ALEXANDRIA, Va. -
The impermissible investments, said NCUA in a new legal opinion letter, are allowable if an FCU can support the cost effectiveness of this strategy and manages the investments, including periodic divestiture to avoid over funding, so the investments are directly related to its employee benefits obligations.
"An FCU," said NCUA, " may purchase an otherwise impermissible investment if it is directly related to the FCU's obligation or potential obligation under an employee benefit plan and the FCU holds the investment only for as long as the FCU has an actual or potential obligation under the plan."
An FCU using this investment strategy must be able to justify how its investments are structured and be able to demonstrate compliance with the agency's rules and regulations, including the direct relationship between any investments and employee benefit obligations they are intended to fund, said NCUA.
