Final Rule Integrating National Bank and Federal Savings Association Licensing Activities

The Office of the Comptroller of the Currency (OCC) released a final rule integrating policies and procedures for corporate activities and transactions of national banks and federal savings associations.

The Dodd-Frank Wall Street Reform and Consumer Protection Act transferred the former Office of Thrift Supervision’s functions relating to Federal savings associations to the OCC. Therefore, the OCC has been responsible for ongoing examination, supervision and regulation of Federal savings associations. Prior to issuing this final rule, the OCC had been maintaining one set of rules applicable to national banks and another set of rules for Federal savings associations.  The rule eliminates unnecessary requirements, promotes fairness in supervision, and furthers the safe and sound operation of the institutions the OCC supervises.

Read more in the Federal Register.

What's New? Privacy Notices

The alternative delivery method for annual privacy notices may be found at: Annual Privacy Notice.

What's New? Exempt Income Protection Act Increases

New York’s Exempt Income Protection Act (“EIPA”) permits certain funds in deposit accounts to be exempt from most restraining notices and levies. The amount of the exemption is set by statute, and increases every three years based on changes in the Consumer Price Index. The exemption amount has increased to $2,750 for 2015. See Exemptions in The Gold Book.

What's New? Elder Financial Exploitation

Federal and State regulators emphasize that financial institutions can play a key role in preventing elder financial exploitation.  Bank tellers and other staff, including those overseeing investment accounts or offering investment advice, are on the frontlines of combating elder financial exploitation.  These individuals frequently work directly with elderly customers and are in a unique position to observe potential “red flags” of abuse.  

See new section of The Gold Book, Elder Financial Exploitation for more information. 

What's New? Suspicious Activity Reports Completion Instructions

In accordance with recent changes made to the filing of Suspicious Reports and the release of the March 2015 FinCEN SAR Electronic Filing Requirements guide, several area of The Gold Book have been updated.

See: 

Suspicious Activity Reports Requirements Summary

Suspicious Activity Reports Completion Instructions

What's New? Checks for Forward Collection

Forward collection is the process by which a bank sends a check to a collecting bank for settlement or to a paying bank for payment. While domestic items are subject to Regulation CC, foreign items are subject to rules established by the International Chamber of Commerce. Read more in the new Gold Book section titled, Checks for Forward Collection.

What's New? Reg. Z Notice of Rescission

The United States Supreme Court recently handed down a very important decision for lenders and borrowers regarding the timeliness of a borrower’s right to rescission under Regulation Z, Truth in Lending Act. The decision provides clarification of a provision regarding the timeliness of a borrower’s right to rescind a mortgage. For further information see Rescission and Notices in the Truth in Lending (Regulation Z) section of The Gold Book. 

New Savings Plans for Disabled

The US Congress passed the ABLE Act in December, which created a 529A account to provide tax advantaged benefits for disabled individuals. The 529A is a special savings account for disabled people and families with children who have special needs. The funds can be invested and grow tax-free. Stay tuned for rules to be finalized and states to roll out the plans. 

What's New? Rollover Chart

Click here for a summary of allowable transfers to and from various employer plans and IRAs.

Proposed Amendments to RESPA and TIL

The Consumer Financial Protection Bureau (CFPB) is proposing amendments to certain mortgage servicing rules regarding force-placed insurance notices, policies and procedures, early intervention, and loss mitigation requirements under Regulation X's servicing provisions; and periodic statement requirements under Regulation Z's servicing provisions. 

The proposed amendments may be found in the Federal Register, here.

What's New? Notice of Wage Rates Repealed

A new law will no longer require employers to provide annual notices to employees under a provisions that make changes to the Wage Theft Protection Act. See Laws Regulating Wages and Hours (New York State) in The Gold Book.

What's New? NY and NJ Minimum Wage Rates Increase

In New York the minimum wage rate increases to $8.75 on December 31, 2014 (read more in The Gold Book.)

In New Jersey the minimum wage rate increases to $8.38 on January 1, 2015 (read more in The Gold Book.)

Last Month's Q&A Answered

The following question appeared in the Q&A section of Banking Spectrum's Report Bulletin last month. Compare your answer to the correct answer below:

Q: A customer applied for a $10,000 HELOC with us.  His credit and other underwriting criteria are good.  He has also brought at lawsuit against the bank claiming that we allowed an unauthorized person in his business to improperly write checks and withdraw funds from the business account while he was in the hospital.  We do not feel comfortable making him this loan.  How should we handle this?

A:  One approach is to deny the credit but find a basis for denial other than his credit qualifications.  Remember the 4 C's of credit, and “character” is one of them.  This might require a bit of creativity in completing the adverse action form.  Another approach to consider is why not grant the HELOC application, a gesture of good will, not a lot of money, not a credit risk to the bank, and it might just help you settle this case.

Tax-Free Transfers to Charity Permitted

Certain owners of individual retirement arrangements (IRAs) may be eligible to make tax-free transfers to charity.

IRA owners age 70½ or older have until Wednesday, Dec. 31 to make a direct transfer of part or all of their IRA distributions to an eligible charity.

The Tax Increase Prevention Act, enacted Dec. 19, extended for 2014 the provision authorizing these qualified charitable distributions (QCDs). The provision had expired at the end of 2013. With this retroactive renewal, any eligible IRA distribution during 2014 properly transferred to a qualified charity counts as a QCD.

As a result, older IRA owners may have a different way to give to charity and amounts transferred to a charity from an IRA are counted in determining whether the owner has met the IRA’s required minimum distribution (RMD).

Read more on the IRS website. 

New Single Distribution Rules for Pension Plans

IRS Notice 2014-54, issued September 18, 2014, provides that all disbursements from a retirement plan scheduled to be made at the same time are treated as a single distribution even if they are sent to multiple destinations. 

As a result of this notice, taxpayers with pretax and after-tax amounts in their plan, for example, can transfer through direct rollovers the pretax portion of the distribution (including earnings on after-tax amounts) to a traditional IRA and the after-tax portion of the distribution to a Roth IRA.  (Previous interpretations allowed accomplishing this result through 60-day rollovers but not direct rollovers.)  The guidance provided in Notice 2014-54 applies only to distributions from qualified plans described in section 401(a) of the Code (such as profit-sharing and 401(k) plans), section 403(b) plans and section 457(b) governmental plans.  The guidance in Notice 2014-54 is generally effective January 1, 2015; however, transitional rules included in the guidance permit taxpayers to utilize the new rules provided in the guidance prior to the effective date. 

The guidance in Notice 2014-54 does not apply to distributions from IRAs.   

Learn more here on the IRS website. 

What's New? Bank size criteria for CRA

The federal bank regulatory agencies announced the annual adjustment to the asset-size thresholds used to define small bank, small savings association, intermediate small bank, and intermediate small savings association under the Community Reinvestment Act (CRA) regulations. See The Gold Book for details.

IRS Revises Standard Mileage Rates for 2015

The Internal Revenue Service has issued the 2015 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck will be:

• 57.5 cents per mile for business miles driven, up from 56 cents in 2014
• 23 cents per mile driven for medical or moving purposes, down half a cent from 2014 
• 14 cents per mile driven in service of charitable organizations

Last Month's Q&A Answered

The following question appeared in the Q&A section of Banking Spectrum's Report Bulletin last month. Compare your answer to the correct answer below:

Q: We are offering a special CD that we shall advertise in the newspaper.  Must we advertise the rules for the renewals for this CD product?

A:  No.  See CFPB Regulation 1030.8.  When you review CFPB regulations, not only under Regulation DD, but the other regulations, you may see different language and new provisions that were not contained in the original Federal Reserve Board regulations prior to the transfer of regulatory jurisdiction for consumer regulation to the CFPB.  Do not assume that all the language in the former Federal Reserve Board regulations has been carried over to the CFPB regulations.

What's New? Amendment to RMD Rules.

The Treasury Department amended the required minimum distribution rules under section 401(a)(9) of the Internal Revenue Code to provide that longevity annuities purchased with IRA assets no longer need to begin payments by age 70-1/2 as long as the annuity contract meets the definition of a “qualifying longevity annuity contract” (QLAC.) Instead the value of these annuities is excluded from the account balance used to calculate an individual’s RMD and distributions may be delayed until the individual reaches age 85.

This amendment is effective immediately.

See Longevitiy Annuities in The Gold Book for details.

What's New? FATCA amendment to FCRA.

Enacted in 2010, the Foreign Account Tax Compliance Act (FATCA) is effective July 1, 2014.  It requires foreign financial institutions to report on the U.S. owned accounts held with them to the Internal Revenue Service.  If they do not, the foreign institutions face a 30% withholding on their US based source income.  Read more about FATCA here.