9500 Ming Avenue P.O. Box 9506 Bakersfield, CA (661) (800)

Transcription

1 Share Accounts Checking Accounts Money Market Accounts Club Accounts Share Certificate Accounts Individual Retirement Accounts (IRA) Deferred Compensation Accounts Electronic Fund Transfers Funds Availability Unclaimed Property Law Account Agreements Share Insurance 9500 Ming Avenue P.O. Box 9506 Bakersfield, CA (661) (800)

2 Table of Contents Information Regarding Member Identification... 3 General Disclosure About All Our Accounts and Services... 3 Arbitration and Waiver of Class Action and Jury Trial... 4 About Our Share Accounts... 5 About Our Regular Share Account... 6 About Our Rocky Raccoon Account... 6 About Our Kappa Club Account... 6 About Our Christmas Club, Tax Club, and Vacation Club Accounts... 6 About Our IRA Club Account... 7 About Our Escrow Club Account... 7 About Our Summer Pay Program Account... 7 About Our Money Market Account... 7 About Our Checking Accounts... 8 About Our Kappa Checking Account... 8 About Our Makes Cents Checking Account... 8 About Our Makes Cents II Checking Account...8 About Our Senior Class Checking (Ages 60+)... 8 About Our Basic Checking Account...9 About Our Advantage Plus Checking Account... 9 About Our Advantage Checking Account... 9 About Our Share Certificate Accounts... 9 About Our Certificate Accounts About Our Simple Saver Certificate Accounts About Our IRA Certificate Accounts Electronic Fund Transfers Agreement Additional Disclosures Applicable to ACH Services Additional Disclosures Applicable to ATM and POS Services Additional Disclosures Applicable to Audio Response (Data Voice) Additional Disclosures Applicable to VISA Check Card Services Additional Disclosures Applicable to Home Banking Services (DataNet) Additional Disclosures Applicable to Bill Pay Services Additional Disclosures Applicable to Mobile Banking Services Additional Regulations Relating to Fund Transfers (Wire Transfers) Remote Deposit Capture Disclosure and Agreement Your Ability to Withdraw Funds Important Notice About Your Account(s) (California Residents) General Terms and Conditions of Your Credit Union Accounts Share Account Agreement Share Draft Account Agreement Share Certificate Account Agreement Your Insured Funds Forward Share Insurance Coverage Frequently Asked Questions Single Ownership Accounts Joint Accounts Revocable Trust Accounts...39 Accounts Held by Executors or Administrators Accounts Held by a Corporation, Partnership or Unincorporated Association Accounts Held by Government Depositors Trust Accounts and Retirement Accounts For More Information from NCUA Where Can You Find More Information About Share Insurance?

3 By continuing beyond this page you are agreeing to the terms and conditions in the Truth in Savings Disclosure and Agreement below. Please read this disclosure carefully and print it for your records. This page will not appear again. A copy of this Agreement can be printed by using your browser s print command and a printer. If you are unable to print this document, a copy can be provided to you by the Credit Union upon request. YOUR TRUTH-IN-SAVINGS DISCLOSURE All agreements and disclosures shall be construed in accordance with the provisions of the California Uniform Commercial Code (UCC). Share accounts, share draft ( checking ) accounts and share certificate accounts are subject to the requirements below and such other terms and conditions as established by the Board of Directors and as contained in the account agreements. Please note that this Agreement contains a BINDING INDIVIDUAL ARBITRATION PROVISION AND JURY AND CLASS ACTION WAIVER which affects your rights with respect to any claims or disputes by or against the Credit Union. You may opt out of that provision as described on page 2. Information Regarding Member Identification To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for our Members: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver s license or other identifying objects. General Disclosure About All of Our Accounts and Services Par Value The par value of each share will be $5.00. Subscriptions to shares are payable at the time of subscription. Accrual of Dividends Dividends begin to accrue on the business day you deposit cash or non-cash items (e.g., checks) to your account if deposited before the close of business. If you close your share or checking account before dividends are credited, you will not receive accrued dividends. Dividend Rates The initial dividend rate and Annual Percentage Yield on our share, checking and share certificate accounts are stated on the Rate and Fee Schedule accompanying this Disclosure. Dividends are paid from current income and available earnings after required transfers to reserves at the end of a dividend period. Bylaw Requirements The board may establish, by resolution, the maximum amount of shares that any one Member may hold. A Member who fails to complete payment of one share within sixty (60) days of admission to membership, or within sixty (60) days from the increase in the par value of shares, or a Member who reduces the share balance below the par value of one share and does not increase the balance to at least the par value of one share within sixty (60) days of the reduction will be terminated from membership. Shares may only be transferred from one Member to another by an instrument in a form as the board may prescribe. Shares that accrue credits for unpaid dividends retain those credits when transferred. Money paid in on shares or installments of shares may be withdrawn as provided in these bylaws or regulation on any day when payment on shares may be made, provided, however, that (a) The board has the right, at any time, to require Members to give up to sixty (60) days written notice of intention to withdraw the whole or any part of the amounts paid in by them. (b) Reserved 3

4 (c) No Member may withdraw any shareholdings below the amount of the Member s primary or contingent liability to the Credit Union if the Member is delinquent as a borrower, or if borrowers for whom the Member is co-maker, endorser, or guarantor are delinquent, without the written approval of the credit committee or loan officer. Coverage of overdrafts under an overdraft protection policy does not constitute delinquency for purposes of this paragraph. Shares issued in an irrevocable trust as provided in Section 6 of this article are not subject to withdrawal restrictions except as stated in the trust agreement. (d) The share account of a deceased Member (other than one held in joint tenancy with another Member) may be continued until the close of the dividend period in which the administration of the deceased s estate is completed. (e) The board will have the right, at any time, to impose a fee for excessive share withdrawals from regular share accounts. The number of withdrawals not subject to a fee and the amount of the fee will be established by board resolution and will be subject to regulations applicable to the advertising and disclosure of terms and conditions on Member accounts. Denial of Services The Credit Union reserves the right to limit, restrict or deny any credit union product(s) or service(s) in its sole discretion to any Member who: (i) causes a loss to the Credit Union; (ii) misuses any Credit Union product or service; (iii) mistreats any Credit Union staff or volunteers; (iv) provides false or misleading information in connection with any transaction or Credit Union product or service; or (v) fails to comply with the terms and conditions of any agreement with the Credit Union. Notwithstanding, all Members retain the right to maintain a basic share account and to vote in annual and special meetings. No action to limit, restrict or deny services will relieve a Member of the obligation to pay any outstanding balances, charges, or other amounts owed to the Credit Union. Requirement to Maintain a Regular Share Account Each Member must purchase and maintain at least one share in a share account that names the Member as the sole or primary owner. Being named as a joint owner of a joint account is insufficient to establish membership. Arbitration and Waiver of Class Action and Jury Trial Please read this provision carefully. It affects your rights and may have a substantial impact on how legal claims you and we have against each other are resolved if you do not opt-out as permitted below. Arbitration To the extent permitted by the Federal Arbitration Act (the FAA ) and any other applicable federal law, binding arbitration may be elected by either party with respect to any past, present or future claim or controversy arising out of or relating to this Agreement and/or a Credit Union account, even if that party has already initiated a lawsuit with respect to a different claim. Arbitration is elected by giving a written demand for arbitration to the other party, by filing a motion to compel arbitration in court, or by initiating arbitration against the other party. You and we agree, upon such written demand, motion or initiation, to submit to, and that such claim shall be settled by, binding arbitration. The arbitration will be subject to the Rules of the American Arbitration Association ( AAA ) in effect at the time the arbitration is initiated, or such similar rules as may be adopted by AAA. Neither party will demand the arbitration of an action filed in small claims court, or its state s equivalent court, for any claim or dispute within the scope of the small claims court s jurisdiction. But if a claim is transferred, removed or appealed to a different court, such claim shall be subject to arbitration. This arbitration provision shall be interpreted and enforced in accordance with the FAA by a single arbitrator appointed by the AAA. The arbitrator shall be an attorney or retired judge with experience and knowledge regarding financial institutions and transactions. We will advance and/or pay, as applicable, the fees and costs of the arbitration pursuant to this Agreement (i) if applicable law requires us to, (ii) if you prevail in the arbitration, or (iii) if we must advance such fees and costs in order for this arbitration provision to be enforced, subject to the arbitrator s award, if any, of arbitration fees and costs to the prevailing party. In each case, each party will pay for its own attorney fees and costs, if any, for prosecuting and defending claims, except that the arbitrator may award the prevailing party all its attorney fees and costs, including expert witness fees. Arbitration hearings will be held in a location reasonably convenient to your residence, or at another location if mutually agreed. Any issue concerning whether or the extent to which a dispute or claim is subject to arbitration, including issues relating to the validity or enforceability of these arbitration provisions, shall be determined by the arbitrator. Only a court, and not an arbitrator, however, shall determine the validity and effect of the class action and jury trial waivers below. All statutes of limitations or other defenses relating to the timeliness of the assertion of a dispute or claim that otherwise would be applicable to an action brought in a court of law must be followed by the arbitrator, and the commencement of an arbitration under this Agreement shall be deemed the commencement of an action for such purposes. The arbitrator s decision shall be final and binding and may be entered in any state or federal court having jurisdiction. The arbitrator may award any remedy provided by the substantive law that would apply if the action were pending in court. For more details, check the American Arbitration Association s website, OR call the American Arbitration Association s Customer Service telephone number at (800)

5 Waiver of Class Action and Jury Trial WE EACH AGREE THAT ANY AND ALL DISPUTES, WHETHER SUBMITTED TO ARBITRATION OR DECIDED BY A COURT, MUST BE BROUGHT IN THE PARTY S INDIVIDUAL CAPACITY AND NOT AS A CLASS ACTION PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. YOU AGREE TO WAIVE THE RIGHT TO PARTICIPATE IN A CLASS ACTION OR LITIGATE ON A CLASS-WIDE BASIS. YOU AGREE THAT YOU HAVE EXPRESSLY AND KNOWINGLY WAIVED THESE RIGHTS. YOU AND THE CREDIT UNION HEREBY VOLUNTARILY AND KNOWINGLY WAIVE THE RIGHT TO TRIAL BY JURY OF ALL DISPUTES, CONTROVERSIES AND CLAIMS BY, BETWEEN OR AGAINST EITHER YOU OR THE CREDIT UNION WHETHER THE DISPUTE, CONTROVERSY OR CLAIM IS SUBMITTED TO ARBITRATION OR IS DECIDED BY A COURT, TO THE FULLEST EXTENT ALLOWED BY LAW. Your Right to Opt-Out: Arbitration and Waiver of Class Action and Jury Trial IF YOU DO NOT WANT THIS ARBITRATION AND WAIVER OF CLASS ACTION AND JURY TRIAL PROVISION TO APPLY, YOU MAY OPT-OUT BY SENDING A WRITTEN REQUEST TO THE CREDIT UNION POSTMARKED WITHIN SIXTY (60) DAYS OF YOUR RECEIPT OF THIS AGREEMENT. THE OPT-OUT MUST INCLUDE YOUR FULL NAME, ADDRESS, TELEPHONE NUMBER, ACCOUNT NUMBER AND PERSONAL SIGNATURE, AND MUST BE MAILED TO THE CREDIT UNION AT P.O. BOX 9506, BAKERSFIELD, CA OPTING OUT WILL NOT TERMINATE THIS AGREEMENT OR AFFECT ANY OTHER RIGHTS AND OBLIGATIONS YOU OR THE CREDIT UNION HAVE UNDER THIS AGREEMENT. This arbitration provision does not preclude you from bringing issues regarding your accounts to the attention of any federal, state or local agency or entity. Such agency or entity may be able to seek relief on your behalf. Nothing in this arbitration provision shall limit your or our right, whether before, during, or after the pendency of any arbitration proceeding, to exercise any self-help remedies, such as set-off or repossession and sale of collateral, or to obtain provisional remedies (including but not limited to, injunctive relief or interpleader relief). The exercise of such rights will not constitute a waiver of the right to submit any dispute to arbitration. This Arbitration and Waiver of Class Action and Jury Trial provision shall survive your death, the closing of any of your accounts, the termination of any of your business or transaction(s) with us, and any bankruptcy filing to the extent consistent with applicable bankruptcy law, and shall also survive as to any claim within the scope of this Agreement. If any term or provision of this Arbitration and Waiver of Class Action and Jury Trial provision is held to be invalid or unenforceable, the remaining provisions shall be enforced without regard to the invalid or unenforceable term or provision. About Our Share Accounts Kern Schools Federal Credit Union s share accounts let you deposit your money in a savings account and withdraw your money generally at any time. Our share accounts are Regular Shares, Rocky Raccoon, Kappa Club, Christmas Club, Tax Club, Vacation Club, IRA Club, Escrow Club, Summer Pay and Money Market. Balance Information We compute the balance in our share accounts to determine the dividends you will be paid by using the average daily balance method which applies a daily periodic rate to the average daily balance in the account for the period. We calculate the average daily balance by adding the balance in the account for each day of the period and dividing that figure by the number of days in the period. Rate Information Our share accounts are designated variable rate tiered accounts on the Rate and Fee Schedule. This rate and yield may change at any time at the Credit Union s discretion. Transaction Limitations During any calendar month, no more than six (6) withdrawals or transfers made to another account at the Credit Union or to a third party by means of a pre-authorized, automatic transfer, online or telephonic order or instruction, whether initiated by check, draft, debit card, or similar order payable to a third party, may be made from each savings account or money market deposit account. If an Account Holder exceeds, or attempts to exceed, these transfer limits, the excess transfer requests may be refused or reversed, a fee may be imposed on the excess transfer requests, and the Credit Union may reclassify or close the account. Transfers initiated by calling the Credit Union or through the Audio Response (Data Voice) service must be counted among the six (6) monthly transfers, except that there are no limits on the number of withdrawals paid directly to an Account Holder when such transfers or withdrawals are made by mail, messenger, automated teller machine (ATM), or in person, or when such withdrawals are made by telephone (via check mailed payable to the Account Holder). 5

6 About Our Regular Share Account Dividend Compounding and Crediting Dividends will be compounded quarterly and will be credited quarterly. For the Regular Share Account the dividend period is quarterly. For example, the beginning date of the first dividend period of the calendar year is January 1 and the ending date is March 31. All other dividend periods follow this same pattern of dates. The dividend declaration date follows the ending date of a dividend period. The most recent dividend declaration date is reflected on the accompanying Rate and Fee Schedule. Minimum Balance and Deposit Requirements The minimum deposit required for you to open a Regular Share Account is $5.00. You must maintain a minimum daily balance of $5.00 to obtain the Annual Percentage Yield as stated on the Rate and Fee Schedule. About Our Rocky Raccoon Account Our Rocky Raccoon Share Account is offered to our Members from birth to ten (10) years of age. Upon reaching eleven (11) years of age, the Rocky Account will automatically be converted to a Kappa Club Account. Dividend Compounding and Crediting Dividends will be compounded quarterly and will be credited quarterly. For the Rocky Raccoon Share Account the dividend period is quarterly. For example, the beginning date of the first dividend period of the calendar year is January 1 and the ending date is March 31. All other dividend periods follow this same pattern of dates. The dividend declaration date follows the ending date of a dividend period. The most recent dividend declaration date is reflected on the accompanying Rate and Fee Schedule. Minimum Balance and Deposit Requirements The minimum deposit required to open a Rocky Raccoon Share Account is $5.00. You must maintain a minimum daily balance of $5.00 in this account to avoid closure. A daily share balance of $5.00 must be maintained before obtaining other services. You must maintain the minimum daily balance of $5.00 to obtain the Annual Percentage Yield as stated on the Rate and Fee Schedule. About Our Kappa Club Account Our Kappa Club Account is a product available to young adults eleven (11) through seventeen (17) years of age who are eligible for Membership. Upon reaching eighteen (18) years of age, the Kappa Club Account will automatically be converted to a Regular Share Account. Dividend Compounding and Crediting Dividends will be compounded quarterly and will be credited quarterly. For the Kappa Club Account the dividend period is quarterly. For example, the beginning date of the first dividend period of the calendar year is January 1 and the ending date is March 31. All other dividend periods follow this same pattern of dates. The dividend declaration date follows the ending date of a dividend period. The most recent dividend declaration date is reflected on the accompanying Rate and Fee Schedule. Minimum Balance and Deposit Requirements The minimum deposit required for you to open a Kappa Club Account is $5.00. You must maintain a minimum daily balance of $5.00 in this account to avoid closure. A daily share balance of $5.00 must be maintained before obtaining other services. You must maintain the minimum daily balance of $5.00 to obtain the Annual Percentage Yield as stated on the Rate and Fee Schedule. About Our Christmas Club, Tax Club, and Vacation Club Accounts Dividend Compounding and Crediting Dividends will be compounded quarterly and will be credited quarterly. For the Club Accounts the dividend period is quarterly. For example, the beginning date of the first dividend period of the calendar year is January 1 and the ending date is March 31. All other dividend periods follow this same pattern of dates. The dividend declaration date follows the ending date of a dividend period. The most recent dividend declaration date is reflected on the accompanying Rate and Fee Schedule. Minimum Balance and Deposit Requirements The minimum deposit required for you to open a Club Account is $5.00. You must maintain the minimum daily balance of $5.00 to obtain the Annual Percentage Yield as stated on the Rate and Fee Schedule. Transaction Limitations Our Christmas Club Account may be opened at any time. Funds will be disbursed to you on or about November 15. 6

7 About Our IRA Club Account Minimum Balance and Deposit Requirements The minimum deposit required for you to open an IRA Club Account is $ You must maintain a minimum daily balance of $ to obtain the Annual Percentage Yield as stated on the Rate and Fee Schedule. Incorporation of IRA Agreement and Disclosures All other terms and disclosures for our Individual Retirement Accounts are contained in the Credit Union s Individual Retirement Account Agreement and Disclosure Statement, which by this reference is incorporated into this Account Disclosure in its entirety. When you open your Individual Retirement Account, the Credit Union Agreement and Disclosure Statement will be provided to you. About Our Escrow Club Account Minimum Balance and Deposit Requirements There is no minimum deposit required for you to open an Escrow Club Account. There is no minimum daily balance required to obtain the Annual Percentage Yield as stated on the Rate and Fee Schedule. About Our Summer Pay Programs This account is offered to our Members who are nine (9) month, ten (10) month, or eleven (11) month school employees. Dividend Compounding and Crediting Dividends will be compounded quarterly and will be credited quarterly. For the Summer Pay Program the dividend period is quarterly. For example, the beginning date of the first dividend period of the calendar year is January 1 and the ending date is March 31. All other dividend periods follow this same pattern of dates. The dividend declaration date follows the ending date of a dividend period. The most recent dividend declaration date is reflected on the accompanying Rate and Fee Schedule. Minimum Balance and Deposit Requirements Summer Pay Program Accounts are set up for payroll deduction. There is no opening deposit required. There is no minimum daily balance required to obtain the Annual Percentage Yield as stated on the Rate and Fee Schedule. Transaction Limitations Our Summer Pay Program Accounts may be opened at any time. Funds will be disbursed to nine (9) month school employees in June, July and August. Funds will be disbursed to ten (10) month school employees in July and August. Funds will be disbursed to eleven (11) month school employees in August. About Our Money Market Account Our Money Market Account is a share account with check access. Please refer to Transaction Limitations below for detailed account activity restrictions. Rate Information Our Money Market accounts are designated variable rate tiered accounts on the Rate and Fee Schedule. This rate and yield may change at any time at the Credit Union s discretion. Dividend Compounding and Crediting Dividends will be compounded monthly and will be credited monthly. For the Money Market Account the dividend period is monthly. For example, the beginning date of the first dividend period of the calendar year is January 1 and the ending date is January 31. All other dividend periods follow this same pattern of dates. The dividend declaration date follows the ending date of a dividend period. The most recent dividend declaration date is reflected on the accompanying Rate and Fee Schedule. Minimum Balance and Deposit Requirements The minimum deposit required for you to open a Money Market Account is $1, You must maintain a minimum daily balance of $1, in your Money Market Account to obtain the Annual Percentage Yield stated in the Rate and Fee Schedule. Transaction Limitations During any calendar month, no more than six (6) withdrawals or transfers made to another account at the Credit Union or to a third party by means of a pre-authorized, automatic transfer, online or telephonic order or instruction, whether initiated by check, draft, debit card, or similar order payable to a third party, may be made from each Money Market account. If an Account Holder exceeds, or attempts to exceed, these transfer limits, the excess transfer requests may be refused or reversed, a fee may be imposed on the excess transfer requests, and the Credit Union may reclassify or close the account. Transfers initiated by calling the Credit Union or through the Audio Response (Data Voice) service must be counted among the six (6) monthly transfers, except that there are no limits on the number of withdrawals paid directly to an Account Holder when such transfers or withdrawals are made by mail, messenger, automated teller machine (ATM), or in person, or when such withdrawals are made by telephone (via check mailed payable to the Account Holder). 7

8 About Our Checking Accounts Kern Schools Federal Credit Union offers the following checking accounts which let you withdraw your money and write checks against your account at any time. Our checking accounts are Kappa Checking, Makes Cents Checking and Makes Cents II Checking. About Our Kappa Checking Account Our Kappa Checking Account is offered to our Members ages eleven (11) through seventeen (17) years, who maintain a minimum share balance of $5.00. Rate Information The Kappa Checking Account is a non-dividend earning account. Minimum Balance and Deposit Requirements The minimum deposit for you to open a Kappa Checking Account is $ Account Limitations There is no monthly service fee. A parent or guardian must be a joint owner on the account for Members under eighteen (18) years of age. About Our Makes Cents Checking Rate Information This is a non-dividend earning account. Minimum Balance and Deposit Requirements The minimum deposit required for you to open a Makes Cents Checking Account is $ You will be assessed the monthly service fee as stated on the Rate and Fee Schedule. To avoid the monthly service fee, you must meet the following criteria: Maintain a monthly direct deposit into the Account; Must enroll to receive statement notices electronically (estatements); and Must conduct a minimum of twelve (12) PIN or signature point of sale Debit Card transactions (excludes ATM transactions) per month. About Our Makes Cents II Checking Rate Information This is a non-dividend earning account. Minimum Balance and Deposit Requirements The minimum deposit required for you to open a Makes Cents II Checking Account is $ You will be assessed the monthly service fee as stated on the Rate and Fee Schedule. To avoid the monthly service fee, you must meet the following criteria: Must enroll to receive statements electronically (estatements); and Must conduct a minimum of twelve (12) PIN or signature point of sale Debit Card transactions (excludes ATM transactions) per month. Account Limitations This account has unlimited check writing with no per check charges. About Our Discontinued Checking Accounts The Senior Class Checking, Basic Checking and Advantage Plus Checking accounts are no longer offered as new checking account products. Members who currently maintain any of these checking account products can continue to maintain the account as long as the account remains open. Once closed, these accounts may not be reopened. The following information applies only to the discontinued checking accounts described below. About Our Senior Class Checking (Ages 60+) Rate Information This is a non-dividend earning account. Minimum Balance and Deposit Requirements There is no monthly service fee or per check charge. You will receive one box of checks per order, from a limited selection, at no charge. 8

9 About Our Basic Checking Account Rate Information This is a non-dividend earning account. About Our Advantage Plus Checking Account Balance Information We compute the balance in our Advantage Plus Checking Account to determine the dividends you will be paid by using the average daily balance method which applies a periodic rate to the average daily balance in the account for the period. We calculate the average daily balance by adding the balance in the account for each day of the period and dividing that figure by the number of days in the period. Rate Information Our Advantage Plus Checking Account is designated a variable rate account on the Rate and Fee Schedule. This rate and yield may change at any time at the Credit Union s discretion. Dividend Compounding and Crediting Dividends will be compounded monthly and credited monthly. For the Advantage Plus Checking Account the dividend period is monthly. For example, the beginning date of the first dividend period of the calendar year is January 1 and the ending date is January 31. All other dividend periods follow this same pattern of dates. The dividend declaration date follows the ending date of a dividend period. The most recent dividend declaration date is reflected on the accompanying Rate and Fee Schedule. Minimum Balance and Deposit Requirements There is a monthly service fee as stated on the accompanying Rate and Fee Schedule. There is no minimum daily balance required to obtain the Annual Percentage Yield as stated on the Rate and Fee Schedule. Account Limitations Your selected style checks will be imprinted with your name and address at no additional cost when you open a new account. This account has unlimited check writing with no per check charges. About Our Advantage Checking Account Balance Information We compute the balance in our Advantage Checking Account to determine the dividends you will be paid by using the average daily balance method which applies a periodic rate to the average balance in the account for the period. We calculate the average daily balance by adding the balance in the account for each day of the period and dividing that figure by the number of days in the period. Rate Information Our Advantage Checking Account is designated as a variable rate account. This rate and yield may change at any time at the Credit Union s discretion. Dividend Compounding and Crediting Dividends will be compounded monthly and credited monthly. For the Advantage Checking Account, the dividend period is monthly. For example, the beginning date of the first dividend period of the calendar year is January 1 and the ending date is January 31. All other dividend periods follow this same pattern of dates. The dividend declaration date follows the ending date of a dividend period. Minimum Balance Requirements You must maintain the minimum daily balance of $100 to avoid a fee. There is no minimum daily balance required to obtain the Annual Percentage Yield. About Our Share Certificate Accounts Kern Schools Federal Credit Union s share certificate accounts let you deposit your money for a specified period of time. Our share certificate accounts are Certificate Accounts and Simple Saver Certificate. Annual Percentage Yield The Annual Percentage Yield is based on an assumption that dividends will remain on deposit until maturity. If you make a withdrawal from your account, your earnings will be reduced. Maturity Your account will mature as reflected on the Rate and Fee Schedule. The maturity date will be stated on the certificate provided to you at the time of opening your account. 9

10 Exceptions to Penalties The penalties stated below will not apply if: 1. The withdrawal is made subsequent to the death of any owner of the share certificate account, or is made pursuant to the Credit Union s bylaws; or 2. Such withdrawal is made as a result of the voluntary or involuntary liquidation of Kern Schools Federal Credit Union issuing the account. Balance Information We compute the balance in our share certificate accounts to determine the dividends you will be paid by using the average daily balance method which applies a periodic rate to the average daily balance in the account for the period. We calculate the average daily balance by adding the balance in the account for each day of the period and dividing that figure by the number of days in the period. Rate Information Our share certificate accounts are designated fixed rate accounts on the Rate and Fee Schedule. You will be paid this rate and yield until maturity. Dividend Compounding and Crediting Dividends will be compounded monthly and will be credited monthly. About Our Certificate Accounts Minimum Balance and Deposit Requirements The minimum deposit required for you to open a share certificate account is indicated on the Rate and Fee Schedule. You must maintain the minimum daily balance to obtain the Annual Percentage Yield stated on the Rate and Fee Schedule and to avoid closure. Renewal of Account/Grace Period Your account will automatically renew at maturity for the same time period as the original term unless you withdraw all of the funds in your account at maturity. There is a ten (10) day grace period following maturity of this account. Account Limitations Dividends may be credited to your sub-account, paid to you by check, or credited to your certificate account. If earned dividends are paid to you or credited to your sub-account before maturity, the Annual Percentage Yield will be reduced. If your dividends are credited to your certificate account, they are not available for withdrawal until maturity. See Early Withdrawal Penalty. Early Withdrawal Penalty We may impose a penalty if you withdraw any of the funds from your account before the maturity date. The penalty imposed shall be as follows: If the qualifying period is less than twelve (12) months, you will forfeit an amount equal to all dividends for ninety (90) days on the full amount of the certificate, whether earned or not. If the qualifying period is twelve (12) months or more, you will forfeit an amount equal to all dividends for one hundred-eighty (180) days on the full amount of the certificate, whether earned or not. If funds are withdrawn early, the entire certificate must be closed, and the penalty will be calculated on the full amount of the certificate. About Our Simple Saver Certificates Minimum Balance and Deposit Requirements The minimum deposit required for you to open your Simple Saver Certificate Account is $ You must maintain the minimum daily balance of $25.00 to obtain the Annual Percentage Yield stated on the Rate and Fee Schedule. Renewal of Account/Grace Period If the balance is under $1, at the end of the term your account will automatically renew at maturity for the same time period as the original term unless you withdraw all of the funds in your account at maturity. There is a ten (10) day grace period following maturity of this account. Account Limitations A recurring monthly deposit of $25.00 must be made into the account. You may make deposits into this account at any time. Dividends will be credited to your certificate account and will not be available for withdrawal until maturity. See Early Withdrawal Penalty. Early Withdrawal Penalty We may impose a penalty if you withdraw any of the funds from your account before the maturity date. The penalty imposed shall be equal to one hundred-eighty(180) days dividends calculated on the full amount of the certificate, whether earned or not. 10

11 About Our IRA Certificate Accounts Our IRA Certificate Accounts include the Traditional IRA, Roth IRA, and Coverdell Education Savings Certificate. Minimum Balance and Deposit Requirements The minimum deposit required for you to open your IRA Certificate Account is $100. You must maintain the minimum balance of $100 to obtain the Annual Percentage Yield stated on the Rate and Fee Schedule and to avoid closure. Renewal of Account/Grace Period Your account will automatically renew at maturity for the same time period as the original term unless you withdraw all of the funds in your account at maturity. There is a ten (10) day grace period following maturity of this account. Account Limitations You may make deposits (i.e.; contributions, rollovers, and trustee-to-trustee transfers) into this account at any time. If you are under 59 ½ years of age, your dividends are credited to your certificate account and they are not available for withdrawal. If you are over fifty-nine and half (59 ½) years of age, earned dividends may be withdrawn at any time. See Early Withdrawal Penalty. Early Withdrawal Penalty We may impose a penalty if you withdraw any of the funds from your account before the maturity date unless you are fiftynine and half (59 ½) years of age or older. We may impose a penalty, regardless of age, for transfers and rollovers to other financial institutions if done before the maturity date. The penalty imposed shall be as follows: If the qualifying period is less than twelve (12) months, you will forfeit an amount equal to all dividends for ninety (90) days on the full amount of the certificate, whether earned or not. If the qualifying period is twelve (12) months or more, you will forfeit an amount equal to all dividends for one hundred-eighty (180) days on the full amount of the certificate, whether earned or not. If funds are withdrawn before maturity, the entire certificate must be closed. Incorporation of IRA Agreement and Disclosures All other terms and disclosures for our Individual Retirement Accounts are contained in the Credit Union s Individual Retirement Account Agreement and Disclosure Statement, which by this reference is incorporated into this Account Disclosure in its entirety. When you open your Individual Retirement Account, the Credit Union Agreement and Disclosure Statement will be provided to you. Electronic Fund Transfers (EFT) Disclosure This EFT Disclosure and Agreement ( Agreement ) as amended from time to time sets forth the terms and conditions governing the use of the Kern Schools Federal Credit Union electronic transfer services. Disclosure information that applies to all electronic services offered by Kern Schools Federal Credit Union is given below, followed by specific disclosure information for each service. Kern Schools Federal Credit Union may also provide remittance transfers (defined by Regulation E, subpart B, as an electronic transfer of funds of more than $15 which is requested by a sender and sent to a designated recipient in a foreign country by a remittance transfer provider ). The terms and conditions for such electronic transfers will be disclosed to you separately when you receive those services, and may differ from the terms and conditions disclosed herein. As applicable, and to the extent not in conflict with such separately provided disclosures, the terms and conditions herein shall apply to remittance transfers that also meet the definition of an electronic fund transfer under Regulation E, subpart A. This Agreement takes the place of all prior agreements and disclosures governing the use of all electronic services. By retaining, using, or allowing others to use the electronic services offered by Kern Schools Federal Credit Union, you are agreeing to be bound by the terms and conditions of this Agreement. In this Agreement, the terms you and your(s) refer to the Member, and the terms we, us and our(s) refer to Kern Schools Federal Credit Union. Personal Identification Number The Credit Union will issue you a Personal Identification Number (PIN) that must be used with the ATM/Check Card for transactions that require the use of a PIN. This number should be memorized-do NOT write it on your ATM/Check Card. After memorizing your PIN, you should destroy the notice disclosing your PIN. If you forget your PIN, contact the Credit Union and we will issue you a new one. Right to Receive Documentation of Transactions You will get a monthly account statement reflecting all of your transactions unless there is no activity in a particular month. In any case you will get the statement at least quarterly. Depending on the terminal, or if the transaction is $15.00 or less, you may receive a receipt at the time you make a transaction at a terminal. If you do receive a receipt, retain the receipt to compare with your monthly statement from the Credit Union. 11

12 Your Liability for Lost, Stolen or Unauthorized Transactions Involving Automated Teller Machine (ATM) Cards Tell us AT ONCE if you believe your ATM/POS Card and/or Personal Identification Number (PIN) has been lost or stolen, or if you believe that an electronic transfer has been made without your permission using information from your check. Telephoning is the best way of keeping your possible losses down. You could lose all the money in your account (plus your maximum overdraft line of credit if you have one with us). If you tell us within two (2) business days, you can lose no more than $50.00 if someone used your ATM/POS Card or PIN without your permission. If you DO NOT tell us within two (2) business days after you learn of the loss or theft of your ATM/POS Card or PIN, and we can prove that we could have stopped someone from using your ATM/POS Card or PIN without your permission if you had told us, you could lose as much as $ Also, if your statement shows transfers that you did not make, tell us at once. If you do not tell us within sixty (60) days after the statement was mailed to you, you may not get back any money you lost after the sixty (60) days if we can prove that we could have stopped someone from taking the money if you had told us in time. If a good reason (such as a long trip or a hospital stay) kept you from telling us, we will extend the time periods. If you have authorized someone else to use the ATM/POS Card and/or PIN, you are responsible for all transactions that person or persons initiates at any time, even if the amount or transactions exceed what you may have authorized. Your Liability for Lost, Stolen or Unauthorized Transactions Involving Check Cards Tell us AT ONCE if you believe your Check Card and/or Personal Identification Number (PIN) has been lost or stolen or if your statement shows an electronic fund transfer has been made without your permission using information from your check. Telephoning is the best way of keeping your possible losses down. You could lose all the money in your account (plus your maximum overdraft line of credit if you have one with us). If you tell us within sixty (60) days of our sending your statement, you can lose no more than $50.00 if someone used your check card without your permission. If you do not tell us within sixty (60) days after the statement was mailed to you, you may not get back any money you lost after the close of the sixty (60) days and before notice to us. If your delay in notifying us was due to extenuating circumstances beyond your reasonable control, including extended travel, your or a Member of your family s death or serious illness, hospitalization, permanent mental impairment or serious physical impairment, unless the circumstance did not reasonably contribute to your delay in notifying us within the sixty (60) day period, we will extend the sixty (60) day period by a reasonable period. If you have authorized someone else to use the Check Card and/or PIN, you are responsible for all transactions that person or persons initiates at any time, even if the amount or transactions exceed what you may have authorized. Special Notice to VISA Check Cardholders If there is an unauthorized use of your VISA Check Card or a Plus network or Interlink transaction, and the transaction takes place on the VISA network, then your liability will be zero ($0.00). This provision limiting your liability does not apply to VISA Corporate Card or VISA Purchasing Card Transactions, ATM cash disbursements processed on non-visa or non-plus networks, or non-visa PIN-less debit transactions. Additionally, your liability with respect to unauthorized transactions may be greater than the above zero ($0.00) liability limit, to the extent allowed under applicable law, if the credit union reasonably determines, based on substantial evidence, that you were grossly negligent or fraudulent in the handling of your account or card. In any case, to minimize your potential liability you should notify us of any unauthorized use no later than 60 days after your statement was mailed to you. How to Notify the Credit Union in the Event of an Unauthorized Transaction or a Lost or Stolen Card If you believe your ATM/Check Card or PIN has been lost or stolen, or that someone has transferred or may transfer money from your account without your permission, call us at (661) or (800) , or write to us at P.O. Box 9506, Bakersfield, California You should also call the number or write to the address listed above if you believe a transfer has been made using information from your check without your permission. Business Days Our business days are Monday through Friday, excluding holidays. Our Liability for Failure to Make Transfers If we do not complete a transaction to or from your share or checking account on time or in the correct amount according to our agreement with you, we will be liable for your losses or damages. However, there are some exceptions. We will NOT be liable, for instance, if: a) through no fault of ours, you do not have enough money in your account to make the transaction; b) the transaction would go over the credit limit on your credit line; c) the terminal where you were making the transaction did not have enough cash; d) the ATM or network system was not working properly and you were aware of the malfunction when you started the transaction; e) circumstances beyond our control (such as fire, flood, power failure, or computer downtime) prevented the transaction, despite reasonable precautions that we have taken; 12

13 f) the money in your account is subject to an uncollected funds hold, legal process or any other encumbrance or agreement restricting a transaction; g) your ATM/Check Card has expired, is damaged so that the terminal cannot read the encoding strip, is inactive or because your PIN has been entered incorrectly; h) your ATM/Check Card or PIN has been reported lost or stolen and we have blocked the account; or i) the failure to complete the transaction is done to protect the integrity of the system or to protect the security of your account. There may be other exceptions not specifically mentioned above. In Case of Errors or Questions About your Electronic Transfers Telephone us at (661) or (800) , or write us at P. O. Box 9506, Bakersfield, California as soon as you can, if you think your statement or receipt is wrong or if you need more information about a transfer listed on the statement or receipt. You should also call the number or write to the address listed above if you believe a transfer has been made using information from your check without your permission. We must hear from you no later than sixty (60) days after we sent the FIRST statement on which the problem or error appeared. 1. Tell us your name and account number. 2. Describe the error or the transfer you are unsure about, and explain as clearly as you can why you believe it is an error or why you need more information. 3. Tell us the dollar amount of the suspected error. If you tell us orally, we may require that you send us your complaint or question in writing within ten (10) business days. We will tell you the results of our investigation within ten (10)* business days after we hear from you and will correct any error promptly. If we need more time, however, we may take up to forty-five (45)** days to investigate your complaint or question. If we decide to do this, we will credit your account within ten (10)* business days for the amount you think is in error, so that you will have the use of the money during the time it takes us to complete our investigation. (If the error you assert is an unauthorized Visa transaction, other than a cash disbursement at an ATM, we will credit your account within five (5) business days unless we determine that the circumstances or your account history warrant a delay, in which case you will receive credit within ten (10) business days.) If we ask you to put your complaint or question in writing and we do not receive it within ten (10) business days, we may not credit your account. If we decide that there was no error, we will send you a written explanation within three (3) business days after we finish our investigation. You may ask for copies of the documents that we used in our investigation. * If you give notice of an error within thirty (30) days after you make the first deposit to your account, we will have twenty (20) business days instead of ten (10) business days. ** If you give notice of an error within thirty (30) days after you make the first deposit to your account, notice of an error involving a point of sale transaction, or notice of an error involving a transaction initiated outside the U.S. its possessions and territories, we will have ninety (90) days instead of forty-five (45) days to investigate. Charges In order to obtain the electronic services listed, you must open and maintain a share and checking account. All charges associated with our electronic fund transactions are disclosed in our Rate and Fee Schedule which accompanies this Disclosure and Agreement. Disclosure of Account Information to Third Parties We will disclose information to third parties about your account or the transfers you make: a) when it is necessary to complete the transaction; b) in order to verify the existence and condition of your account for a third party, such as a credit bureau or merchant; c) in order to comply with government agency or court orders or other legal process; or d) if you give us your prior oral or written permission. Address Change Keep the Credit Union informed of your current address to insure correct mailing of monthly statements. Amendments The Credit Union may change the terms and conditions of this Agreement from time to time by mailing written notice to your address or address if you have opted-in to estatements/enotices as it appears on our records. If any change results in greater cost or liability to you or decreases access to your accounts, you will be given at least twenty-one (21) days prior notice of the change. Prior notice may not be given where an immediate change in terms or conditions is necessary to maintain the integrity of the system and/or the security of ATM Cards, Check Cards or designated accounts. 13

14 Termination You may terminate this Agreement with us at any time. The Credit Union reserves the right to terminate this Agreement and/or your use of your ATM/POS/Check Card or PIN with or without cause. We may do so immediately if: a) you or any authorized user of your ATM Card, Check Card, PIN or account breaches this or any other agreement with the Credit Union; b) we have reason to believe that there has been, or might be, an unauthorized use of your ATM Card, Check Card, PIN or account; or c) you or any authorized user of your ATM Card, Check Card, PIN or account request that we do so. Additional Benefits/Card Enhancements The Credit Union may from time to time offer additional services to your account. Some may be at no additional cost to you and others may involve a specified fee. You understand that the Credit Union is not obligated to offer such services and may withdraw or change them at any time. Waiver of Rights The Credit Union can delay enforcing any of the provisions under this Agreement or the law any number of times without losing its right to enforce them at a later date. Other Agreements Except as stated otherwise in the Agreement, this Agreement does not alter or amend any of the terms or conditions of any other agreement you may have with the Credit Union. Severability If any part of this Agreement should be held to be unenforceable, the remaining provisions of this Agreement shall remain in full force and effect. Who is Bound by this Agreement Each person who signs the Application agrees to be bound by the terms and conditions of this Agreement. If more than one person signs the application, all signers are jointly and severally liable. The Credit Union can waive or delay enforcement of its rights as to one signer without affecting its ability to enforce its rights as to the other signers. The Agreement is also binding upon your heirs, personal representatives and successors. Signatures By using your access to the system, or authorizing anyone else to use your access to the system, and/or by signing the application, you agree to be bound by the terms and conditions of this Agreement and Disclosure. Consumer Reports The Credit Union makes credit available to its Members on a regular basis. The Applicant(s)/Account Holder(s) of the account authorizes the Credit Union to obtain consumer reports in connection with credit and business transactions involving the Applicant(s)/Account Holder(s), including but not limited to applying for membership, the opening of a share or share draft account or the issuance of an ATM card, check card, or other service provided by the Credit Union, and the Applicant(s)/Account Holder(s) of the account authorizes any person, association, or corporation to furnish on request of this Credit Union, information concerning the affairs of the Applicant(s)/Account Holder(s). The Applicant(s)/Account Holder(s) also authorizes the Credit Union to furnish information concerning the account to consumer reporting agencies. Additional Disclosure Applicable to Automated Clearing House (ACH) Services Documentation of Direct Deposits If you have arranged to have direct deposits made to your account at least once every sixty (60) days from the same person or company, you can call us at (661) or (800) to find out whether or not the deposit has been made. If the only possible transfers to or from your account are direct deposits or pre-authorized deposits, you will get at least a quarterly statement from us. Disclosure of Right to Stop Payment a) Right to stop payment and procedure for doing so. If you have told us in advance to make regular payments out of your account, you can stop any of these payments. Here s how: Call us at (661) or (800) , or write to us at P.O. Box 9506, Bakersfield, California , in time for us to receive your request three (3) business days or more before the payment is scheduled to be made. If you call we may also require you to put your request in writing and get it to us within fourteen (14) days after you call. 14

15 b) Notice of varying amounts. If these regular payments vary in amount, the person you are going to pay will tell you ten (10) days before each payment, when it will be made and how much it will be. You may choose instead to get this notice only when the payment would differ by more than a certain amount from the previous payment, or when the amount would fall outside certain limits that you set. Transactions Available You may use your ACH services to perform the following transactions: Make deposits to your share/savings or share draft/checking account; Make loan payments; Pay bills directly from your share/savings or share draft/checking account in the amounts and on the days you request; Authorize a merchant or other payee to make a one-time electronic payment from your share draft/checking account using information from your check to pay bills or pay for purchases; Authorize a merchant or other payee to debit your share draft/checking account for returned check fees or returned debit entry fees; and Make a one-time debit from your account at another financial institution using the PayNet service. All payments and deposits are subject to later verification by us. Additional Disclosures Applicable to ATM and POS Services Rules for Use By using your ATM/POS Card with your personal identification number (PIN) at automated teller machines (ATMs) or other electronic terminals operated by a participating institution, network system, or company (collectively terminals ), you authorize us to effect the transactions from or to your share or checking account(s) in accordance with the instructions given at the terminals. All ATM/POS Card transactions are subject to the terms and conditions of your account agreements with us governing the affected accounts. ATM Fees When you use an ATM not owned by Kern Schools Federal Credit Union, you may be charged a fee by the ATM operator and you may be charged a fee for a balance inquiry even if you do not complete a fund transfer. A fee will not be imposed for use of an ATM or Check Card issued by Kern Schools Federal Credit Union for use of an electronic terminal operated by Kern Schools Federal Credit Union. Transactions Available You may use your ATM/POS Card to perform the following transactions: Make deposits to your share or checking accounts; Withdraw cash from your share, checking account or line of credit; Transfer funds between your share and checking accounts; Make point-of-sale payments for goods and services to others from your checking account; Access your Ready Cash Account for loan advances; Transfer funds from your Ready Cash Account to your checking and share savings accounts; Make loan payments; and Make account balance inquiries. Some of the transactions listed above may not be available at all terminals. All payments and deposits are subject to later verification by us. Limitations on Transactions You may make ATM cash withdrawals or POS transactions up to $ each twenty-four (24) hour period as long as your available balance will cover the transaction. Various institutions that participate in networks of which the Credit Union is a Member may have withdrawal limits different from the amount set forth herein. In the event that a specific ATM is so limited, you may not be able to withdraw more than the cash limit of that particular ATM. Access Cards All ATM Cards/Check Cards are nontransferable and belong to the Credit Union. The Credit Union may cancel, modify and restrict the use of any ATM/Check Card upon proper notice or without notice if your account is overdrawn or where necessary to maintain or restore the security of accounts on the ATM system. 15

16 Foreign Transactions Purchases and cash advances made in a foreign country will be billed to you in U.S. dollars. Transactions processed outside of the United States, or in a foreign currency will be charged a foreign transaction fee, regardless of whether there is a currency conversion associated with the transaction. The conversion rate in dollars will be a rate selected by VISA from a range of rates available in wholesale currency markets for the applicable Central Processing Date, which rate may vary from the rate VISA itself receives, or the government-mandated rate in effect for the applicable Central Processing Date in each instance, plus a one percentage point (1%) fee charged by the Issuer. ATM Safety An ATM provides a quick and convenient way to access your money. However, use caution and remember the following safety tips whenever you use an ATM: Be aware of the surroundings, particularly at night. Look for well-lighted ATMs when transacting at night. If you notice anything suspicious when approaching the ATM, return later or use another ATM. Have your transaction ready before you go to the ATM. When you can, fill out any deposit or withdrawal slips/envelopes before leaving your vehicle. Have your ATM/Check Card ready, to avoid going through your purse or searching through the contents of your wallet at the ATM site. If you notice anything suspicious while you are transacting business, immediately stop your transaction, put your ATM card away and leave. Consider having another person accompany you to the ATM. Immediately report all crimes to the ATM operator and to local law enforcement officials. Stand close to the ATM and away from others in line to avoid detection of your PIN or other account information. Put your cash away as soon as the transaction is complete; count the cash later in the safety of your vehicle or home. Never give information to strangers at the ATM or to anyone over the phone. Be aware of fraud or people who pose as Credit Union employees who try to get information from you. This information should only be discussed in person by you at the Credit Union. Remember to keep your PIN a secret. Make sure not to write it on your ATM/Check Card or anywhere else in your wallet; thieves can easily figure out the reason for hidden or secret numbers. Additional Disclosures Applicable to Audio Response (Data Voice) Transactions Available You may use the audio response service (Data Voice) to perform the following transactions: Obtain account and loan balances; Obtain loan payment due date and payoff information; Obtain last dividend, date, and amount; Obtain clearance of specific checks; Transfer funds among your share, club, and checking accounts; Access your line of credit to request loan advances; Transfer funds from your line of credit to your checking and share savings accounts; and Make loan payments. All payments and deposits are subject to later verification by us. Additional Disclosures Applicable to VISA Check Card Services Issuance of Card Card means the Kern Schools Federal Credit Union Check Card and any duplicates, renewals, or substitutions the Credit Union issues to you; Account means the account designated on the application for your Check Card. Responsibility for Transactions You are responsible for all transactions you make with the card or that you authorize another person to make with the card. You understand that if you disclose your Check Card PIN to anyone, they will have access to all accounts identified by your account number. If the account is a joint account, all transactions involving the account are binding on all account holders. Limitations on Dollar Amounts and Frequency of Transactions Purchases made above the floor limit of the merchant will require an authorization number from VISA. 16

17 You may make ATM cash withdrawals or POS transactions up to $ each twenty-four (24) hour period as long as your available balance will cover the transaction. You may make VISA Check Card transactions up to $5, each twentyfour (24) hour period as long as your available balance will cover the transaction. Various institutions that participate in networks of which the Credit Union is a Member may have withdrawal limits different from the amount set forth herein. In the event that a specific ATM is so limited, you may not be able to withdraw more than the cash limit of that particular ATM. Use of the Card You may use the Card and PIN to: Withdraw cash from your checking account at ATMs, merchants, or financial institutions that accept VISA Check Cards; Transfer funds among your checking account, your share account, and/or the line of credit; and Make deposits to the checking account and/or share accounts at the Credit Union. You may use the card without the PIN to: Purchase goods or services at places that accept VISA Check Cards (these are point-of-sale or POS transactions); Order goods or services by mail or telephone from places that accept VISA Check Cards; Order goods or services without a PIN by mail, online, or telephone at merchants who offer the payment transactions processed through the STAR, PULSE, CO-OP, ACCEL/Exchange or any other Debit Card network; and Make automatic payments from your account to pay bills or other charges, providing that the person or organization that you are paying agrees to accept payments this way. Some of these services may not be available at all terminals. Use of the card, the account number on the card, the PIN or any combination of the three (3) for payments, purchases, or to obtain cash from merchants, financial institutions or others who honor VISA Check Cards is an order by you for the withdrawal of the amount of the transaction from your account. Each transaction with the card will be charged to your account on the date the transaction is posted to your account. All Check Card transactions covered by this Agreement are subject to the terms and conditions of your account agreements with us governing the affected accounts, except as modified by this Agreement. Any future changes to your account agreements may affect the use of the card. When the Credit Union receives notification of a Check Card transaction, it will put a hold on an equivalent amount of funds in your checking account for three (3) days. Illegal Use of Check Card Account You agree that your VISA Check Card Account will not be used to make or facilitate any transaction(s) that are or might be construed to be illegal pursuant to applicable law, rule or ordinance, including but not limited to gambling. Said use, including any such authorized use, will constitute an event of default under this Agreement. You agree that the Credit Union has no liability, responsibility or culpability whatsoever for any such use by you or any authorized user(s). You agree that you are responsible for repayment of any and all debts incurred for these transactions. You further agree to indemnify and hold the Credit Union harmless from any suits, liability, damages or adverse action of any kind that results directly or indirectly from such illegal use. Overdrafts You promise to pay the Credit Union immediately upon demand for any negative (overdraft) balance arising in your account, unless you have available overdraft privileges. If you do not have overdraft privileges, the Credit Union may deduct the amount of any overdraft on your account from any other account you have with the Credit Union, except an Individual Retirement Account. Refusal to Honor Card The Credit Union is not liable for the refusal or inability of any electronic terminal to honor the card or to complete a withdrawal from your account, or for their retention of the card. The Credit Union is also not responsible for the refusal of any merchant or financial institution to honor the card or for their retention of the card. Foreign Transactions Purchases and cash advances made in a foreign country will be billed to you in U.S. dollars. Transactions processed outside of the United States, or in a foreign currency will be charged a foreign transaction fee, regardless of whether there is a currency conversion associated with the transaction. The conversion rate in dollars will be a rate selected by VISA from a range of rates available in wholesale currency markets for the applicable Central Processing Date, which rate may vary from the rate VISA itself receives, or the government-mandated rate in effect for the applicable Central Processing Date in each instance, plus a one percentage point (1%) fee charged by the Issuer. 17

18 Additional Disclosures Applicable to Home Banking Services (DataNet) System Requirements DataNet Home Banking Services allows convenient access to your account information twenty-four (24) hours a day. To use DataNet you must have a computer, modem, Internet Service, browser, your account number and a PIN or Access Code. Transactions Available You may use the DataNet service to perform the following transactions: Obtain account/loan balance information; Obtain loan payment due date and thirty (30) day payoff quote; Obtain last dividend, date and amount; Obtain clearance of specific checks; Request check withdrawals from your checking and share account; Transfer funds between your share draft/checking, share account and line of credit; Download transaction information to personal financial management software from checking and share account; Make loan payments; Pay bills through Bill Pay from checking; Make address changes; Request stop payments; Order copies of checks; Request copies of statements; Apply for loans; View estatements and edocuments; and View check images. Limitations on Transactions The following are limitations to the use of the DataNet service: During any calendar month, no more than six (6) withdrawals or transfers made to another account at the Credit Union or to a third party by means of a pre-authorized, automatic transfer, online or telephonic order or instruction, whether initiated by check, draft, debit card, or similar order payable to a third party, may be made from each savings account or money market deposit account. If an Account Holder exceeds, or attempts to exceed, these transfer limits, the excess transfer requests may be refused or reversed, a fee may be imposed on the excess transfer requests, and the Credit Union may reclassify or close the account. Transfers initiated by calling the Credit Union or through the Audio Response (Data Voice) service must be counted among the six (6) monthly transfers, except that there are no limits on the number of withdrawals paid directly to an Account Holder when such transfers or withdrawals are made by mail, messenger, automated teller machine (ATM), or in person, or when such withdrawals are made by telephone (via check mailed payable to the Account Holder). Additional Disclosures Applicable to Bill Pay Services System Requirements To use Bill Pay Services you must have a computer, modem, Internet Service, browser, your account number and a PIN or Access Code. Right to Stop Payment of Preauthorized Transfers and Right to Receive Notice of Varying Amounts a) Right to stop payment and procedure for doing so. If you have told us in advance to make regular payments out of your account, you can also stop any of these payments. Here s how: Call at (661) or (800) for Bill Pay Services or write to us at P.O. Box 9506, Bakersfield, CA , in time for us to receive your request three (3) business days or more before the payment is scheduled to be made. If you call, we may also require you to put your request in writing and get it to us within fourteen (14) days after you call. b) Notice of varying amounts. If these regular payments vary in amount, the person you are going to pay will tell you ten (10) days before each payment, when it will be made and how much it will be. You may choose instead to get this notice only when the payment would differ by more than a certain amount from the previous payment, or when the amount would fall outside certain limits that you set. 18

19 Transactions Available You may use your Bill Pay Service to perform the following transactions: Add/Edit Merchants: Merchant refers to the entity to which you pay bills. The merchant can be a company, organization, or individual. The Add/Edit Merchant feature allows you to add merchants to, delete merchants from or edit merchant information on your personal list of merchants. Make nonrecurring payments from checking: This feature allows you to schedule one-time payments to merchants. This feature enables you to specify the amount of the payment and the processing date. Make recurring payments from checking: This feature allows you to schedule recurring payments to merchants. View History: View History permits you to see payments made over a specified time period. Limitations on Transactions The following are limitations to the use of the Credit Union s Bill Pay Service: Bill payments can only be made from your checking account; Payments cannot be made for tax payments, court-ordered payments or payments to payees outside of the United States; If you close the designated bill payment share draft/checking account, all scheduled payments will be stopped; You cannot stop a payment if the payment has already been processed; and You can schedule payments twenty-four (24) hours a day, seven (7) days a week, however, payments scheduled on a Saturday, Sunday, or holiday will be processed within one (1) to two (2) business days. Methods and Restrictions Payments are made to your payee either electronically via the Automated Clearing House (ACH) or by check or laser draft. The method of payment depends upon the processing method that can be accommodated by the payee or by our bill payment service provider. It is important that you take into consideration what method of bill payment will be used when scheduling bill payments to ensure payment deadlines are met. If the payee accepts electronic bill payment, the payment may take up to four (4) business days to process. If the payee does not accept electronic bill payment, the payment will be sent in a check form, and may take up to ten (10) business days to process. Member Responsibilities You are responsible for: any late payment, late fees, interest payments, and service fees charged by merchant(s); any overdraft, NSF or stop payment fees charged by the Credit Union as a result of these transactions; data input of payee information (payment amount(s), name, address and any other pertinent information); written notification to the Credit Union in the event you wish to cancel this service; and you must allow sufficient time for bill payments to be processed so that the funds can be delivered to the merchant on or before the due date. Additional Disclosures Applicable to Mobile Banking Services System Requirements To use the Mobile Banking service, you must have a smart phone or tablet device with a service plan that includes data and Internet access, your DataNet Home Banking login information and download the Kern Schools Federal Credit Union Application from your smartphone or tablet s application store. Third party fees may apply for data and Internet access. Contact your mobile device carrier for additional information. Transactions Available You may use the Mobile Banking service to perform the following transactions: Obtain loan and deposit accounts balance information; View account transactions; Make account transfers between your share and share draft/checking accounts; Deposit checks through Remote Deposit Capture service (contact your mobile device carrier for applicable date charges); and Pay bills through Bill Pay from checking. 19

20 Limitations on Transactions The following are limitations to the use of the Mobile Banking service: During any calendar month, no more than six (6) withdrawals or transfers made to another account at the Credit Union or to a third party by means of a pre-authorized, automatic transfer, online or telephonic order or instruction, whether initiated by check, draft, debit card, or similar order payable to a third party, may be made from each savings account or money market deposit account. If an Account Holder exceeds, or attempts to exceed, these transfer limits, the excess transfer requests may be refused or reversed, a fee may be imposed on the excess transfer requests, and the Credit Union may reclassify or close the account. Transfers initiated by calling the Credit Union or through the Audio Response (Data Voice) service must be counted among the six (6) monthly transfers, except that there are no limits on the number of withdrawals paid directly to an Account Holder when such transfers or withdrawals are made by mail, messenger, automated teller machine (ATM), or in person, or when such withdrawals are made by telephone (via check mailed payable to the Account Holder). Additional Regulations Relating to Fund Transfers (Wire Transfers) 1. This Agreement and notice applies to funds transfers as defined in the Article 4A of the Uniform Commercial Code and Subpart B of Regulation J of the Board of Governors of the Federal Reserve System. 2. The Credit Union may establish or change cutoff times for the receipt and processing of funds transfer requests, amendments, or cancellations. Unless other times are posted for the various types of funds transfers, the cutoff time will be 11:00 A.M. (PST) at Kern Schools Federal Credit Union on each Monday through Friday that the Credit Union is open, excluding holidays. Payment orders, cancellations, or amendments received after the applicable cutoff time, or on a Saturday, may be treated as having been received on the next funds transfer business day and processed accordingly. 3. The Credit Union may charge your account for the amount of any funds transfer initiated by the Member or any person authorized by the account owner as a joint tenant or other authorized party with the right of access to the account from which the funds transfer is to be made. 4. The Credit Union may establish, from time to time, security procedures to verify the authenticity of a payment order. The account owner will be notified of the security procedure, if any, to be used to verify payment orders issued by the account owner or for which the account owner s account will be liable. The account owner agrees that the authenticity of payment orders may be verified using that security procedure unless the account owner notifies the Credit Union in writing that he/she does not agree to that security procedure. In that event, the Credit Union shall have no obligation to accept any payment order from the account owner or other authorized parties on the account until the account owner and the Credit Union agree, in writing, on an alternate security procedure. 5. If the account owner sends or receives a wire transfer, Fedwire may be used. Regulation J is the law covering all Fedwire transactions, except to the extent of a conflict between Regulation E and Regulation J with respect to remittance transfers, in which case, Regulation E shall be the law covering the Fedwire transaction. This means that the account owner s rights and liabilities in a wire transfer involving Fedwire will be governed by Regulation J, except to the extent of a conflict between Regulation E and Regulation J with respect to remittance transfers, in which case, Regulation E shall govern. 6. If the account owner gives the Credit Union a payment order which identifies the beneficiary (recipient of the funds) by both name and identifying or account number, payment may be made by the beneficiary s bank on the basis of the identifying or bank account number, even if the number identifies a person different than the named beneficiary. This means that the account owner will be responsible to the Credit Union if the funds transfer is completed on the basis of the identification number provided to the Credit Union by the account owner. 7. If the account owner gives the Credit Union a payment order which identifies an intermediary or beneficiary s bank by both name and an identifying number, a receiving bank may rely on the number as the proper identification even if it identifies a different person than the named bank. This means that the account owner will be responsible for any loss or expenses incurred by a receiving bank which executes or attempts to execute the payment order in reliance on the identifying number provided by the account owner. 8. The Credit Union may at its discretion give the account owner credit for Automated Clearing House (ACH) payments before it receives final settlement of the funds transfer. Any such credit is provisional until the Credit Union receives final settlement of the payment. The account owner is hereby notified and agrees, if the Credit Union does not receive such final settlement, that it is entitled to a refund from the account owner of the amount credited to the account owner in connection with that ACH entry. This means that the Credit Union may provide the account owner with access to ACH funds before the Credit Union actually receives the money. However, if the Credit Union does not receive the money, then the Credit Union may reverse the entry on the account owner s account and the account owner would be liable to repay the Credit Union. 9. ACH transactions are governed by operating rules of the National Automated Clearing House Association. In accordance with these rules, the Credit Union will not provide the account owner with next day notice of receipt of ACH credit transfers to the account owner s account. The account owner will continue to receive notices of receipt of ACH items in the periodic account statements which we provide. 20

21 Remote Deposit Capture Disclosure and Agreement This Remote Deposit Capture Disclosure and Agreement as amended from time to time ( Agreement ) sets forth the terms and conditions governing the use of Kern Schools Federal Credit Union s Remote Deposit Capture services ( Remote Deposit Capture ). Please read this Agreement completely and retain it with your personal records. By using, or allowing another person to use, Remote Deposit Capture services offered by Kern Schools Federal Credit Union, you agree to be bound by the terms and conditions of this Agreement. In this Agreement, the terms you and your(s) refer to the Member, and the terms we, us, our(s) and Credit Union refer to Kern Schools Federal Credit Union. What is Remote Deposit Capture? Remote Deposit Capture is a service that allows you to deposit a check into your Credit Union account from anywhere with cellular data connectivity by using the Kern Schools Federal Credit Union Mobile Application and your smart phone or other mobile device to take and send an Electronic Image of the item. It eliminates the need to deliver the paper item to the Credit Union. System Requirements To use Remote Deposit Capture, you must have a mobile device with an enabled camera and service plan that includes data and Internet access. Third party fees may apply for data and Internet access. Contact your smart phone device carrier for additional information. You must also have the Kern Schools Federal Credit Union Mobile Application installed on your mobile device. The Kern Schools Federal Credit Union Mobile Application can be downloaded from your device s application store. The Operating System version must be compatible with the latest version of the application. Requirements for Electronic Images Prior to creating an Electronic Image of a check, you must add the words For Deposit Only, your Credit Union account number, and your signature endorsement to the back of the check, or as otherwise instructed by the Credit Union. An Electronic Image must contain: (i) a complete, legible and accurate image of the front of the check showing the name of the drawer/payor, signature(s), the paying bank s pre-printed information, MICR encoded information, the name of the payee and the payment amount information; and (ii) a complete, legible and accurate image of the back of the check showing your signature endorsement. The following check items are not accepted for deposit through the Mobile Deposit service: Items displaying a non-negotiable or void notation or watermark. Items containing an alteration on the front of the check, or which you know or suspect, or should know or suspect, are fraudulent or otherwise not authorized by the owner of the account on which the check is drawn. Items dated more than six (6) months prior to the date of deposit. Items previously converted to a substitute check or items that are remotely created checks as defined by Federal Reserve Board Regulation CC. Items issued by or through a financial institution in a foreign country. Items not payable in United States currency. Items with incomplete or illegible information. Items that are money orders, traveler s checks or savings bonds. Items made payable to a third party (i.e., any person or entity other than you). Items that are in violation of any federal or state law, rule, or regulation. Checks or items prohibited by Kern Schools Federal Credit Union s current procedures relating to the Remote Deposit Capture service or are otherwise not acceptable under the terms of your Credit Union account. Items with any endorsement on the back other than what is specified in this Agreement. You agree to follow any and all other procedures and instructions for use of the Remote Deposit Capture service as the Credit Union may establish from time to time. Transaction Limitations The maximum amount you may deposit on any day is $10, We reserve the right to modify this limit from time to time. Processing Electronic Images We will review each Electronic Image received to determine whether it is eligible for processing. If eligible, we will: (a) present the Electronic Image directly or indirectly to the bank on which the original check is drawn or through which the original check is payable ( Paying Bank ); (b) create a substitute check that we will present directly or indirectly to the Paying Bank; or (c) if we are the Paying Bank, present or post the Electronic Image. If we determine for any reason that the Electronic Image is illegible, incomplete, or otherwise ineligible for processing, we will require you to present the original item for deposit. It is your responsibility to retain the original item for a reasonable period of time to ensure that it is properly credited to your account. The Credit Union is not responsible for errors in Electronic Images that may prevent or delay the deposit of funds into your account. The Credit Union is not responsible for any image that we do not receive for any reason, including transmission interruptions. 21

22 All deposits are subject to later verification by us. We may return or refuse to accept all or any part of a deposit to your Account using the Remote Deposit Capture service at any time and will not be liable for doing so even if such action causes checks or other debits to your Account to be dishonored and returned. You are solely responsible for paying any overdraft or insufficient funds (NSF) fee charged by the Credit Union or any third party as a result of the Credit Union s rejection of any item(s), or for any item(s) returned unpaid. Cut-Off Time and Credit to Your Account Items transmitted using the Remote Deposit Capture service are not subject to the funds availability requirements of Federal Reserve Board Regulation CC, and therefore longer hold delays may apply to these deposited items. Deposits received before 3:00 p.m. PST on a business day the Credit Union is open (a business day is any day except Saturdays, Sundays and holidays) will be credited to your account on the first (1st) business day after the day we receive your deposit. Deposits received after 3:00 p.m. PST on a business day the Credit Union is open will be credited on the second (2nd) business day after we receive your deposit. Funds that you deposit using the Remote Deposit Capture service may not be immediately available to you. Fees All fees or charges associated with the Remote Deposit Capture service are disclosed in our Fee Schedule, as amended from time to time, a copy of which accompanies this Agreement. At any time, in our discretion, we may add to or modify disclosed fees, subject to any prior notice requirements under applicable law (see Amendments). Your continued use of the Remote Deposit service after the change becomes effective shall constitute your agreement to pay the disclosed fee. You may designate in writing the account from which such fees may be charged; however, you authorize us to charge such fees to any account you maintain with us in the event that a specific account has not been designated by you in writing or if there are insufficient funds in the designated account. Record Retention It is your responsibility to ensure the safekeeping or destruction of the original item after the item has been transmitted. You should securely store each original check(s) for a period of sixty (60) days after you receive confirmation that your deposit has been accepted. Please note that you are solely responsible for the security and storage of the original checks and you are solely liable for any loss or misappropriation of these checks. Original checks that are no longer stored should be disposed of in a secure manner designed to ensure that they cannot be read or recreated. How to Notify Us in Case of Errors If you believe there has been an error with respect to any original check or Electronic Image transmitted to the Credit Union for deposit, call us at (661) or (800) or write to us at P.O. Box 9506, Bakersfield CA You will be asked to produce the original item and may be asked to complete a written statement in support of your claim. Service and Maintenance We may periodically audit the Remote Deposit Capture service and infrastructure. From time to time, the Credit Union may disable the Remote Deposit Capture service without prior notice for scheduled maintenance and upgrades to the system. In the event the Remote Deposit Capture service is unavailable, you may deposit the original item in person at a Credit Union branch location during regular business hours, at a Credit Union ATM, or by mailing the item to us at P.O. Box 9506, Bakersfield CA Our Right to Audit We may periodically audit your individual transactions and use of the Remote Deposit Capture service to verify your compliance with this Agreement. You agree to cooperate with any such audit and to provide, at your expense, such information or documents as we may reasonably request. Termination You may terminate this Agreement with us at any time. The Credit Union reserves the right to terminate this Agreement and/or your use of Remote Deposit Capture service at any time with or without cause. We may do so immediately if: a) You or any authorized signer on your account breaches this or any other agreement with the Credit Union; b) We have reason to believe that there has been or might be an unauthorized use of your account; or c) You or any authorized signer on your account requests that we do so. Disclosure of Account Information to Third Parties We will disclose information to third parties about your account or the transfers you make: a) When it is necessary to complete the transaction; b) In order to verify the existence and condition of your account for a third party, such as a credit bureau or merchant; c) In order to comply with government agency or court orders or other legal process; or d) If you give us your prior oral or written permission. 22

23 Member Warranties and Indemnification By using the Remote Deposit Capture service, you represent and warrant all of the following to be true: The item transmitted is a complete, accurate and unaltered item payable to you, that it originated as a paper item, and that you are legally entitled to negotiate it. The original check has not and will not be: (i) deposited; (ii) endorsed to a third party; or (iii) otherwise negotiated or submitted for payment, after transmitting the digital image through the Remote Deposit Capture service. No other duplicate images of the original check have been made. The electronic image of the check, or any substitute check as defined by federal law, will become the representation of the check for all purposes (except funds availability) including return item processing. Any files and images transmitted to the Credit Union will not contain any viruses or any other disabling features that may have an adverse impact on the Credit Union s network, data, or related system. You will not attempt to deposit or otherwise negotiate any original check that you have previously presented to us as an Electronic Image through the Remote Deposit Capture service. You will not attempt to present a duplicate Electronic Image. You agree to indemnify, defend and hold the Credit Union, its directors, officers, employees, and agents harmless for any losses, liabilities, damages, claims, costs, or expenses (including reasonable fees) arising from its reliance on these representations and warranties, as well as any of the following: Any negligent or intentional act or omission by you in the performance of your obligations under this Agreement. Calculation or data entry errors made by you. Any material breach of this Agreement or violation of any applicable law, statute, or regulation in the performance of your obligations. Your failure to securely maintain your hardware, your security credentials, or to securely maintain or dispose of any original check. This section shall survive the termination of the Remote Deposit Capture service. Address Change You are required to keep the Credit Union informed of your current address to insure correct mailing of monthly statements. Additional Benefit Enhancements The Credit Union may from time to time offer additional services to you in connection with your accounts. Some services may be at no additional cost to you and others may involve a specified fee. You understand that the Credit Union is not obligated to offer such services and may withdraw or change them at any time. Electronic Disclosure of Remote Deposit Capture Disclosure and Agreement By accessing the Remote Deposit Capture service, you acknowledge and accept electronic receipt of the Credit Union s Remote Deposit Capture Disclosure and Agreement. You agree that you have read this Agreement in its entirety and will abide by its terms and conditions. You understand that the Credit Union will not provide you with an additional paper (non-electronic) copy of this Agreement unless you specifically request it. Amendments The Credit Union may change the terms and conditions of this Agreement from time to time by sending written notice to you at your address as it appears on our records. If any change results in greater cost or liability to you or decreases access to your accounts, you will be given at least thirty (30) days prior notice of the change to the extent required by applicable law. Prior notice may not be given where an immediate change in terms or conditions is necessary to maintain the integrity of the system and/or the security of the Remote Deposit Capture service or designated accounts. Governing Law; Attorneys Fees All agreements and disclosures shall be construed in accordance with the laws of the State of California and the provisions of the California Uniform Commercial Code (UCC). You agree to pay the Credit Union all of our costs and reasonable attorneys fees, including all collection costs, litigation costs, skip-tracing fees, and outside services fees incurred while we are enforcing our rights under this Agreement. Reservation of Rights Failure or delay by the Credit Union to enforce any provision of this Agreement or to exercise any right or remedy available under this Agreement, or at law, shall not be deemed a waiver and the Credit Union expressly reserves the right to enforce such provision, or to exercise such right or remedy, at a later date. Other Agreements Except as stated otherwise in the Agreement, this Agreement does not alter or amend any of the terms or conditions of any other agreement you may have with the Credit Union. 23

24 Severability If any part of this Agreement should be held to be unenforceable, the remaining provisions of this Agreement shall remain in full force and effect. Your Ability to Withdraw Funds Our policy is to make funds from your cash and check deposits available to you on the first business day after the day we receive your deposit. Electronic direct deposits will be available on the day we receive the deposit. Once the funds are available, you can withdraw them in cash and we will use them to pay checks that you have written. For determining the availability of your deposits, every day is a business day, except Saturdays, Sundays, and federal holidays. If you make a deposit before the close of business on a business day that we are open, we will consider that day to be the day of your deposit. However, if you make a deposit after the close of business or on a day we are not open, we will consider that the deposit was made on the next business day we are open. Longer Delays May Apply In some cases, we will not make all of the funds that you deposit by check available to you on the first business day after the day of your deposit. Depending on the type of check that you deposit, funds may not be available until the second business day after the day of your deposit. However, the first $ of your deposits will be available on the first business day. If we are not going to make all of the funds from your deposit available on the first business day, we will notify you at the time you make your deposit. We will also tell you when the funds will be available. If your deposit is not made directly to one of our employees, or if we decide to take this action after you have left the premises, we will mail you the notice by the day after we receive your deposit. If you will need the funds from a deposit right away, you should ask us when the funds will be available. In addition, funds you deposit by check may be delayed for a longer period under the following circumstances: We believe a check you deposit will not be paid. You deposit checks totaling more than $5, on any one day. You redeposit a check that has been returned unpaid. You have overdrawn your account repeatedly in the last six (6) months. There is an emergency, such as failure of computer or communications equipment. We will notify you if we delay your ability to withdraw funds for any of these reasons, and we will tell you when the funds will be available. They will generally be available no later than the seventh business day after the day of your deposit. Special Rules for New Accounts If you are a new Member, the following special rules will apply during the first thirty (30) days your account is open. Funds from electronic direct deposits to your account will be available on the day we receive the deposit. Funds from deposits of cash, wire transfers, and the first $5, of a day s total deposits of cashier s, certified, teller s, traveler s, and federal, state and local government checks will be available on the first (1st) business day after the day of your deposit if the deposit meets certain conditions. For example, the checks must be payable to you (and you may have to use a special deposit slip). The excess over $5, will be available on the ninth (9th) business day after the day of your deposit. If your deposit of these checks (other than a U.S. Treasury check) is not made in person to one of our employees, the first $5, will not be available until the second (2nd) business day after the day of your deposit. Funds from all other check deposits will be available on the eleventh(11th) business day after the day of your deposit. Holds on Other Funds (Check Cashing) If we cash a check for you that is drawn on another financial institution, we may withhold the availability of a corresponding amount of funds that is already in your account. Those funds will be available at the time funds from the check we cashed would have been available if you had deposited it. Holds on Other Funds (Other Account) If we accept for deposit a check that is drawn on another financial institution, we may make funds from the deposit available for withdrawal immediately but delay your availability to withdraw a corresponding amount of funds that you have on deposit in another account with us. The funds in the other account would then not be available for withdrawal until the time periods that are described elsewhere in this disclosure for the type of check that you deposited. Deposits at Automated Teller Machines Funds from any deposits (cash or checks) made at automated teller machines (ATMs) we do not own or operate will not be available until the fifth (5th) business day after the day of your deposit. This rule does not apply at ATMs that we own or operate. 24

25 Important Notice About Your Account(s) (California Residents) In accordance with California s Unclaimed Property Law, C.C.P. 1500, et seq., any funds held by the Credit Union (including, without limitation, funds in a share, share draft, certificate, or other account, sums for the payment of cashier s checks, teller s checks, etc.) may be transferred to the Unclaimed Property Division of the California State Controller s Office if no activity occurs in the account within the time period specified by state law. Accounts subject to escheatment will be assessed the Escheatment Fee as stated on the Rate and Fee Schedule. General Terms and Conditions of Your Credit Union Accounts Definitions ACCOUNT AGREEMENT means any share, share draft, share certificate, trust, Totten trust or UTMA account. TIS AGREEMENT means Truth In Savings Agreement entitled, About Your Credit Union Accounts. Membership & Account Application The terms, conditions and information contained in the Membership & Account Application, and all amendments thereto, are by this reference hereby incorporated in their entirety into this TIS Agreement and become an integral part of the General Terms and Conditions of the Credit Union Accounts. Account Ownership The ownership of trust, Totten trust and UTMA accounts shall be governed by the applicable Account Agreement. Unless otherwise specified in the Account Agreement, the parties who sign an Account Agreement agree with each other and with the Credit Union that all funds in the accounts shall be owned as follows: Individual Accounts: The account or certificate is owned by the party named on the Account Agreement ( Account Holder ). Upon the death of the party, ownership passes to the named pay-on-death payee(s), designated as the beneficiary(ies) on the Account Agreement. Joint Accounts: The account or certificate is owned by the parties named on the Account Agreement ( Account Holder ). Upon the death of any of them, ownership passes to the survivor(s). Upon the death of all of them, ownership passes to the named pay-on-death payee(s), designated as the beneficiary named on the Account Agreement. Special Rules for Joint Accounts Withdrawals by and Liability of Joint Owners The Account Holders of an account agree with each other and with the Credit Union that all funds and all accumulations thereon are subject to the withdrawal or receipt by any of the Account Holders, and payment to any of them shall be valid and discharge the Credit Union from any and all liability for such payment. The Account Holders of an account expressly agree that each Account Holder is jointly and severally liable for any and all overdrafts, losses or charges to an account created by any Account Holder(s). Disputes If there is a dispute about ownership or control of an account, the Credit Union may place a hold on the account and not release funds until the Credit Union receives either a court order or an instruction signed by all persons claiming an interest in the account. Notice Notice to one Account Holder shall constitute notice to all persons authorized to have access to the account. Changes in Terms and Conditions The use of an account is subject to such other terms, conditions and requirements as the Credit Union may establish from time to time. The Credit Union has the right to change the terms and conditions of this Agreement at any time, in any manner, and for any reason. We may delete or modify existing terms. We may add new terms without regard to whether the matter is already addressed by this Agreement. We may offer new or different services at any time, and may convert an existing account or service into a new account or service. We will generally notify you in advance of changes by sending written notice to your address as it appears on our records. However, we may make changes without sending you advance notice, unless such notice is required by law. By continuing to use or keep your account open, you will be deemed to accept and agree to any such changes in terms. Ability to Pledge Funds Any or all of the joint Account Holders may pledge all or any part of the funds as security for a loan or loans with the Credit Union only. Enforcement of Liens All funds in an account remain subject to any and all liens, including but not limited to statutory liens and/or consensual liens, security interests, rights of set off and charges, notwithstanding the source of the contribution. 25

26 Order of Posting; Understanding Your Available and Current Balance Order of Posting: The order in which items are paid is important if there is not enough money in your account to pay all of the items that are presented. We will pay checks, automated debits (ACH), Debit Card transactions, ATM withdrawals and point-of-sale transactions in the order presented to the Credit Union. Multiple checks presented for payment on the same day will be paid in lowest to highest dollar amount order. For ACH transactions, deposits are posted first then debits are posted by settlement date in the order received. For ATM Card and Debit Card transactions, items are posted in the order received. You understand that the order in which items are processed can affect the total amount of fees that may be assessed against your account. The Credit Union reserves the right to adjust the above processing times in its sole discretion. Current and Available Balances: It is also important that you understand the difference between your current balance and your available balance in order to properly manage the money in your account and avoid overdraft and insufficient fund fees. Your available balance is the amount you have in your account at a particular time that is available for immediate withdrawal. Your available balance is updated throughout the day to reflect holds, pending transactions and cleared deposits. The difference between your current balance and your available balance is the result of pending activity that has not yet posted to the account (example, any pending deposits, checks, transfers and withdrawals or holds on your account). We will use the available balance in your account to determine if you have sufficient funds to cover your transactions. You can determine your available balance at the ATM, by phone or by accessing your account online or with mobile banking. You understand that you may be overdrawn even when your current balance shows positive. You also understand that you may still overdraw your account even though the available balance appears to show there are sufficient funds to cover a transaction that you wish to make because your available balance will not reflect all your outstanding checks, automatic payments or recent deposits. In addition, your available balance will not reflect all of your debit card transactions. For example, if a merchant obtains your prior authorization but does not submit a one-time debit card transaction for payment within three (3) business days of authorization (or for up to thirty (30) business days for certain types of debit card transactions), we are required to release the authorization hold on the transaction. The available balance will not reflect this transaction once the hold has been released until the transaction has been received by us and paid from your account. You must keep careful records and practice good account management to avoid making transactions without sufficient funds available for withdrawal. For additional details on the availability of your funds for withdrawal, see the section entitled Your Ability to Withdraw Funds Policy. If you have additional questions about your available or current balance, please see a team member or call (661) or (800) Financial Abuse Reporting Account Holder(s) understand(s) and agree(s) that the Credit Union may report known or suspected illegal or fraudulent activity including, but not limited to, the following: Financial abuse involving an elder or dependent adult; Where the ownership or collectibility of funds are subject to dispute; or Misuse or abuse of account services; to appropriate law enforcement or government entities, as required or permitted by law. In addition, the Credit Union reserves the right to suspend, restrict, deny or terminate account services and activity, including the placement of an administrative hold (freeze) on account proceeds, or take such other actions as deemed necessary under the circumstances. Account Holder(s) agree(s) to indemnify and hold the credit union harmless from and against all claims, actions, damages, losses, and expenses, including attorneys fees, as a result of any action or inaction taken in relation to the matters described here. Notification of Changes Each Account Holder agrees to promptly notify us in writing of any change in address(es). If you fail to do so, we may send notices, statements or other important information to the address shown in our records and you agree to release us from any liability for doing so. You also agree to notify us in writing of any change in ownership or authorized signers, or if an owner or authorized signer dies or is placed under legal guardianship or conservatorship. We may, at our option, require a new Account Agreement to be completed before any such change takes effect. Any such changes shall not affect transactions previously made. Waiver of Certain Rights The Credit Union reserves the right to waive the enforcement of any of the provisions of this TIS Agreement with respect to any transaction or series of transactions. Any such waiver will not affect the right of the Credit Union to enforce any of its rights with respect to later transactions and is not sufficient to modify the terms and conditions of this TIS Agreement. Consumer Reports The Credit Union makes credit available to its Members on a regular basis. The Applicant(s)/Account Holder(s) of the account authorizes the Credit Union to obtain consumer reports in connection with credit and business transactions involving the Applicant(s)/Account Holder(s), including but not limited to applying for membership, the opening of a share or share draft account or the issuance of an ATM card, check card, or other service provided by the Credit Union, and the Applicant(s)/ Account Holder(s) of the account authorizes any person, association, or corporation to furnish on request of this Credit Union, information concerning the affairs of the Applicant(s)/Account Holder(s). The Applicant(s)/Account Holder(s) also authorizes the Credit Union to furnish information concerning the account to consumer reporting agencies. 26

27 Negative Credit Reporting We may report information about your account to credit bureaus. Late payments, missed payments, or other defaults on your account may be reflected in your credit report. Reporting Inaccurate Information If you believe the Credit Union is reporting inaccurate information to a credit reporting agency, please notify us at Kern Schools Federal Credit Union, P.O. Box 9506, Bakersfield, CA , so we can investigate. Post-Dated Share Drafts and Checks The Credit Union will treat all share drafts or checks as though the share drafts or checks were written on the date presented. Examination of Statements The Account Holder(s) to whom the periodic statement of account is sent agree(s) to exercise reasonable care and promptness in examining the statement to discover any errors or discrepancies, and to promptly notify the Credit Union after discovery thereof. Signatures, Authorized Signers Facsimile and Substitute Signature Username, Password, or PIN Security Passwords and Access Options Signatures When and if your signature is required on any KSFCU application, agreement, disclosure, consent, form or any other document we require, KSFCU may accept your original handwritten signature or your electronically-captured handwritten signature using an authorized KSFCU signature pad or device. We may accept your electronically-captured handwritten signature submitted to us using a non-ksfcu pad or device, or any other form of electronic signature submitted to us, in our sole and absolute discretion and only if KSFCU-approved hardware, software and secure delivery systems were used. You understand and agree that any such signature shall be legally binding. You agree that use of your Username, Password, Personal Identification Number (PIN), an approved facsimile or substitute signature constitutes your signature, acceptance and agreement as if actually signed by you in writing. You further understand that any recorded verbal authorization given by you to KSFCU shall also have the same force, legal effect and validity as your handwritten signature, unless otherwise prohibited by law. KSFCU reserves the right to reject any signature presented or received in its sole and absolute discretion. Authorized Signers - Each Account Owner agrees to sign a New Account Card when you open an account with KSFCU and further agrees to sign an updated New Account Card upon request by KSFCU. You agree that we may rely on any signature you provide to us on your New Account Card. If your account has more than one Account Owner, you understand that we will only require one (1) Account Owner s signature on a check or other withdrawal, regardless of any independent and separate agreement between Account Owners. You understand that KSFCU does not allow accounts that require the signature of more than one Account Owner on checks or withdrawals and does not allow accounts with other or special instructions regarding required signatures for checks and withdrawals. You understand and agree that each Account Owner shall have equal access to the account, regardless of their net contributions to the account. Approved Facsimile or Substitute Signature - You may use an alternative method of signing documents in connection with your KSFCU account(s), such as a facsimile or substitute signature, upon our prior approval. Before we approve your use of any form of facsimile or substitute signature, we will require you to provide us with, among other things as applicable, a sample of the proposed facsimile or substitute signature. In addition, if you need to use a specific mark as a substitute for your signature, we will require you to have a witness present when you sign any document. If the document requires a notarized signature, you understand that you will have to have two witnesses present when you sign. You understand that your witness/es will have to present us with valid photo identification, write your name for you next to your mark and execute a separate document attesting that he/she/they witnessed you make your mark. In the event we approve your use of any form of facsimile or substitute signature, you agree that the approved facsimile or substitute signature shall have the same legal effect as an original handwritten signature on any and all KSFCU documents it may appear. You agree to execute and deliver documents in the form we require. You agree to protect any approved facsimile or substitute signature from any unauthorized use and keep any approved facsimile or substitute signature secure from others as appropriate. You understand and agree that you shall bear the entire risk of loss suffered by you and/or us as a result of any unauthorized use of an approved facsimile or substitute signature, whether or not you were negligent, except as may be required by applicable law, and that we shall have no duty to determine the authority of any person so affixing such a signature to any item. You understand and agree that any unauthorized use of an approved facsimile or substitute signature will not be considered a forgery or an unauthorized signature and will have the same legal effect as if you signed or endorsed the document at issue. You agree to indemnify and hold us harmless from and against any and all loss, damages, liability, claims, exposure, or costs (including but not limited to reasonable attorney fees) we may suffer as a result of any and all unauthorized or unlawful use or misuse by any person of an approved facsimile or substitute signature. We reserve the right to reject any facsimile or substitute signature presented to us that does not conform to the sample of the approved facsimile or substitute signature in our file for your account in our sole and absolute discretion. Non-Cash Payments Non-cash payments deposited into an account may be credited subject to final payment. 27

28 Fees and Charges All accounts shall be subject to service charges in accordance with fee schedules adopted by the Credit Union as amended from time to time. Attorneys Fees and Other Fees You agree to pay the Credit Union all of our costs and reasonable attorneys fees, including all collection costs, litigation costs, skip-tracing fees, and outside services fees incurred while we are enforcing our rights under this Agreement. Credit Union s Right to Offset Account Holder(s) agrees that the Credit Union has the right to offset against any account of any Account Holder to cover any amount owing to the Credit Union for any reason. The Credit Union may also apply the funds held in a joint account to cover any amount owing to the Credit Union by any individual Account Holder(s). Account Holder(s) understand that this means that the Credit Union has the right to impress and enforce a statutory lien against the Account Holder(s ) s share and dividends in the event of the failure of the Account Holder(s) to satisfy any financial obligation due and payable to the Credit Union. Account Holder(s) understand that the Credit Union may enforce this right without further notice except as to Individual Retirement Accounts (IRA), Keogh Plan, Social Security/SSI, and as otherwise prohibited by law. Governing Law This TIS Agreement shall be construed in accordance with the laws of the State of California, including the California Uniform Commercial Code (UCC). Share Account Agreement Transfers to Third Parties During any calendar month, no more than six (6) withdrawals or transfers made to another account at the Credit Union or to a third party by means of a pre-authorized, automatic transfer, online or telephonic order or instruction, whether initiated by check, draft, debit card, or similar order payable to a third party, may be made from each savings account or money market deposit account. If an Account Holder exceeds, or attempts to exceed, these transfer limits, the excess transfer requests may be refused or reversed, a fee may be imposed on the excess transfer requests, and the Credit Union may reclassify or close the account. Transfers initiated by calling the Credit Union or through the Audio Response (Data Voice) service must be counted among the six (6) monthly transfers, except that there are no limits on the number of withdrawals paid directly to an Account Holder when such transfers or withdrawals are made by mail, messenger, automated teller machine (ATM), or in person, or when such withdrawals are made by telephone (via check mailed payable to the Account Holder). Withdrawals, Prior Notice Requirement The Credit Union reserves the right to require prior written notice of intention to withdraw all or any part of shares not to exceed the notice requirement as set forth in the Credit Union s bylaws. Share Draft Account Agreement Withdrawals, Approved Methods Only share drafts and other methods approved by the Credit Union may be used to withdraw funds from a share draft account. Electronic Check Conversion Upon prior notification from the merchant to the Account Holder, a purchase made with a share draft or check can be converted to a one-time electronic fund transfer (EFT) if authorized by the Account Holder. The Account Holder may also authorize merchants to electronically debit the account for returned check fees. It is agreed that the Account Holder authorizes the electronic funds transfers if the transaction is completed after being told (orally or by a notice posted) that the transfer may be processed electronically or if the Account Holder signs a written authorization. Demand Drafts The Credit Union may pay and charge to the applicable share draft account, share drafts drawn by and payable to any person, organization, association or corporation that has been authorized by an Account Holder to be paid, by the provision of MICR encoded information on the account. It is agreed that the Credit Union s rights in respect to such share drafts shall be the same as if it were a share draft drawn and signed by an Account Holder(s) personally. This authority shall remain in effect until revoked by an Account Holder in writing. It is agreed that the Credit Union shall be fully protected in honoring such share drafts. It is further agreed that if any such share draft is dishonored, whether with or without cause, and whether intentionally or inadvertently, the Credit Union shall incur no liability whatsoever, even though such dishonor results in the forfeit of insurance, loss or damage of any kind. Overdrafts The Credit Union is under no obligation to pay a share draft which exceeds the balance in an account; the Credit Union may, however, pay such a share draft and recover or obtain a refund of the amount of the resulting overdraft plus a service charge from any of the Account Holders of this account, each of whom expressly agrees that each Account Holder is jointly and severally liable for any and all overdrafts of this account and any and all associated costs created by any Account Holder. 28

29 Overdraft Privilege Service The Credit Union recognizes that sometimes you may overdraw your share draft account. In such cases the Credit Union may decide to honor drafts for which there are insufficient funds. This is the Credit Union s Overdraft Privilege Service. The Credit Union provides the Overdraft Privilege Service as an accommodation to you and is not obligated to do so, even when it has done so in the past. You do not apply for this service. Qualification To be eligible for the Overdraft Privilege Service, you must meet all of the following criteria: Be a Member in good standing with the Credit Union; Share draft account must be opened for a minimum of one (1) month; There is a thirty (30) day waiting period for the Overdraft Privilege Service on all eligible new accounts; Continue to make deposits consistent with past practices, and depositing at least $ or more in the account within each thirty (30) day period (Note, your account must remain positive for a period of at least one (1) business day for the thirty (30) day period to be satisfied); and You are not in default with any loan obligation with the Credit Union. Description of Service By participating in the program, the Credit Union may honor overdrafts, including checks/share drafts over-the-counter, checks/share drafts, automated debits (ACH), recurring debit card transactions and point-of-sale transactions. Unless the Credit Union currently has your affirmative consent (opt-in) on file, we will not approve your overdrafts for ATM withdrawal or everyday debit card transactions. You must tell us you want overdraft coverage for these transactions. To request overdraft coverage for your ATM withdrawal or everyday debit card purchases, contact us in-person; by calling us at (661) or (800) (outside of Bakersfield); by writing to us at P.O. Box 9506, Bakersfield, CA ; or logging online at Complete the Overdraft Consent Form, which is provided with this disclosure, and return it to any Credit Union branch or mail it to us at the address shown. The Credit Union will provide you with written confirmation of your opt-in choice. When an overdraft is covered, the account will be taken negative by the dollar amount of the overdraft, plus the amount of the Courtesy Pay fee. If we honor multiple overdrafts we may honor them in any order at the Credit Union s option or return any such items. The following Overdraft Privilege Service limits, including the Courtesy Pay fee, for each account type are: $ for the Makes Cents Checking account; or $ for the Makes Cents II Checking account; or $ for the Basic Checking* account; or $1, for the Advantage Plus Checking* account; or $1, for the Advantage Checking* account; or $1, for the Senior Class Checking* account. * Although this checking account product is no longer offered, existing accounts are not affected and remain subject to all terms and conditions contained in the Truth in Savings Disclosure and Agreement, including Courtesy Pay. Please refer to the About Our Discontinued Checking Accounts section. When the Credit Union honors overdraft items, you must deposit funds immediately, but in no case more than thirty (30) days from the date of any notice sent to you. If you fail to cover the total overdraft amount within thirty (30) days, the Credit Union may pursue all collection options available to it. The Credit Union may, but is not obligated to, transfer funds from your other accounts with us to cover the overdraft. The Overdraft Privilege Service fee is a flat fee charged regardless of the amount the account is overdrawn and will be charged for each overdraft item presented and paid by the Credit Union. The charge for Overdraft Privilege Service is described in our Fee Schedule. The Overdraft Privilege Service is a discretionary privilege offered to Members and not a right of membership. The Credit Union encourages you to properly maintain your accounts with us. You agree that the Credit Union will not be held liable for either paying or refusing to pay any overdraft item. The Credit Union reserves the right to discontinue this service at any time without any notice. Opt-Out If you do not want the Overdraft Privilege Service, you must inform the Credit Union in-person; by calling us at (661) or (800) (if outside of Bakersfield); or by writing to us at P.O. Box 9506, Bakersfield, CA Stale-Dated Share Drafts The Credit Union is under no obligation but may pay a share draft which is presented more than six (6) months after it is dated. The Credit Union may assess a special handling charge upon receipt of any such item in addition to a service charge upon the account in accordance with the fee schedules adopted by the Credit Union and as amended from time to time. 29

30 Stop Payments Any Account Holder(s) of this account may stop payment of any item drawn against the account. The Stop Payment Order must describe the item with reasonable certainty and must be received in such time and manner as to afford the Credit Union a reasonable opportunity to act upon it. A Stop Payment Order is effective for six (6) months, but it lapses after fourteen (14) calendar days if the original order was oral and was not confirmed in writing within that fourteen (14) day period. The Stop Payment Order may be renewed in writing for an additional six (6) month period. A fee may be assessed with the placement of a stop payment. Refer to the Schedule of Fees. Truncation of Drafts The Account Holder(s) acknowledges that share drafts are truncated and hereby waives any and all rights to receive the items without prejudice to any of the Credit Union s defenses available under the California Uniform Commercial Code (UCC). Liability of Credit Union Except for its own lack of good faith or failure to exercise ordinary care, the Credit Union is not liable for any action it takes regarding the payment or nonpayment of a share draft, even if nonpayment results in the forfeit of insurance, loss or damage of any kind. Closure of Account The Credit Union may close a share draft account at any time. Closure of a share draft account will not affect the obligation to pay any outstanding balances or charges owed. For Share Draft Accounts with Share Overdraft Protection If any Account Holder(s) writes a share draft that would result in this Share Draft Account being overdrawn, the Credit Union is authorized to charge the designated share account(s), regardless of which party signed the item, in such multiples as determined by the Credit Union sufficient to permit the Credit Union to honor the share draft and to credit such charge to this Share Draft Account. No share draft overdraft may be paid by charging a share account if, as a result of such charge, that share account would be subject in any one month to more than six pre-authorized, automatic or telephonic transfers. For Share Draft Accounts with Loan Overdraft Protection If any Account Holder(s) writes a share draft which would result in this Share Draft Account being overdrawn, and if at that time any Account Holder(s) is eligible to receive loan advances from this Credit Union on a loan designated on the Overdraft Agreement, the Credit Union is authorized to make an advance from the designated loan account, and to credit the advance to this Share Draft Account in such multiples as determined by the Credit Union sufficient to permit the Credit Union to honor such share draft and any associated fees. Share Certificate Account Agreement Pledging of Funds Share certificates may not be pledged, transferred, or assigned to any party other than the Credit Union unless otherwise provided by statute. Shares invested for an Individual Retirement Account (IRA) may not be pledged as security for any loan. The Credit Union reserves the right to offset this certificate except as otherwise precluded by law. If the Credit Union offsets funds from this certificate, the funds withdrawn are subject to the early withdrawal penalty. Your Insured Funds The National Credit Union Administration on (NCUA) operates the National Credit Union Share Insurance Fund (NCUSIF) to protect accounts at federally insured credit unions up to $250,000. The $250,000 in coverage applies to each share owner, per insured credit union, for each account ownership category. This booklet provides examples of insurance coverage under NCUA s rules. Because the scope of this booklet is limited, credit union members should contact their federally insured credit unions or NCUA s Office of Consumer Protection for further share insurance coverage details about situations not addressed in this booklet. Contact information for the Office of Consumer Protection is available on the back cover of this booklet. Members or their counsel may also wish to consult the NCUA Rules and Regulations relating to share insurance coverage published in the Code of Federal Regulations (12 C.F.R. Part 745). Also, you can find NCUA s insurance regulations at ncua.gov. Additional information about share insurance coverage is available at MyCreditUnion.gov. 30

31 The Federal Credit Union Act and NCUA rules on share insurance coverage control how accounts will be insured at each federally insured credit union. No persons may imply a federally insured credit union can offer coverage that differs from this formal structure. Also, members should review their accounts periodically and whenever they open new accounts or modify existing accounts to ensure that all their funds remain insured. Forward The purpose of this booklet is to help you understand your share insurance protection. NCUA is an independent agency of the U.S. Government. NCUA regulates, charters, and insures the nation s federal credit unions. In addition, NCUA insures state-chartered credit unions that seek and qualify for federal insurance. In most states, state law requires state chartered credit unions to be federally insured. The shares in your credit union are insured by the National Credit Union Share Insurance Fund (NCUSIF), which is backed by the full faith and credit of the U.S. Government. Established by Congress in 1970 to insure member share accounts at federally insured credit unions, the NCUSIF is managed by NCUA under the direction of its three-person Board. Your share insurance coverage is similar to the deposit insurance coverage offered by the Federal Deposit Insurance Corporation (FDIC). Credit unions that are insured by the NCUSIF must display in their offices the official NCUA insurance sign, which appears on the cover of this booklet. All federal credit unions must be insured by NCUA, and no credit union may terminate its federal insurance without first notifying its members. Here are some important facts to remember about your share insurance coverage: No member of a federally insured credit union has ever lost one penny of insured savings. The NCUSIF has several programs to help insured credit unions that might be experiencing problems. Liquidations or failures are a last resort. In the rare instances when a federally insured credit union does fail, NCUA will make any necessary payouts to the credit union s members. These payouts are usually made within 3 days from the time the credit union closes its doors. As a member of a federally insured credit union, you do not pay directly for your share insurance protection. Your credit union pays a deposit and an insurance premium when required into the NCUSIF based on the total amount of insured shares and deposits in the credit union. Insured credit unions are required to deposit and maintain one percent of their insured shares and deposits in the NCUSIF. Share Insurance Coverage Properly established share accounts in federally insured credit unions are insured up to $250,000. Generally, if a credit union member has more than one account in the same credit union of the same ownership, those accounts are added together and insured in the aggregate. There are exceptions though. You may obtain additional separate coverage on multiple accounts, but only if you have different ownership interests or rights in different types of accounts and you properly complete account forms and applications. For example, if you have a single ownership regular share account and an Individual Retirement Account (IRA) at the same credit union, the regular share account is insured up to $250,000 and the IRA is separately insured up to $250,000. However, if you have a regular share account, a share certificate, and a share draft account, all in your own name and without any beneficiaries, you will not have additional coverage. Those accounts will be added together and insured up to $250,000 as your individual account. Additionally, shares denominated in foreign currencies are insured as outlined in NCUA Rules and Regulations. Coverdell Education Saving Accounts (or 529 Accounts), formerly education IRAs, are insured as irrevocable trust accounts and will be added to a member s other irrevocable trust accounts and insured up to $250,000. Roth IRAs will be added together with traditional IRAs and insured up to $250,000. You may also qualify for additional coverage on revocable trust (formal or informal commonly referred to as payable on death) accounts. A co-owner s interest in all joint accounts in the same credit union will be added together and insured up to the maximum of $250,000. Frequently Asked Questions About the National Credit Union Share Insurance Fund 1. Which credit unions are insured by the NCUSIF? The NCUSIF insures member shares in all federal credit unions and those federally insured, state chartered credit unions that apply for and meet the insurance standards. Insured credit unions are required to indicate their insured status in their advertising and to display the official NCUSIF sign at their offices and branches. Some state-chartered credit unions may be insured by private insurance or guaranty corporations. This coverage is separate and apart from the NCUSIF and is not backed by the full faith and credit of the U.S. Government. 31

32 2. How does the NCUSIF protect credit union members against loss? Each credit union approved for NCUSIF coverage must meet high standards of safety and soundness in its operations. Federal and state examiners, as appropriate, conduct regular examinations to determine whether federally insured credit unions are following these standards. If an insured credit union gets into financial difficulties and must be closed, the NCUSIF acts immediately to protect each member s share accounts. 3. Does the NCUSIF protection apply only if a credit union is liquidated? No. Liquidation is the only situation in which a member is directly provided share insurance protection by the payment of a check for his or her insured savings. However, indirect protection is provided when the NCUA Board, through the NCUSIF, authorizes financial assistance to a credit union to enable it to overcome a temporary financial setback. In a case where a credit union is unable to overcome its difficulty, financial assistance may be authorized to assist its members in continuing to receive credit union service at another insured credit union through either a merger or acquisition. 4. How does NCUSIF pay members their shares when an insured credit union is liquidated? Checks for each member s shares (less any amounts due on outstanding loans) up to the insurance limit are mailed to the member s last known address as shown in the records of the credit union. These checks are usually mailed within 3 days after the credit union is placed into liquidation. In situations where on-site payment is more convenient, the NCUA liquidation team will give checks directly to members. 5. What happens to the member s share account when an insured credit union is merged into another insured credit union? Each member s share account is transferred to the continuing credit union. Accrued dividend credits are also transferred. On the effective date of the merger, each merging credit union member has full membership rights to all the financial services provided by the continuing credit union. 6. Does the NCUSIF protect the interests of creditors? No. The NCUSIF protects only credit union members. Frequently Asked Questions About General Share Insurance Coverage 7. What is the Standard Maximum Share Insurance Amount? The Standard Maximum Share Insurance Amount for a credit union member is $250,000. Share accounts maintained in different rights or capacities, or forms of ownership, may each be separately insured up to the $250,000 standard maximum, or in the case of certain retirement accounts, up to $250,000. Thus, a member may hold or have an interest in more than one separately insured share account in the same insured credit union. 8. What types of accounts are insured? All types of member share accounts and deposits received by the credit union in its usual course of business, including regular shares (savings accounts), share certificates, and share draft accounts (checking accounts) are insured. Investment products offered by a credit union to its members, such as mutual funds, annuities, and other non-deposit investments are not insured by the NCUSIF. 9. Is the NCUSIF coverage increased by placing funds in two or more of the same kind of share accounts in the same credit union? No. The NCUSIF coverage is not increased merely by dividing funds owned by the same person or persons into one or more of the different kinds of share accounts available. For example, a regular share account, a share draft account and a share certificate account owned by the same member with no beneficiaries are added together and insured up to $250,000. Insurance can be increased by opening a different type of account - one that is held in a different right and capacity. For example, insurance on a single ownership account is separate from insurance on a joint account. 10. If a member has accounts in several different insured credit unions, will the accounts be added together for the purpose of insurance coverage? No. The NCUSIF coverage is applied to share accounts in each insured credit union. A member who has share accounts in two or more different insured credit unions would have coverage up to the full insurable amount in each credit union. In the case of a credit union having one or more branches, the main office and all branch offices are considered as one credit union. Frequently Asked Questions About Insurance For Individual and Joint Accounts 11. If a member has more than one individual account in the same insured credit union, is each account insured to $250,000? No. Individual share accounts held by the same member are added together and are insured up to $250,000. An individual share account is an account solely owned by one individual, without beneficiaries, and the right of withdrawal by another individual. IRA and Keogh accounts are insured separately. 32

33 12. What types of joint accounts may be insured? The NCUSIF covers joint accounts owned in any manner conforming with applicable state law such as joint tenants with a right of survivorship, tenants by the entireties, tenants in common, or an account owned by a husband and wife as community property in states recognizing this particular form of joint ownership. 13. If two or more persons, such as husband and wife, have a joint account in the same credit union as well as their own individual accounts, is each account separately insured? Yes. A person s interest in joint accounts are insured separately up to $250,000, provided each co-owner has personally signed an account signature card and has a right of withdrawal on the same basis as the other co-owners*. However, the insurance protection for a co-owner on joint accounts is not increased by rearranging the names of the owners, changing the style of names, or by establishing more than one joint account. The interests that a particular co-owner has in all joint accounts held in the same credit union will be added together and insured up to $250,000. * If state law limits a minor s right of withdrawal, the account will still be insured as a joint account. The signature of each co-owner is not required on a share certificate. 14. Does the standard maximum of $250,000 apply if funds in the individual and joint accounts of husband and wife all consist of community property? Yes. In those jurisdictions recognizing community property, community funds may be maintained in accounts in the individual names of each spouse or a joint account in the names of both. The individual account of the husband and the individual account of the wife will each be insured up to $250,000. As co-owners, the interest of the husband and wife in the joint account will each be insured up to $250,000. Frequently Asked Questions About Special Accounts 15. What is the NCUSIF coverage on a trust account held under the provisions of an irrevocable express trust? The trust interest of a beneficiary in a valid irrevocable trust, including Coverdell Education Savings Accounts (or 529 Accounts), if capable of evaluation in accordance with published rules, is insured up to $250,000 separately from the individual accounts of the settlor (grantor), trustee, or the beneficiary. Either the settlor or the beneficiary must be a member to obtain insurance benefits. All trust interests created by the same settlor (grantor) in the same credit union for the same beneficiary will be added together and insured in the aggregate to $250, What is the insurance coverage on a revocable trust account, a tentative or Totten trust account, a payable-on-death (POD) / in trust for (ITF) account, or a qualifying living trust account? These accounts, or any similar accounts which document the owner s intent on to have the funds pass on to a named beneficiary after the owner dies, are considered revocable trust accounts. The funds in such accounts are insured for the owner, also known in formal trusts as settlor or grantor, up to $250,000 for each beneficiary separately from any other individual accounts of the owner. If the beneficiary is not a natural person or charitable organization or other non-profit entity under the Internal Revenue Code of 1986, the funds in the account that are attributable to that beneficiary are treated as an individually owned account of the owner, aggregated with any other individual accounts of the owner, and insured to the up $250,000. In the case of a revocable trust account, the person who holds the power of revocation is deemed to be the owner of the funds in the account. 17. What is the insurance coverage on a joint revocable trust account? A joint revocable trust account is a revocable trust account, as described above, that is established by more than one owner and held for the benefit of others, some or all of whom are natural persons or a charitable organization or other non-profit entity under the Internal Revenue Code of The respective interests of each co-owner held for the benefit of each beneficiary will be separately insured up to $250,000. The interest of each co-owner will be deemed equal unless otherwise stated in the share account records of the federally insured credit union. Interests held for beneficiaries other than those described above will be added to the individual accounts of the co-owners. When a husband and a wife establish a revocable trust account naming themselves as the sole beneficiaries, the account will not be insured as a joint revocable trust account, but will instead be insured as a joint account. 18. Is a co-owner on a revocable trust account insured if they are not a member in their own right? No. A revocable trust co-owner needs to be a member of the credit union for that owner s respective interest in the revocable trust funds to be insured. As such, any co-owner that is not a member of that credit union is not insured. 33

34 19. Is the interest in an employee benefit account insured any differently than a member s individual account? Yes. For insurance purposes, employee benefit accounts are insured separately. The ascertainable interest of each participant in such account is insured up to the $250,000 maximum separately from other accounts. 20. May a person receive separate insurance on each of several employee benefit plans established by the member s employer with the same credit union? No. If two or more employee benefit plans are established by an employer for the same individual, at the same credit union, the beneficiary s interest in the two accounts will be added together and insured up to the $250,000 standard maximum. 21. What insurance coverage is provided for traditional IRAs, Roth IRAs, and Keogh accounts? Traditional IRAs, Roth IRAs, and Keogh accounts are insured up to $250,000, separately from other accounts that the member maintains in the same credit union. However, a member s Roth IRA will be added together with his or her traditional IRA and insured in the aggregate to the maximum of up to $250,000. A Keogh account is separately insured from the IRA accounts up to $250, Are accounts held by a person as executor, administrator, guardian, custodian, or in some other similar fiduciary capacity insured separately from his individual account? Yes. If the records of the credit union indicate that the person is depositing the funds in a fiduciary capacity, such funds would be separately insured from the fiduciary s individually owned account. 23. When an account is designated as held by a person as agent for the owner of the funds, how is the account insured? The account is insured as an account of the principal or true owner. The funds in the account are added to any other individual account owned by the owner and the total is then insured up to $250, Is an account held by a corporation, partnership, or unincorporated association insured separately from the individual accounts of the stockholders, partners, or members? Yes. If the corporation, partnership, or unincorporated association has obtained membership in the credit union and is engaged in an independent activity, its account is separately insured to $250,000. The term independent activity means an activity other than one directed solely at increasing share insurance coverage. Other Frequently Asked Questions 25. Can a federal credit union terminate its NCUSIF coverage? No. A federal credit union cannot be chartered or retain its charter unless it is insured by the NCUSIF. 26. Can a state credit union terminate its participate on in the NCUSIF? Yes. A state-chartered credit union can terminate its NCUSIF coverage in some states, but it must obtain the approval of its members and NCUA. In other states, state-chartered credit unions are required to have federal insurance provided by the NCUSIF. NCUA s share insurance is the only share insurance backed by the full faith and credit of the U.S. Government. When a state credit union converts its share insurance to another licensed share insurance program, NCUSIF coverage terminates upon conversion. If the state credit union does not provide for another share insurance program, NCUSIF coverage remains in effect for one year following the effective date of termination, but coverage may be reduced depending upon account activity during the one year period. 27. What publications covering the operations of the NCUSIF are available? NCUA publishes an Annual Report which covers the operations of the NCUSIF. This report is available on NCUA s website. The report includes financial statements and an independent audit of the NCUSIF s records. To learn more, visit ncua.gov. 28. What happens to insured funds that are not claimed by the member at a liquidation on payout? At the end of the 18-month insurance period, unclaimed funds are no longer insured, and share account balances are paid based on liquidation and other recoveries. The funds are generally held by NCUA and are available as long as the records of the credit union are available or until the charter or insurance certificate is canceled. In some cases funds may be transferred to a state s unclaimed property section for a period of time. 29. Where does a credit union member go for information about his credit union or specific questions about NCUSIF coverage? The member should first contact the credit union for the needed information. Credit union personnel, however, cannot require the NCUSIF to provide more protection than is allowed under the Federal Credit Union Act or NCUA Rules and 34

35 Regulations. They will be able to obtain information for you from NCUA. If the credit union cannot provide the information or is no longer in operation, the member should contact the Office of Consumer Protection directly. Contact information for the Office of Consumer Protection is available on the back cover of this booklet. 30. What effect does the death of a member have on NCUSIF coverage? The death of a member will not affect the member s share insurance coverage for a period of six months following death unless the member s share accounts are restructured in that time period. If the accounts are restructured during the six-month grace period or upon the expiration of the six months if not restructured, the share insurance coverage will be provided on the basis of actual ownership of the accounts in accordance with the share insurance rules. 31. What effects does the merger of federally insured credit unions have on NCUSIF coverage? Whenever the liability to pay the member accounts of one or more insured credit unions is assumed by another insured credit union, whether by merger, consolidation, other statutory assumption or contract, the insured status of the credit unions whose member account liability has been assumed terminates on the date of receipt by NCUA of satisfactory evidence of the assumption. The separate insurance of member accounts assumed continues for six months from the date the assumption takes effect or, possibly longer in the case of share certificates. Appendix Examples of Insurance Coverage Afforded Accounts in Credit Unions Insured by the NCUSIF All of the following examples are based on the $250,000 standard maximum share insurance amount. Additionally, the following examples illustrate share insurance coverage on accounts maintained in the same federally insured credit union. They are intended to cover various types of ownership interests and combinations of accounts which may occur in connection with funds invested in insured credit unions. The examples, as well as the rules which they interpret, are predicated upon the assumption that: (1) funds are actually owned in the manner indicated on the credit union s records; and (2) the owner of funds in an account is a credit union member or otherwise eligible to maintain an insured account in a credit union. If available evidence shows that ownership is different from that on the institution s records, the NCUSIF may pay claims for insured accounts on the basis of actual ownership. Further, the examples and the rules which they interpret do not extend share insurance coverage to persons otherwise not entitled to maintain an insured account or to account relationships that have not been approved by the NCUA Board as an insured account. A. Single Ownership Accounts All funds owned by an individual member (or, in a community property state, by the husband wife community of which the individual is a member) and invested by the member in one or more individual accounts are added together and insured to $250,000. This is true whether the accounts are maintained in the name of the individual member owning the funds, in the name of the member s agent or nominee, or in a custodial loan account on behalf of the member as a borrower. All such accounts are added together and insured as one individual account. Funds held in one or more accounts in the name of a guardian, custodian, or conservator for the benefit for the same ward or minor are added together and insured up to the $250,000 maximum. However, such an account or accounts will not be added to any other individual accounts of the guardian, custodian, conservator, ward, or minor for purposes of determining insurance coverage. Example 1 Question: Members A and B, spouses, each maintain an individual account containing $250,000. In addition, they hold a qualifying joint account containing $500,000. What is the insurance coverage? Answer: Each individual account is insured up to $250,000, and the interest of A and the interest of B in the joint account are each insured for $250,000 separately from their individual accounts. The total coverage is $1,000,000. The coverage would be the same whether the individual accounts contain funds owned as community property or as individual property of the spouses. Example 2 Question: Members H and W, husband and wife, reside in a community property state. H maintains a $250,000 account consisting of his separately owned funds and deposits $250,000 of community property funds in another account, both of which are in his name alone and at the same federally insured credit union. What is the share insurance coverage? Answer: The two accounts are added together and insured to a total of $250,000, leaving $250,000 uninsured. Example 3 Question: Member A has $242,500 deposited in an individual account, and his agent (or fiduciary), Member B deposits $25,000 of A s funds in a properly designated agency account. B also holds a $250,000 individual account. What is the share insurance coverage? 35

36 Answer: A s individual account and the agency account are added together and insured to $250,000, leaving $17,500 uninsured. The deposit of funds through an agent does not result in additional insurance coverage for the account owner. B s individual account is insured separately from the agency account. However, if the account records of the credit union do not show the fiduciary relationship under which the funds in the $25,000 account are held, the $25,000 in B s name could, at the option of the NCUSIF, be added to his individual account and insured to $250,000 in the aggregate, leaving $25,000 uninsured. Example 4 Question: Member A holds a $250,000 individual account. Member B holds two accounts in his own name, the first containing $25,000 and the second containing $242,500. In processing the claims for payment of insurance on these accounts, the NCUSIF discovers that the funds in the $25,000 account actually belong to A and that B deposited these funds as agent for A, his undisclosed account owner. What is the insurance coverage? Answer: Because the available evidence shows that A is the actual owner of the funds in the $25,000 account, those funds would be added to the $250,000 individual account held by A (rather than to B s $242,500 account) and insured to $250,000, leaving $25,000 uninsured. B s $242,500 individual account would be separately insured. Example 5 Question: Member C, a minor, maintains an individual account of $750. C s grandfather makes a gift to him of $250,000, which is deposited in another account by C s father, designated on the credit union s records as custodian under the Uniform Gifts to Minors Act. C s father, also a member, maintains an individual account of $250,000. What is the insurance coverage? Answer: C s individual account and the custodian account held for him by his father are each separately insured: the $250,000 maximum on the custodian account, and $750 on the individual account. The individual account held by C s father is also separately insured to the $250,000 maximum. Example 6 Question: Member G, a court appointed guardian, invests in a properly designated account $250,000 of funds in his custody which belong to member W, his ward. W and G each maintain $25,000 individual accounts. What is the insurance coverage? Answer: W s individual account and the guardianship account in G s name are each separately insured to $250,000 providing W with $275,000 in insured funds. G s individual account is also separately insured. Example 7 Question: X Credit Union acts as a servicer of FHA, VA, and conventional mortgage loans made to its members, but sold to other parties. Each month X receives loan payments for remittance to the other parties from approximately 2,000 member mortgagors. The monies received each month total $1,000,000 and are maintained in a custodial loan account. What is the insurance coverage? Answer: X Credit Union acts as custodian for the 2,000 individual mortgagors. The interest of each mortgagor is separately insured as his individual account (but added to any other individual accounts which the mortgagor holds in the credit union). B. Joint Accounts The interest of a co-owner in all accounts held under any form of joint ownership valid under state law (whether as joint tenants with right of survivorship, tenants by the entireties, tenants in common, or by husband and wife as community property) is insured up to $250,000. This insurance is separate from that afforded by individual accounts held by any of the co-owners. An account is insured as a joint account only if each of the co-owners has personally signed a membership card or an account signature card and possesses the same withdrawal rights as the other co-owners. An account owned jointly which does not qualify as a joint account for insurance purposes is insured as if owned by the named persons as individuals. In that case, the actual ownership interest in the account of each person is added to any other accounts individually owned by such person and insured up to the $250,000 standard maximum in the aggregate. Any individual, including a minor, may be a co-owner of a joint account. Although, generally, each co-owner must have signed an account signature card and must have the same rights of withdrawal as other co-owners in order for the account to qualify for separate joint account insurance. There is an exception for minors. If state law limits or restricts a minor s withdrawal rights for example, a minimum age requirement to make a withdrawal the account will still be insured as a joint account. The interests of a co-owner in all joint accounts that qualify for separate insurance coverage are insured up to the $250,000 maximum. For insurance purposes, the co-owners of any joint account are deemed to have equal interests in the account. Example 1 Question: Members A and B maintain an account as joint tenants with right of survivorship and, in addition, each holds an individual account. Is each account separately insured? 36

37 Answer: If both A and B have signed the membership or signature card and possess equal withdrawal rights with respect to the joint funds, their interests in the joint account are separately insured from their interests in the individual accounts. If the joint account is represented by a share certificate, their individual signatures are not required for that account. Example 2 Question: Members A and B, who are a married couple, reside in a community property state. Each holds an individual account and, in addition, they hold a qualifying joint account. The funds in all three accounts consist of community property. Is each account separately insured? Answer: Yes. An account in the individual name of a spouse will be insured up to $250,000 whether the funds consist of community property or separate property of the spouse. A joint account containing community property is separately insured. Thus, community property can be used for individual accounts in the name of each spouse and for a joint account in the name of both spouses. In this example, each individual account is insured up to $250,000, and the interests of both spouses in the joint account are each insured up to $250,000. Example 3 Question: Two accounts of $250,000 each are held by a member husband and his wife under the following names: John Smith and Mary Smith, husband and wife, as joint tenants with right of survivorship. How much insurance do the husband and wife have? Answer: They have $500,000 of insurance. Both the husband and wife are deemed to have a one half interest ($125,000) in each account. The husband s interest in both accounts would be added together and insured for $250,000. The wife s insurance coverage would be determined the same way. Example 4 Question: The following accounts are held by members A, B and C, each of whom has personally executed signature cards for the accounts in which they have an interest. Each co-owner of a joint account possesses the necessary withdrawal rights. What is the insurance coverage? Account No. Owners Account Balance Individual 1 A $250,000 2 B $250,000 3 C $250,000 Joint 4 A and B $240,000 5 A and C $240,000 6 B and C $240,000 7 A, B and C $240,000 Answer: Accounts numbered 1, 2 and 3 are each separately insured for $250,000 as individual accounts held by A, B and C, respectively. The interests of the co-owners of each joint account are deemed equal for insurance purposes. A s interest in accounts numbered 4, 5, and 7 are added together for insurance purposes. Thus, A has an interest of $120,000 in account No. 4, $120,000 in account No. 5 and $80,000 in account No. 7, for a total joint account interest of $320,000, of which $250,000 is insured. The interests of B and C are each similarly insured. Example 5 Question: A, B and C hold accounts as set forth in Example 4. Members A and B are a married couple; C, their minor child, has failed to sign the signature card for Account No. 7. In Account No. 5, according to the terms of the account, C cannot make a withdrawal without A s written consent. (This is not a limitation imposed under state law.) In Account No. 6, the signatures of both B and C are required for withdrawal. A has provided all of the funds for Accounts numbered 5 and 7 and under state law has the entire actual ownership interest in these two accounts. What is the insurance coverage? Answer: If any of the co-owners of a joint account have failed to meet any of the joint account requirements, the account is not a qualifying joint account. Instead, the account is treated as if it consisted of commingled individual accounts of each of the co-owners in accordance with the co-owner s actual ownership interest in the funds, as determined under applicable state law. Account No. 5 is not a qualifying joint account because C does not have equal withdrawal rights with A. Based on the terms of the account, C can only make a withdrawal if he has A s written consent. Account No. 7 is not a qualifying joint account because C did not personally sign the signature card. Therefore, all of the funds in Accounts 5 and 7 are treated as individually owned by A and added to A s individual account, Account No. 1. For insurance purposes then, A has $730,000 in one individual account that is insured for $250,000, leaving $480,000 uninsured. Account 6 is a qualifying joint account for share insurance purposes since each co-owner has the right to withdraw funds on the same basis. Account 4 is 37

38 also a qualifying joint account. A s interest in Account 4 is insured for $120,000. B s interest of $120,000 in Account 4 is added to her interest of $120,000 in Account 6 and insured for $240,000. C s interest in Account 6 is insured for $120,000. Example 5(a) Question: Assume the same accounts as Example 5 except that, on Account No. 5, C s right to make a withdrawal is limited by state law which precludes a minor from making a withdrawal without the co-owner s written consent. What is the insurance coverage? Answer: In this situation, Accounts 4, 5, and 6 all qualify as joint accounts. A, B, and C will each have $240,000 of insured funds based on: A s interest in Account 4 ($120,000) and 5 ($120,000), B s interest in Accounts 4 ($120,000) and 6 ($120,000), and C s interest in Accounts 5 ($120,000) and 6 ($120,000). As in Example 5, Account No. 7 does not qualify as a joint account and would be added to A s individual account for share insurance purposes. Example 6 Question: If a person has an interest in more than one joint account at the same federally-insured credit union, what is the extent of the insurance coverage? Answer: A person holding an interest in more than one joint account may receive $250,000 on the total of his/her interests in all of those joint accounts. For example, assume that A and B own a joint account containing $220,000 and A and C own a joint account containing $100,000. The interests of the co-owners of a joint account are deemed equal for insurance purposes. A has an interest of $110,000 in the account with B, and an interest of $50,000 in the account with C. A would have insurance of $160,000. B would have insurance of $110,000 and C would have insurance of $50,000. In this example, all of the funds held in the two joint accounts would be insured. Example 7 The following illustrations show how typical families may use multiple ownership of accounts to increase the insurance coverage for their family funds. The examples are not all inclusive, as other options are also available. In all cases, the accounts illustrated must meet the share insurance coverage requirements as published in the Code of Federal Regulations (12 C.F.R. Part 745). Family of Two Insurance coverage for each owner is calculated as follows: Individual Accounts Joint Tenancy Accounts Testamentary Revocable Trust Accounts Husband Individual $250,000 Wife Individual $250,000 Husband & Wife (Joint) $500,000 Husband as Trustee for Wife $250,000 Wife as Trustee for Husband $$250,000 Total $1,500,000 Family of Three Insurance coverage for each owner is calculated as follows: Individual Husband Individual $250,000 Wife Individual $250,000 Child Individual $250,000 Joint Tenancy Accounts Husband & Wife (Joint) $250,000 Husband & Child (Joint) $250,000 Wife & Child (Joint) $250,000 Testamentary Revocable Trust Accounts Husband as Trustee for Wife $250,000 Husband as Trustee for Child $250,000 Wife as Trustee for Husband $250,000 Wife as Trustee for Child $250, Total $2,500,000,

39 The husband is insured to $250,000 on his two accounts with his wife and child. The wife is insured to $250,000 on her two accounts with her husband and child. The child is insured to $250,000 on the child s accounts with the father and mother. ($750,000 for all individual accounts plus $750,000 for all joint accounts plus $1,000,000 for all revocable trust accounts) Family of Four Insurance coverage for each owner is calculated as follows: Individual Accounts Husband Individual $250,000 Wife Individual $250,000 Child Individual $250,000 Joint Tenancy Accounts Husband & Wife (Joint) $250,000 Husband & Child #1 (Joint) $250,000 Wife & Child # 2 (Joint) $250$250,000 Child #1 & Child #2 (Joint) $250,000 Testamentary Revocable Trust Accounts Husband as Trustee for Wife $250,000 Wife as trustee for Husband $250,000 Husband as Trustee for Child #1 $250,000 Wife as Trustee for Child #1 $250,000 Husband as Trustee for Child #2 $250,000 Wife as Trustee for Child #2 $250,000 Total $3,500,000 As in the previous illustration, none of the co-owners has an interest of more than $250,000 in all of the joint accounts, so the total amount held by the each of the co-owners in all of the joint accounts is insured. ($1,000,000 for all individual accounts plus $1,000,000 for all joint accounts plus $1,500,000 for all revocable trust accounts) C. Revocable Trust Accounts This section explains NCUA share insurance coverage for revocable trust accounts, and is not intended as estate planning advice or guidance. Members should contact a legal or financial advisor for assistance with estate planning. A revocable trust account is a share account owned by one or more people identifying one or more beneficiaries who will receive the funds upon the death of the owner(s). An owner of a revocable trust has discretion to change, terminate, or revoke the trust at any time. In this section, the term owner means the grantor or settlor of the revocable trust. Although some unique circumstances can exist, depending upon state law, in general when calculating insurance coverage, trustees, co-trustees, and successor trustees are not relevant. They are administrators and have no impact on insurance coverage unless they also are the owners or beneficiaries of the trust. For the purposes of share insurance coverage, the revocable trust category includes both informal and formal revocable trusts: Informal revocable trusts often called payable on death (POD), Totten trust, in trust for (ITF), or as trustee for accounts (ATF) are created when the account owner signs an agreement usually part of the signature card directing the credit union to transfer the funds in the account to one or more eligible named beneficiaries upon the owner s death. Formal revocable trusts known as living or family trusts are written trusts created for estate planning purposes. The owner controls the funds and other assets in the trust during his or her lifetime. The agreement establishes that the funds are to be paid to one or more identified beneficiaries upon the owner s death. The trust generally becomes irrevocable, or partially irrevocable, upon the owner s death. All funds an owner has in both informal and formal revocable trusts are added together for insurance purposes, and the insurance limit is applied to the combined total. Coverage and Requirements for Revocable Trust Accounts In general, the owner of a revocable trust account is insured up to $250,000 for each different beneficiary, if all of the following requirements are met: 1. The account title or other account records of the credit union must indicate the account is held pursuant to a trust relationship. This rule can be met by using the terms payable on death (or POD), in trust for (or ITF), as trustee for (or ATF), living trust, family trust, or any similar language to indicate the existence of a trust relationship. 39

40 2. For informal revocable trusts, the beneficiaries must be identified by name in the account records of the insured credit union. 3. To qualify as an eligible beneficiary, the beneficiary must be a natural person, charity, or non-profit organization (as recognized by the Internal Revenue Service). An account must meet all of the above requirements to be insured separately as a revocable trust. Typically, if any of the above requirements are not met, the portion of the account that does not qualify is added to the owner s other individual accounts, if any, at the same credit union and insured up to $250,000. If the trust has multiple owners, the amount that does not qualify for coverage as a revocable trust would be added to each owner s individual accounts based on their ownership interests. An owner who identifies a beneficiary as having a life estate interest in a formal revocable trust, such as a living trust, is entitled to insurance coverage up to $250,000 for that beneficiary. A life estate beneficiary is a beneficiary who has the right to receive income from the trust or to use trust funds during the beneficiary s lifetime. For example: A husband is the sole owner of a living trust that gives his wife a life estate interest in the trust funds, with the remainder going to their two children upon his wife s death. Maximum insurance coverage for this account is calculated as follows: $250,000 times one owner with three different beneficiaries equals $750,000. Revocable Trust Insurance Computation Methods General Framework Insurance coverage for revocable trust accounts is calculated differently depending on the number of eligible beneficiaries named by the owner, the beneficiaries interests, and the amount of the funds. A common mistake that members make in calculating coverage for revocable trust accounts is assuming that every person named on a revocable trust account both the owner(s) and the beneficiaries receives up to $250,000 in share insurance coverage. This is not correct. Each owner of a revocable trust may be entitled to insurance coverage up to $250,000 for each beneficiary that the account owner designates in the revocable trust account. If all of the beneficiaries are eligible and have equal interests, the insurance coverage for each owner is calculated by multiplying $250,000 times the number of beneficiaries, not $250,000 times the number of owners plus the number of beneficiaries. If the beneficiaries are not all eligible, or have unequal interests, the above calculation should not be used. All funds attributable to non-eligible beneficiaries are aggregated and insured up to $250,000 as the single account funds of the trust owner. In addition, if the trust account specifies different interests for the beneficiaries, the owner may be insured up to each beneficiary s actual interest in the trust. Another common misunderstanding is that the trust agreement itself is entitled to an additional $250,000 of share insurance coverage. This is not correct. If a payable on death account has more than one owner (such as a married couple) or is held for multiple beneficiaries, the insured balance of the account can exceed $250,000. NCUA will assume that the owners shares are equal unless the credit union s account records state otherwise. Similarly, if there are multiple beneficiaries, NCUA will assume the beneficiaries interests are equal unless otherwise stated in the account records. Two calculation methods are used to determine insurance coverage of revocable trust accounts: one method is used only when a revocable trust owner has five or fewer different beneficiaries; the other method is used only when an owner has six or more different beneficiaries. If a trust has more than one owner, each owner s insurance coverage is calculated separately. Revocable Trust Insurance Coverage - Five or Fewer Different Beneficiaries When a revocable trust owner names five or fewer beneficiaries, the funds have coverage of up to $250,000 for each different beneficiary. This rule applies to the combined interests of all beneficiaries the owner has named in all formal and informal revocable trust accounts at the same credit union. When there are five or fewer beneficiaries, the maximum share insurance coverage for each trust owner is determined by multiplying $250,000 times the number of different beneficiaries, regardless of the dollar amount or percentage allocated to each different beneficiary. 40

41 Example 1 Payable on death with one owner Account Account Title Owner Beneficiaries Share Account No. Type Balance 1 Father POD Father Son, Daughter 2 Father POD Father Son, Daughter 3 Father POD Father Son, Daughter Regular Share Money Market Share Certificate $10,000 $20,000 $470,000 Total $500,000 Amount Insured $500,000 Amount Uninsured $0 Explanation: The father has three revocable trust accounts at the same federally insured credit union. Maximum insurance coverage for these accounts is calculated as $250,000 times one owner with three beneficiaries, which equals $750,000. These accounts have full insurance coverage. Example 2 Multiple Revocable Trust Accounts with Five or Fewer Different Beneficiaries Account Account Title Account Balance 1 Person A and Person B Living Trust, with Person C and Person D as beneficiaries 2 Person B POD, with Person D and Person E as beneficiaries $700,000 $450,000 Owner Beneficiaries Total Ownership Amount Amount of Revocable Insured Uninsured Trusts Person A Person C, Person D $350,000 $350,000 $0 Person B Person C, Person D and Person E $800,000 $750,000 $50,000 Total $1,150,000 $1,100,000 $50,000 Explanation: When a revocable trust owner names five or fewer beneficiaries, the owner receives up to $250,000 in insurance coverage for each different beneficiary. Person A s total ownership: $350,000 (50% of Account 1) Person B s total ownership: $800,000 (50% of Account 1 & 100% of Account 2) Because A named two different beneficiaries, the maximum insurance coverage is $500,000 ($250,000 times two beneficiaries). Because A s total ownership of revocable trust accounts of $350,000 is less than $500,000, A has full coverage. Because B named three different beneficiaries between accounts 1 and 2, B s maximum insurance coverage is up to $750,000 ($250,000 times three beneficiaries). Because B s total ownership of revocable trust accounts of $800,000 exceeds $750,000, B is uninsured for $50,000. Revocable Trust Insurance Coverage - Six or More Different Beneficiaries Six or More Different Beneficiaries with Equal Beneficial Interests When a revocable trust owner names six or more different beneficiaries, and all the beneficiaries have an equal interest in the trust, the insurance calculation is the same as for revocable trusts that name five or fewer beneficiaries. The trust owner receives insurance coverage up to $250,000 for each different beneficiary. As shown in the following example, with one owner and six beneficiaries, where all the beneficiaries have an equal beneficial interest, the owner s maximum share insurance coverage is up to $1,500,000. Example 3 - Maximum insurance coverage for each revocable trust owner when there are six or more different 41

42 beneficiaries with unequal beneficial interests Number of Different Beneficiaries Maximum Insurance Coverage 6 Beneficiaries with Equal interest $1,500,00 7 beneficiaries with Equal Interest $1,750,000 8 Beneficiaries with Equal Interest $2,000,000 9 Beneficiaries with Equal Interest $2,250, Beneficiaries with Equal Interest Add up to $250,000 for each additional different beneficiary Six or More Different Beneficiaries with Unequal Beneficial Interests When a revocable trust owner names six or more beneficiaries and the beneficiaries do not have equal beneficial interests (that is, they receive different amounts), the owner s revocable trust accounts are insured for the greater of either: (1) the sum of each beneficiary s actual interest in the revocable trust accounts up to $250,000 for each different beneficiary; or (2) $1,250,000. Additional Information about Living (or Family Trust) Living or family trust accounts are insured up to $250,000 per owner for each named beneficiary if all of the following requirements are met: 1. The account title or other account records at the credit union must indicate that the account is held pursuant to a trust relationship. This rule can be met by using the term living trust, family trust, or similar language. 2. The beneficiaries must be eligible as defined for payable on death accounts earlier. Note: The share insurance coverage calculation for a formal revocable trust depends on if all owners and beneficiaries are living and the beneficiaries are identified in the trust document. While the owners of a trust may benefit from the trust during their lifetimes, they are not considered beneficiaries for the purpose of calculating share insurance coverage. Beneficiaries are those identified by the owner to receive an interest in the account in the event of the owners deaths. The account records must identify the beneficiaries by name. Share insurance coverage for a revocable living trust account depends upon the answers to the following specific questions: Do the account title or account records at the credit union indicate that the account is held by a trust? This requirement can easily be met by using the words living trust, or family trust, or similar terms. Who are the owners of the trust? The owners are commonly referred to in the formal revocable trust document as trustees, grantors or settlors. For the purpose of calculating share insurance coverage only, the trustees, co-trustees, and successor trustees are not relevant. They are administrators and have no impact on share insurance coverage unless they are also the owners of the trust. Who are the beneficiaries of the trust? The beneficiaries are the people or entities entitled to an interest in the trust. Contingent or alternative trust beneficiaries are not considered to have an interest in the trust funds and other assets as long as the primary or initial beneficiaries are still living, with the exception of revocable living trusts with a life estate interest. Do the beneficiaries meet the eligibility requirement? To qualify for revocable trust share insurance coverage, a trust beneficiary must be a natural person or a charity or another nonprofit organization recognized by the IRS. What is the dollar amount or percentage interest each owner has allocated to each primary beneficiary? This question does not apply to revocable trust deposits with five or less eligible beneficiaries. Coverage is calculated at $250,000 times the number of eligible beneficiaries up to $1.25 million. If the member has six or more beneficiaries and wants to insure more than $1.25 million, then the insurance coverage will be the greater of either $1.25 million or the aggregate amount of all eligible beneficiaries proportional interests in the revocable trust(s), limited to $250,000 per beneficiary. Are all the owners and beneficiaries living? The amount of share insurance coverage can change if there is a death of an owner or a beneficiary. Upon the death of an owner, NCUA provides a grace period up to six months during which the account is insured as if the owner were still living. However, the six-month grace period does not apply to the death of a beneficiary named in a living trust account unless the account is restructured in that time frame. The following section describes how insurance coverage is determined when a living (or family) trust has multiple beneficiaries with varying trust interests. 1. If a living trust has multiple beneficiaries, NCUA will assume the beneficiaries interests are equal unless otherwise 42

43 stated in the trust. For example: A mother has a living trust leaving all trust funds equally to her three children. The trust account at an insured credit union could be insured up to $750,000. Because there are three beneficiaries who would inherit the trust funds equally when the owner dies, the owner has created a trust relationship of $250,000 with each of her three children for a total of $750, Living trust coverage is based on the interests of beneficiaries who would become entitled to receive trust assets when the trust owner dies (or if the trust is jointly owned, when the last owner dies). This means that, when determining coverage, NCUA will ignore any trust beneficiary who would have an interest in the trust assets only after another living beneficiary dies. For example: A father has a living trust that leaves all of the trust assets to his son. If the son predeceases the father, the trust assets are distributed equally to the son s five children (father s grandchildren). If the credit union should fail while the son is still alive, the father s living trust account is insured up to $250,000, because there is one beneficiary who is entitled to receive the trust assets when the father dies. However, if the son predeceases his father, the five grandchildren are then the beneficiaries and the father s living trust account would be insured up to $1.25 million ($250,000 for each of the living five beneficiaries). Some living trusts give a beneficiary the right to receive income from the trust or to use trust assets during the beneficiary s lifetime (known as a life estate interest), and then other beneficiaries receive the remaining trust assets after the life estate beneficiary dies. In such a case, NCUA will recognize all beneficiaries in determining insurance coverage. For example: A husband has a living trust giving his spouse a life estate interest in the trust deposits, with the remainder going to their two children equally upon his spouse s death. The husband s living trust would be insured up to $750,000. In this example, NCUA s insurance rules recognize the wife and two children as beneficiaries. Because there is one trust owner who has three beneficiaries, the husband s trust account at an insured credit union would be insured up to $750, If a living trust has multiple owners, coverage would be up to $250,000 per beneficiary for each owner, provided the beneficiary would be entitled to receive the trust assets when the last owner dies. For example: A husband and spouse are co-owners of a living trust. The trust states that upon the death of one spouse the assets will pass to the surviving spouse, and upon the death of the last owner the assets will pass to their three children equally. This trust account would be insured up to $1.5 million. Because each owner names three beneficiaries, the owners (husband and spouse) will be insured up to $750,000 each. 4. The $250,000 per beneficiary insurance limit applies to all formal and informal revocable trust accounts that an owner has at the same credit union. For example: A father has a payable on death account naming his son and daughter as equal beneficiaries and he also has a living trust account naming the same beneficiaries. In this case, the funds in both the payable on death account and living trust account would be added together and the total insured up to $500,000 ($250,000 per owner per beneficiary). Note: Irrevocable trusts that are created upon the death of a revocable trust account owner will continue to be insured under the revocable trust rules. D. Accounts Held By Executors or Administrators All funds belonging to a decedent and invested in one or more accounts, whether held in the name of the decedent or in the name of his executor or administrator, are added together and insured to the $250,000 standard maximum. Such funds are insured separately from the individual accounts of any of the beneficiaries of the estate or of the executor or administrator. Example 1 Question: Member A, administrator of Member D s estate, sells D s automobile and invests the proceeds of $12,500 in an account entitled Administrator of the estate of D. A has an individual account in that same credit union containing $250,000. Prior to his death, D had opened an individual account of $250,000. What is the insurance coverage? Answer: The $12,500 is added to D s individual account and insured to $250,000, leaving $12,500 uninsured. A s individual account is separately insured for $250,000. E. Accounts Held By A Corporation, Partnership or Unincorporated Association All funds invested in an account or accounts by a corporation, a partnership, or an unincorporated association engaged in any independent activity are added together and insured up to $250,000. The term independent activity means any activity other than one directed solely at increasing coverage. If the corporation, partnership, or unincorporated association is not engaged in an independent activity, any account held by the entity is insured as if owned by the persons owning or comprising the entity, and the imputed interest of each such person is added, for insurance purposes, to any individual account which he maintains. Example 1 43

44 Question: Member X Corporation maintains a $250,000 account. The stock of the corporation is owned by members A, B, C, and D in equal shares. Each of these stockholders also maintains an individual account of $250,000 with the same credit union. What is the insurance coverage? Answer: Each of the five accounts would be separately insured to $250,000 if the corporation is engaged in an independent activity and has not been established merely for the purpose of increasing insurance coverage. The same would be true if the business were operated as a bona fide partnership instead of as a corporation. However, if X corporation was not engaged in an independent activity, then $62,500 (25 percent interest) would be added to each account of A, B, C, and D. The accounts of A, B, C, and D would then each be insured to $250,000, leaving $62,500 in each account uninsured. Example 2 Question: Member C College maintains three separate accounts with the same credit union under the titles: General Operating Fund, Teachers Salaries, and Building Fund. What is the insurance coverage? Answer: Because all of the funds are the property of the college, the three accounts are added together and insured only to $250,000. Example 3 Question: The men s club of X Church carries on various social activities in addition to holding several fund-raising campaigns for the church each year. The club is supported by membership dues. Both the club and X Church maintain member accounts in the same credit union. What is the insurance coverage? Answer: The men s club is an unincorporated association engaged in an independent activity. If the club funds are, in fact, legally owned by the club itself and not the church, each account is separately insured to $250,000. Example 4 Question: The PQR Union, a member of the ABC Federal Credit Union, has three locals in a certain city. Each of the locals maintains an account containing funds belonging to the parent organization. All three accounts are in the same insured credit union. What is the insurance coverage? Answer: The three accounts are added together and insured up to $250,000. F. Accounts Held By Government Depositors For insurance purposes, the official custodian of funds belonging to a public unit, rather than the public unit itself, is insured as the account holder. All funds belonging to a public unit and invested by the same custodian in a federally insured credit union are categorized as either share draft accounts or share certificate and regular share accounts. If these accounts are invested in a federally insured credit union located in the jurisdiction from which the official custodian derives his authority, then the share draft accounts will be insured separately from the share certificate and regular share accounts. Under this circumstance, all share draft accounts are added together and insured up to $250,000 and all share certificate and regular share accounts are also added together and separately insured up to the $250,000 standard maximum. If, however, these accounts are invested in a federally insured credit union located outside of the jurisdiction from which the official custodian derives his authority, then insurance coverage is limited to $250,000 for all accounts regardless of whether they are share draft, share certificate or regular share accounts. If there is more than one official custodian for the same public unit, the funds invested by each custodian are separately insured. If the same person is custodian of funds for more than one public unit, he is separately insured with respect to the funds of each unit held by him in properly designated accounts. For share insurance purposes, a political subdivision is entitled to the same insurance coverage as any other public unit. Political subdivision includes any subdivision of a public unit or any principal department of such unit meeting the following factors: state statute authorized the creation of the unit; state statute allocated some functions of government to the unit; and a statute or ordinance provides for the unit to have funds for its exclusive use and control. Example 1 Question: As Comptroller of Y Consolidated School District, A maintains a $275,000 account in the credit union containing school district funds. He also maintains his own $250,000 member account in the same credit union. What is the insurance coverage? Answer: The two accounts are separately insured, assuming the credit union s records indicate that the account containing the school district funds is held by A in a fiduciary capacity. Thus, $250,000 of the school s funds and the entire $250,000 in A s personal account will be insured. Example 2 44

45 Question: A, as city treasurer, and B, as chief of the city police department, each have $250,000 in city funds invested in custodial accounts. What is the insurance coverage? Answer: Assuming that both A and B have official custody of the city funds, each account is separately insured to $250,000. Example 3 Question: A is Treasurer of X County and collects certain tax assessments, a portion of which must be paid to the state under statutory requirement. A maintains an account for general funds which belong to the state treasurer. The credit union s records indicate that the separate account contains funds held for the state. What is the insurance coverage? Answer: Because two public units own the funds held by A, the account would each be separately insured to $250,000. Example 4 Question: A city treasurer invests city funds in each of the following accounts: General Operating Account, School Transportation Fund, Local Maintenance Fund, and Payroll Fund. Each account is available to the custodian upon demand. By administrative direction, the city treasurer has allocated the funds for the use of and control by separate departments of the city. What is the insurance coverage? Answer: All of the accounts are added together and insured in the aggregate to $250,000. Because the allocation of the city s funds is not by statute or ordinance for the specific use of and control by separate departments of the city, separate insurance coverage to $250,000 is not afforded to each account. Example 5 Question: A county treasurer establishes the following share draft accounts in an insured credit union each with $250,000: General Operating Fund County Roads Department Fund County Water District Fund County Public Improvement District Fund County Emergency Fund What is the insurance coverage? Answer: The County Roads Department, County Water District, and County Public Improvement District accounts would each be separately insured to $250,000 if the funds in each such accounts have been allocated by law for the exclusive use of a separate county department or subdivision expressly authorized by state statute. Funds in the General Operating and Emergency Fund accounts would be added together and insured in the aggregate to $250,000, if such funds are for countywide use and not for the exclusive use of any subdivision or principal department of the county, expressly authorized by state statute. Example 6 Question: A, the custodian of Native American tribal funds, lawfully invests $2,500,000 in an account in an insured credit union on behalf of 15 different tribes; the records of the credit union show that no tribe s interest exceeds $250,000. A, as official custodian, also invests $1,000,000 in the same credit union on behalf of 100 individual Native Americans, who are not members; each Native American s interest is $10,000. What is the insurance coverage? Answer: Because each tribe is considered a separate public unit, the custodian of each tribe, even though the same person is entitled to separate insurance for each tribe. Because the credit union s records indicate no tribe has more than $250,000 in the account, the $2,500,000 would be fully insured as 15 separate tribal accounts. If any one tribe had more than a $250,000 interest in the funds, that tribe s interest would be insured only to $250,000 and any excess owned by that tribe would be uninsured. However, the $1,000,000 invested on behalf of the individual Indians would not be insured since the individual Indians are neither public units, or in the example, members of the credit union. If A is the custodian of the funds in his capacity as an official of a governmental body that qualified as a public unit, then the account would be insured for $250,000 leaving $750,000 uninsured. Example 7 Question: A, an official custodian of funds of a state of the United States, lawfully invests $625,000 of state funds in a federally insured credit union located in the state from which he derives his authority as an official custodian. What is the insurance coverage? Answer: If A invested the entire $625,000 in a share draft account, then $250,000 would be insured and $375,000 would be 45

46 uninsured. If A invested $300,000 in share draft accounts and another $325,000 in share certificate and regular share accounts, then A would be insured for $250,000 for the share draft accounts and $250,000 for the share certificate and regular share accounts leaving $125,000 uninsured. If A had invested the $625,000 in a federally insured credit union located outside the state from which he derives his authority as an official custodian, then $250,000 would be insured for all accounts regardless of whether they were share draft, share certificate or regular share accounts, leaving $375,000 uninsured. G. Trust Accounts and Retirement Accounts A trust estate is the interest of a beneficiary in an irrevocable express trust, whether created by trust instrument or statute that is valid under state law. Thus, funds invested in an account by a trustee under an irrevocable express trust are insured on the basis of the beneficial interest under such trust. The interest of each beneficiary in an account (or accounts) established under such a trust arrangement is insured to $250,000 separately from other accounts held by the trustee, the settlor (grantor), or the beneficiary. However, in cases where a beneficiary has an interest in more than one trust arrangement created by the same settlor, the interests of the beneficiary in all accounts established under such trusts are added together for insurance purposes, and the beneficiary s aggregate interest derived from the same settlor is separately insured up to $250,000. A beneficiary s interest in an account established pursuant to an irrevocable express trust arrangement is insured separately from other beneficial interests (trust estates) invested in the same account if the value of the beneficiary s interest (trust estate) can be determined (as of the date of a credit union s insolvency) without evaluation of contingencies except for those covered by the present worth tables and rules of calculation for their use set forth in Section of the Federal Estate Tax Regulations (26 C.F.R ). If any trust estates in such an account cannot be so determined, the insurance with respect to all such trust estates together shall not exceed $250,000 standard maximum. In order for the insurance coverage of a trust account to be effective in accordance with the foregoing rules, certain recordkeeping requirements must be met. In connection with each trust account, the credit union s records must indicate the name of both the settlor and the trustee of the trust and must contain an account signature card executed by the trustee indicating the fiduciary capacity of the trustee. In addition, the interests of the beneficiaries under the trust must be clear from the records of either the credit union or the trustee, and the settlor or beneficiary must be a member of the credit union. If there are two or more settlors or beneficiaries, then either all the settlors or all the beneficiaries must be members of the credit union. Although each trust estate is separately insured, it should be noted that in short-term trusts the insurable interest or interests may be very small, because the interests are computed only for the duration of the trust. Thus, if a trust is made irrevocable for a specified period of time, the beneficial interest will be calculated in terms of the length of time stated. A reversionary interest retained by the settlor is treated in the same manner as an individual account of the settlor. As stated, the trust must be valid under local law. A trust which does not meet local requirements, such as one imposing no duties on the trustee or conveying no interest to the beneficiary, is of no effect for insurance purposes. An account in which such funds are invested is considered to be an individual account. An account established pursuant to a revocable trust arrangement is insured as a form of individual account and is treated under the rules previously discussed about Testamentary Accounts. Traditional IRAs and Roth IRAs are combined and insured up to $250,000, separately from Keogh accounts which are also insured to $250,000 as discussed in Question 20. Although credit unions may serve as trustees or custodians for self-directed traditional IRAs, Roth IRAs, and Keogh accounts, once the funds in those accounts are taken out of the credit union, they are no longer insured. In the case of an employee retirement fund where only a portion of the fund is placed in a credit union account, the amount of insurance available to an individual participant on his interest in the account will be in proportion to his interest in the entire employee retirement fund. If, for example, the participant s interest represents 10 percent of the entire plan funds, then he is presumed to have only a 10 percent interest in the plan account. Said another way, if a participant has vested interest of $10,000 in a municipal employees retirement plan and the trustee invested 25 percent of the total plan funds in a credit union, the participant would be insured for only $2,500 on that credit union account. There is an exception, however. The participant would be insured for $10,000 if the trustee can document, through records maintained in the ordinary course of business, that individual beneficiary s interest are segregated and the total vested interest of the participant was, in fact, invested in that account. Example 1 Question: Member S invests $90,000 in trust for B, the beneficiary. S also has an individual account containing $180,000 in the same credit union. What is the insurance coverage? Answer: Both accounts are fully insured. The trust account is separately insured from the individual account. Example 2 Question: S invests funds in trust for A, B, C, D, and E. A, B, and C are members of the credit union, D, E, and S are not. What is the insurance coverage? Answer: This is an uninsurable account. Where there is more than one settlor or more than one beneficiary, all the settlors 46

47 or all the beneficiaries must be members to establish this type of account. Since D, E and S are not members; this account cannot legally be established or insured. Example 3 (a) Question: Member T invests $1,500,000 in trust for ABC Employees Retirement Fund. Some of the participants are members and some are not. What is the insurance coverage? Answer: The account is insured as to the determinable interests of each participant to a maximum of $250,000 per participant regardless of credit union member status. Participant interests not capable of evaluation shall be added together and insured to a maximum of $250,000 in the aggregate. Example 3 (b) Question: T is trustee for the ABC Employees Retirement Account containing $2,000,000. Participant A has a determinable interest of $180,000 in the account (9 percent of the total). T invests $1,000,000 of the account in an insured credit union and the remaining $1,000,000 elsewhere. Some of the participants of the account are members of the credit union and some are not. T does not segregate each participant s interest in the retirement account. What is the insurance coverage? Answer: The account is insured as to the determinable interest of each participant, adjusted in proportion to the account s investment in the credit union, regardless of the membership status of the participants. A s insured interest in the account is $90,000, or 9 percent of $1,000,000. This reflects the fact that only 50 percent of the retirement account is in the account and A s interest in the account is in the same proportion as his interest in the overall plan. All other participants would be similarly insured. Participants interests not capable of evaluation are added together and insured up to a maximum of $250,000 in aggregate. Example 4 Question: Member A has an individual account of $250,000 and establishes an IRA and accumulates $250,000 in that account. Subsequently, A becomes self-employed and establishes a Keogh account in the same credit union and accumulates $250,000 in that account. What is the insurance coverage? Answer: Each of A s accounts would be separately insured as follows: the individual account for up to $250,000; the IRA account for $250,000, the maximum for that account type; and the Keogh account for $250,000, the maximum for that account type. In the example, A would be fully insured for $750,000. Example 5 Question: Member A has a self-directed IRA account with $70,000 in it. The federally insured credit union is the trustee of the account. Member transfers $40,000 into a blue chip stock; $30,000 remains in the federally insured credit union. What is the insurance coverage? Answer: Originally, the full $70,000 in A s IRA is insured. The $40,000 is no longer insured once it is moved from the federally insured credit union. The $30,000 remaining in the federally insured credit union is insured. Official NCUA Share Insurance Sign All federally insured credit unions must prominently display the official NCUA insurance sign at each teller station and where insured account deposits are normally received in their principal place of business and in all branches. Federally insured credit unions are also required to display the official sign on their web page, if any, where they accept deposits or opens accounts. No credit union may end its federal insurance without first notifying members. NCUA Share Insurance Estimator The NCUA Electronic Share Insurance Estimator is available to help members better understand the protection offered by the NCUSIF. This interactive site allows users to input data to compute the amount of NCUSIF coverage available under different account scenarios. This resource is available at the link MyCreditUnion.gov/estimator. 47