a nonprofit, special purpose corporation organized under the laws of the State of North Carolina,” McKenna wrote. “While not all 529 accounts across the country would necessarily qualify for pass-through share insurance coverage, we believe the subject account does.”
Other Similar Escrow Account Share Insurance Coverage (Feb. 1, 2018)