Proposed Rule2026-01382
Dependent Care and Board Member Expense Reimbursement
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 26, 2026
Issuing agencies
National Credit Union Administration
Abstract
The NCUA Board proposes to amend its regulations concerning the reimbursement of reasonable expenses for federal credit union (FCU) officials. The proposed rule would enable FCU boards to establish policies that allow for the payment of reasonable dependent care costs incurred by volunteer officials while attending board meetings and performing their official duties. This proposed amendment would include dependent care costs as a reimbursable expense. The proposed changes aim to provide FCUs with greater flexibility to create family-friendly policies, thereby alleviating dependent care costs for volunteer officials, which may otherwise hinder their ability to volunteer.
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<title>Federal Register, Volume 91 Issue 16 (Monday, January 26, 2026)</title>
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[Federal Register Volume 91, Number 16 (Monday, January 26, 2026)]
[Proposed Rules]
[Pages 3073-3081]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-01382]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 91, No. 16 / Monday, January 26, 2026 /
Proposed Rules
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
RIN 3133-AF64
Dependent Care and Board Member Expense Reimbursement
AGENCY: National Credit Union Administration (NCUA).
ACTION: Proposed rule.
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SUMMARY: The NCUA Board proposes to amend its regulations concerning
the reimbursement of reasonable expenses for federal credit union (FCU)
officials. The proposed rule would enable FCU boards to establish
policies that allow for the payment of reasonable dependent care costs
incurred by volunteer officials while attending board meetings and
performing their official duties. This proposed amendment would include
dependent care costs as a reimbursable expense. The proposed changes
aim to provide FCUs with greater flexibility to create family-friendly
policies, thereby alleviating dependent care costs for volunteer
officials, which may otherwise hinder their ability to volunteer.
DATES: Comments must be received by on or before March 27, 2026.
ADDRESSES: You may submit written comments by any of the following
methods identified by RIN (Please send comments by one method only):
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Follow the instructions for submitting comments for Docket Number NCUA-
2026-0067.
<bullet> Mail: Address to Melane Conyers-Ausbrooks, Secretary of
the Board, National Credit Union Administration, 1775 Duke Street,
Alexandria, Virginia 22314-3428.
<bullet> Hand Delivery/Courier: Same as mail address.
Mailed and hand-delivered comments must be received by the close of
the comment period.
Public Inspection: All public comments are available on the Federal
eRulemaking Portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a> as submitted, except
when impossible for technical reasons. Public comments will not be
edited to remove any identifying or contact information. If you are
unable to access public comments on the internet, you may contact the
NCUA for alternative access by calling (703) 518-6540 or emailing
<a href="/cdn-cgi/l/email-protection#87c8c0c4cae6eeebc7e9e4f2e6a9e0e8f1"><span class="__cf_email__" data-cfemail="9ad5ddd9d7fbf3f6daf4f9effbb4fdf5ec">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: Keisha L. Brooks, Attorney-Advisor,
Office of General Counsel at (703) 518-1156 or by mail at the address
above. Office of Examination and Insurance (E&I): Lauren G. Kamin, Risk
Officer, by telephone at (703) 664-3868 or by mail at the address
above.
SUPPLEMENTARY INFORMATION:
I. Introduction
A. Background
Since 1934, the Federal Credit Union Act (the FCU Act) has
restricted FCU board compensation.\1\ The FCU Act provides that only
one FCU board member may be compensated as such. No other FCU official
may receive compensation for serving as a board or committee member. In
1975, the NCUA added 12 CFR 701.33 (Sec. 701.33). This section
clarified that compensation excludes payments for reasonable and proper
costs incurred by FCU officials in carrying out their
responsibilities.\2\ Section 520 of the Garn-St. Germain Depository
Institutions Act of 1982 amended section 111 of the FCU Act (section
111) to codify that such expenses are not considered compensation.\3\
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\1\ Federal Credit Union Act, 12 U.S.C. 1761(a), 1761(c), 1761a.
\2\ 40 FR 30261 (July 18, 1975) (adding 12 CFR 701.33).
\3\ Garn-St. Germain Depository Institutions Act of 1982, Public
Law 97-320, title V, sec. 520, 96 Stat. 1531 (1982) (adding 12
U.S.C. 1761(c)).
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Under the NCUA regulation, reasonable and proper costs incurred by
an official in carrying out their responsibilities may be paid directly
or reimbursed by an FCU. This is contingent on the payment being
determined by the FCU board of directors to be necessary or appropriate
to carry out official credit union business. And, the payment must be
in accordance with written policies and procedures established by the
board of directors. The NCUA Board considers the ``necessary or
appropriate'' requirement to mean that the reimbursement is appropriate
for the official to fulfill their responsibilities to the members in
the effective management of the FCU. Such policies should also ensure
that such payments are reasonable in amount in relation to the FCU's
resources and financial condition. This means that the reimbursement
should be limited to an amount that the FCU can afford while
maintaining financial stability and capital adequacy.\4\
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\4\ Proposed Rule, 57 FR 18837, 18838-39 (May 1, 1992).
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Although the NCUA is not bound by Internal Revenue Service (IRS)
rulings in this area, the NCUA has previously followed IRS
interpretations when construing the word ``compensation'' as used in
section 111 and Sec. 701.33.\5\ The NCUA has consistently viewed
reimbursable payments, which do not count as compensation, as limited
to out-of-pocket costs. However, indirect costs such as lost wages or
paid leave used while attending credit union activities have been
considered compensation under Sec. 701.33. In 1988, the NCUA proposed
eliminating this distinction for FCU officials' attendance at board and
committee meetings.\6\ In the past, some credit unions expressed a need
to reimburse their board members for lost wages or leave to attract and
keep qualified volunteers.\7\ The NCUA suggested reimbursing lost wages
for credit union board members to attract qualified volunteers.\8\
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\5\ OGC Legal Op. 92-0626 (June 1992), <a href="https://ncua.gov/regulation-supervision/legal-opinions/1992/compensation-officials">https://ncua.gov/regulation-supervision/legal-opinions/1992/compensation-officials</a>-0;
OGC Legal Op. 93-0233 (Mar. 12, 1993) (holiday gifts of nominal
value given to volunteer board members are not considered
compensation), <a href="https://ncua.gov/regulation-supervision/legal-opinions/1993/gifts-committee-members">https://ncua.gov/regulation-supervision/legal-opinions/1993/gifts-committee-members</a>.
\6\ Proposed Rule, 53 FR 4992 (Feb. 19, 1988).
\7\ OGC Legal Op. 95-1218 (Jan. 1996), <a href="https://ncua.gov/regulation-supervision/legal-opinions/1996/reimbursement-expenses">https://ncua.gov/regulation-supervision/legal-opinions/1996/reimbursement-expenses</a>.
\8\ Proposed Rule, 53 FR 4992 (Feb. 19, 1988).
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The comments received on the 1988 proposal, however, signaled that
the vast majority of FCUs felt such reimbursement was unnecessary and
may be harmful to the credit union volunteer spirit. Noted concerns
included that voluntarism distinguishes credit unions from other
financial institutions and that easing the reimbursement restrictions
could
[[Page 3074]]
endanger the tax-exempt status of credit unions. Many credit unions
opposed the proposal, citing concerns about harming the volunteer
spirit, potential tax issues, uneven reimbursements among board
members, additional IRS reporting, and verification challenges.\9\
Given the credit union community's overwhelming opposition to
reimbursing volunteer officials for lost pay or leave, the NCUA Board
decided not to go forward with the 1988 proposal.\10\ As discussed
further in this preamble, other amendments to Sec. 701.33 have
provided FCUs with clarity as to what types of expenses the NCUA has
found to be consistent with the law.
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\9\ Final Rule, 53 FR 29640 (Aug. 8, 1988).
\10\ Final Rule, 53 FR 29640 (Aug. 8, 1988).
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1. Reasonable and Proper Costs
With certain exceptions discussed in this section of the preamble,
the NCUA has generally granted each FCU's board flexibility in
determining which costs are necessary or appropriate to carry out
official credit union business, including official travel costs. This
flexibility is consistent with the general powers granted to FCU boards
under the FCU Act. Section 113 of the FCU Act provides that an FCU's
board of directors shall have the general direction and control of the
affairs of the FCU.\11\ The FCU board of directors must oversee the
credit union's operations to ensure the credit union operates in a safe
and sound manner. For example, the FCU board must be kept informed
about the credit union's operating environment, as well as hire and
keep competent management. FCU boards must also ensure that the credit
union has a risk management structure and process suitable for the
credit union's size and activities. The NCUA Board also clarified that
this flexibility was based in part on public comments received in
rulemaking.\12\
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\11\ 12 U.S.C. 1761b.
\12\ Final Rule, 57 FR 54499, 54501-02 (Nov. 19, 1992).
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Specifically, in 1992, the NCUA Board solicited public comments on
whether to include a reasonableness test or common business practice
test in the regulation, or leave the determination to the FCU's
management under NCUA oversight.\13\ Based on the comments, the NCUA
Board left these matters to each FCU's board of directors, within the
boundaries of reasonableness and safety and soundness.\14\ Further, the
NCUA may take exception or object to policies and procedures that are
unreasonable, unsafe and unsound, or present an undue risk to the
National Credit Union Share Insurance Fund. NCUA staff interpretations
help clarify ambiguities in Sec. 701.33 when necessary.\15\ The NCUA
Board believes this framework provides sufficient boundaries while
keeping flexibility for FCUs.
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\13\ Proposed Rule, 57 FR 18837, 18838-39 (May 1, 1992).
\14\ Final Rule, 57 FR 54499, 54501-02 (Nov. 19, 1992).
\15\ Legal Opinions, NCUA, <a href="https://ncua.gov/regulation-supervision/legal-opinions">https://ncua.gov/regulation-supervision/legal-opinions</a> (last visited Dec. 10, 2025). These legal
opinions provided helpful guidance based on the specific facts
stated in the letters. The legal opinions were not intended to
present an exhaustive list of reimbursable expenses and do not
necessarily apply to circumstances involving different or additional
facts.
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2. Dependent Care Costs
In 2024, the NCUA received feedback about past staff
interpretations deeming childcare costs as not reasonable and proper
under Sec. 701.33. These opinions cited the considerations leading the
NCUA Board to reject lost wages in 1988 as applicable to childcare
costs.\16\ In a letter, a national trade organization for credit unions
requested the NCUA Board explicitly permit reimbursement of childcare
and dependent care costs for FCU board members attending official board
meetings.\17\ The organization cited several factors supporting an
amendment.
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\16\ OGC Legal Op. 89-0414F (Apr. 14, 1989); OGC Legal Op. 92-
0507 (Jun. 10, 1992), <a href="https://ncua.gov/regulation-supervision/legal-opinions/1992/compensation-officials">https://ncua.gov/regulation-supervision/legal-opinions/1992/compensation-officials</a>; OGC Legal Op. 98-1215 (Mar.
1999) (``Our view is that payment of childcare expenses, like
reimbursement for lost leave or pay for volunteers who take time
away from their jobs to attend to credit union business, would
violate NCUA's regulation.''), <a href="https://ncua.gov/regulation-supervision/legal-opinions/1999/reimbursement-credit-union-volunteers-child-care">https://ncua.gov/regulation-supervision/legal-opinions/1999/reimbursement-credit-union-volunteers-child-care</a>.
\17\ Letter from Luke Martone, Senior Director of Advocacy &
Counsel, America's Credit Unions to the NCUA (May 7, 2024)
(Permitting Childcare Expenses as Reimbursable Under 12 CFR 701.33),
<a href="https://americascus.widen.net/view/pdf/a3086514-002b-4638-858e-afc1a9d78a2d/ACU-Letter-to-NCUA-re-Childcare-Expense_final.pdf">https://americascus.widen.net/view/pdf/a3086514-002b-4638-858e-afc1a9d78a2d/ACU-Letter-to-NCUA-re-Childcare-Expense_final.pdf</a>. See
also CU Today, ``It's `Outdated': Effort Underway to Get Change Made
in NCUA Rule Prohibiting Reimbursing Childcare Expenses for Board
Members'' (May 7, 2024), <a href="https://www.cutoday.info/Fresh-Today/Its-Outdated-Effort-Underway-to-Get-Change-Made-in-NCUA-Rule-Prohibiting-Reimbursing-Childcare-Expenses-for-Board-Members">https://www.cutoday.info/Fresh-Today/Its-Outdated-Effort-Underway-to-Get-Change-Made-in-NCUA-Rule-Prohibiting-Reimbursing-Childcare-Expenses-for-Board-Members</a>.
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First, dependent care costs are inextricably tied to the time and
travel required for board meetings and, therefore, should be
reimbursable.\18\ Second, it believed family structures and childcare
responsibilities are significantly different now than in the past.
Last, the organization suggested that allowing reimbursement would
attract and retain FCU board members with dependent care
responsibilities. The organization noted that, without this support,
volunteer officials might be unable to attend board meetings or promote
credit union activities. The organization also noted that this expense
can be amplified for a single parent or head of household with a
dependent.
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\18\ The NCUA has long recognized reasonable costs associated
with a director's attendance at board meetings, training events, and
conferences on behalf of the FCU as permissible under the FCU Act.
Such costs typically include transportation, meals, and lodging. See
OGC Legal Op. 91-0215 (May 1, 1991), <a href="https://ncua.gov/regulation-supervision/legal-opinions/1991/meal-reimbursement-directors">https://ncua.gov/regulation-supervision/legal-opinions/1991/meal-reimbursement-directors</a>.
Currently, Sec. 701.33 also permits reimbursement for one guest's
travel costs if the payment meets the ``necessary or appropriate''
and written board policy requirements. 12 CFR 701.33(b)(2)(i). This
policy evolved over several years in response to feedback from the
credit union community. See Proposed Rule, 57 FR 18837, 18838 (May
1, 1992); Final Rule, 66 FR 65628, 65629 (Dec. 20, 2001). Initially,
NCUA staff reasoned that travel costs for an accompanying spouse did
not qualify for reimbursement because there was no direct benefit to
the FCU. As such, NCUA staff considered these costs to be prohibited
compensation. This reasoning was based, in part, on past IRS
interpretations regarding business expense tax deductions taken for
spousal travel expenses. See for example, OGC Legal Op. 88-0927
(Oct. 20, 1989), OGC Legal Op. 90-0117 (Jan. 10, 1991) and OGC Legal
Op. 98-0619 (Aug. 1998) (reimbursement of travel expenses for a
director's companion), <a href="https://ncua.gov/regulation-supervision/legal-opinions/1998/reimbursement-travel-expenses-directors-companion">https://ncua.gov/regulation-supervision/legal-opinions/1998/reimbursement-travel-expenses-directors-companion</a>.
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The NCUA Board recognizes the tension between attracting skilled
volunteers and the prohibition against compensation. The NCUA Board
acknowledges that credit union directors face more complex duties in
delivering financial services. Directors also have a fiduciary
responsibility to credit union members to maintain high standards of
professional conduct, including ensuring appropriate compensation
policies, avoiding misuse of the credit union for unauthorized or
inappropriate personal gain, and acting ethically and impartially in
carrying out appropriate credit union policies and procedures.\19\ The
FCU system's success depends on dedicated volunteers who accept these
responsibilities.
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\19\ See 12 CFR 701.4; NCUA, Letter to Credit Unions 22-CU-05,
CAMELS Rating System (March 2022), <a href="https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/camels-rating-system">https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/camels-rating-system</a>. The CAMELS rating system is based upon an evaluation of six
critical elements of a credit union's operations: Capital adequacy,
Asset quality, Management, Earnings, Liquidity and Sensitivity to
Market Risk.
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In its letter, the organization noted that the only option for a
FCU board member to attend a board meeting is to ensure their dependent
has proper care. In many situations, this requires a paid caregiver.
The standard FCU bylaws require one in-person board of directors
meeting per year.\20\ All other meetings may be conducted virtually. In
its letter, the organization noted that holding
[[Page 3075]]
virtual or after-hours meetings does not resolve dependent care
concerns, as such care is still required outside of standard work
hours. According to the organization, FCU board members attending in-
person meetings may face not only travel expenses but also childcare
costs to ensure proper care for their dependents.
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\20\ Standard FCU Bylaws, 12 CFR part 701, App. A.
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Several bodies of research point to increasing childcare costs in
America and the rising share of family income they take up, especially
in single-parent, low-income, and multiple-child families. In 2023,
22.4 million children ages five and younger lived in the U.S.\21\
According to the Federal Reserve Bank of St. Louis, in 2021, about 53
percent of working adults were parents, and 37 percent of those parents
had young children.\22\ Between 1991 and 2024, daycare and preschool
costs rose at nearly twice the pace of overall inflation.\23\ The cost
of childcare has increased by over 220 percent since 1990.\24\ Median
full-day childcare price for one child in 2022 ranged from $6,552
($7,266 in 2024 dollars) to $15,600 ($17,300) per year, depending on
provider type, the child's age, and geographic location, representing
8.9 to 16.0 percent of median family income.\25\ Part-time care for
school-aged children comprised 8.1% to 9.4% of median family income,
ranging from $5,943 ($6,591) to $9,211 ($10,215) per child annually.
Families that pay for the care of multiple children experience a
compounded effect. About 30 percent of families with children under age
six have two or more children in this age group.\26\ In 2024, the
average price of center-based childcare for two children (an infant and
a 4-year-old) was above the median rent in every state and DC and was
higher than the median mortgage in DC and all but four states.\27\
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\21\ Federal Interagency Forum on Child and Family Statistics.
Table POP1. ``Child population: Number of children (in millions)
ages 0-17 in the United States by age, 1950-2023 and projected 2024-
2050.'' Retrieved Dec. 15, 2025 from <a href="https://www.childstats.gov/americaschildren/tables.asp">https://www.childstats.gov/americaschildren/tables.asp</a>.
\22\ Gascon et al. ``The Economic Impact of Child Care by
State.'' The Federal Reserve Bank of St. Louis. Retrieved Aug. 29,
2024 from <a href="https://www.stlouisfed.org/community-development/child-care-economic-impact">https://www.stlouisfed.org/community-development/child-care-economic-impact</a>.
\23\ ``Crisis in childcare and the state of work in America.''
KPMG, 28 May 2024. Retrieved Dec. 15, 2025 from <a href="https://kpmg.com/us/en/articles/2024/may-2024-childcare-crisis-state-work-america.html">https://kpmg.com/us/en/articles/2024/may-2024-childcare-crisis-state-work-america.html</a>.
\24\ The Annie E. Casey Foundation. ``2023 Kids Count Data
Book.'' Retrieved Dec. 15, 2025 from <a href="https://assets.aecf.org/m/resourcedoc/aecf-2023kidscountdatabook-2023.pdf">https://assets.aecf.org/m/resourcedoc/aecf-2023kidscountdatabook-2023.pdf</a>.
\25\ Poyatzis and Livingston. ``NEW DATA: Childcare Costs Remain
an Almost Prohibitive Expense.'' U.S. Department of Labor. DOL Blog,
19 Nov. 2024. Retrieved Dec. 15, 2025 from <a href="https://blog.dol.gov/2024/11/19/new-data-childcare-costs-remain-an-almost-prohibitive-expense">https://blog.dol.gov/2024/11/19/new-data-childcare-costs-remain-an-almost-prohibitive-expense</a>.
\26\ Landivar et al. ``Childcare Prices in Local Areas: Initial
Findings from the National Database of Childcare Prices.'' Women's
Bureau, U.S. Department of Labor. January 2023. Retrieved Dec. 15,
2025 from <a href="https://www.dol.gov/sites/dolgov/files/WB/NDCP/508_WB_IssueBrief-NDCP-20230213.pdf?qls=QMM_12345678.0123456789">https://www.dol.gov/sites/dolgov/files/WB/NDCP/508_WB_IssueBrief-NDCP-20230213.pdf?qls=QMM_12345678.0123456789</a>.
\27\ Child Care Aware of America. ``2024 Price of Care: Child
Care Affordability Analysis'' Table XI: ``2024 Average Prices for
Two Children in Center- Based Child Care Versus Median Housing Costs
by State.'' Retrieved Dec. 15, 2025 from <a href="https://info.childcareaware.org/hubfs/Affordability_Analysis_2024.pdf">https://info.childcareaware.org/hubfs/Affordability_Analysis_2024.pdf</a>. Note:
information for New Mexico was not available.
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The burden of childcare costs is even higher for single-parent and
low-income families. Low-income families are more likely to reduce work
outside the home to care for young children while high-income families
are more likely to pay for care, with differing financial
consequences.\28\
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\28\ ``Childcare Costs, Reduced Work, and Financial Strain: New
Estimates for Low-Income Families, U.S. Department of Commerce.''
June 27, 2024. Retrieved Dec. 15, 2025 from <a href="https://www.commerce.gov/news/blog/2024/06/childcare-costs-reduced-work-and-financial-strain-new-estimates-low-income">https://www.commerce.gov/news/blog/2024/06/childcare-costs-reduced-work-and-financial-strain-new-estimates-low-income</a>. Note that the definition
of ``low-income families'' can vary according to source and may
differ from the term ``low-income member'' as defined in the NCUA
regulation at 12 CFR 701.34.
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Other families may have added responsibilities caring for aging
parents or adult children with physical or mental impairments. Adult
dependent care costs (for example, care for persons who are permanently
and totally disabled, or eldercare) vary widely by an individual's
needs, facility type, and location.\29\ Adult homecare services include
homemaker services--assistance with ``hands off'' everyday tasks and
general companionship--and home health aides, who provide ``hands on''
assistance. In 2024, the median hourly rates for adult homemaker
services and home health aides nationally were $33 and $34,
respectively.\30\ Compared with 2023, the median hourly rate increased
10 percent (from $30) for homemaker services and 3 percent (from $33)
for home health aide services. The national median price of adult day
health care services was $100 per day (up to 8 hours) in 2024, 5
percent above the 2023 level of $95 per day.
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\29\ Adult day care falls into two broad groups: social care and
health care. Both generally include providing meals and activities,
but health care involves additional medical services, such as
medication dispensing and therapy. Goldy Brown and Clem. ``Adult Day
Care Costs: 2025 Data and Price Guide.'' Dec. 6, 2025. Retrieved
Dec. 15, 2025 from <a href="http://www.seniorliving.org/adult-day-care/costs/">www.seniorliving.org/adult-day-care/costs/</a>.
\30\ Genworth. ``Cost of Care Survey 2024.'' March 4, 2025.
Retrieved Dec. 15, 2025 from <a href="https://pro.genworth.com/riiproweb/productinfo/pdf/131168.pdf">https://pro.genworth.com/riiproweb/productinfo/pdf/131168.pdf</a>.
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3. Declines in Volunteering
As dependent care costs increased, many communities experienced
declines in volunteering.\31\ The 2021 Current Population Survey Civic
Engagement and Volunteering Supplement released by AmeriCorps and the
Census Bureau showed that formal volunteering declined from 30 percent
to 23.2 percent between 2019 and 2021.\32\ A 2024 AmeriCorps report
indicates that formal volunteering rates remain over 5 percentage
points below pre-pandemic figures in 11 states and the District of
Columbia metro area.\33\
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\31\ See Rebecca Nesbit, Laurie E. Paarlberg & Suyeon Jo, The
Decline of Volunteering in the United States: Is it the Economy?,
CES Working Paper No. 25-41, U.S. Census Bureau (June 23, 2025),
<a href="https://www2.census.gov/library/working-papers/2025/adrm/ces/CES-WP-25-41.pdf">https://www2.census.gov/library/working-papers/2025/adrm/ces/CES-WP-25-41.pdf</a>, Putnam, Robert D. (2000). Bowling Alone: The Collapse and
Revival of American Community.
\32\ Spinney, S., & Clinton, Y. (2024). Engaging Volunteers: A
Comprehensive Literature Review. ICF, <a href="https://www.americorps.gov/sites/default/files/document/Literature%20Review%20for%20Volunteer%20Management_0.pdf">https://www.americorps.gov/sites/default/files/document/Literature%20Review%20for%20Volunteer%20Management_0.pdf</a>.
\33\ Schlachter, Laura Hanson. (2024). Renewed Engagement in
American Civic Life. Washington, DC: AmeriCorps.
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Voluntarism remains one of the cornerstones of the credit union
philosophy.\34\ Securing new talent requires credit unions to
intentionally engage in recruitment strategies that include enlisting
people of borrowing age and broadening their talent pool to attract
volunteer officials that use a variety of credit union services like
electronic banking, credit cards, and loans. According to the national
trade organization, reimbursing reasonable expenses may lessen the
financial burden and, in turn, may encourage volunteering to serve as
credit union officials. The NCUA Board invites comments on how the NCUA
permitting dependent care reimbursement for volunteer officials can
better support credit unions in attracting new talent to the credit
union system.
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\34\ See NCUA, The Future Role of Voluntarism in Credit Unions
(June 1976) reprinted in 9 Volunteer Administration 13 (Winter
1976), <a href="https://ellisarchive.org/sites/default/files/2021-11/VOLUNTEER-ADMINISTRATION-9-4.pdf">https://ellisarchive.org/sites/default/files/2021-11/VOLUNTEER-ADMINISTRATION-9-4.pdf</a> (defining voluntarism as the
principle that overall policy decisions, operational controls, audit
supervision and, for some credit unions, part or all the operations
themselves, are the direct responsibility of volunteer members).
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4. Other Federal Agency Guidance on Dependent Care Costs
The NCUA has found IRS guidelines to be persuasive in determining
the reasonableness of expenses under Sec. 701.33.\35\ Current IRS
guidelines exclude childcare expenses from deductible volunteer costs
(even if a taxpayer would be unable to volunteer
[[Page 3076]]
without childcare).\36\ Historically, courts have not viewed childcare
as a business-related expense.\37\ Instead, these expenses are treated
as personal or family expenses.\38\
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\35\ See supra note 5. I.R.S. Info. Ltr. 2000-0145 (June 26,
2000), <a href="https://www.irs.gov/pub/irs-wd/00-0145.pdf">https://www.irs.gov/pub/irs-wd/00-0145.pdf</a>.
\36\ Internal Revenue Serv., U.S. Dep't of the Treasury, Pub.
No. 526, Charitable Contributions: For Use in Preparing 2023 Returns
(Feb. 29, 2024), <a href="https://www.irs.gov/pub/irs-pdf/p526.pdf">https://www.irs.gov/pub/irs-pdf/p526.pdf</a>.
\37\ See Shannon W. McCormack, America's (D)evolving Childcare
Tax Laws, 53 Georgia Law Review 1094, 1111 (2019) (citing Smith v.
Commissioner, 40 B.T.A. 1038, 1039-1040 (1939) aff'd, 113 F.2d 114
(2d Cir. 1940)).
\38\ 26 U.S.C 262. See also Limor Riza, In Retrospect of 40
Years, Another Look at Andrews' Personal Deductions Argument: A
Comparison of Charitable Contributions and Child-Care Expenses 15
DePaul Bus. & Com. L.J. 55 (2017); Kuntz v. Comm., T.C. Memo 2011-
52101, T.C.M. (CCH) 1239 T.C.M. (RIA) 2011-52 (March 1, 2011)
(applying Smith to caregiver expenses for a spouse).
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Other tax code provisions allow different income exclusions for the
dependent care tax credit for unreimbursed dependent care expenses
necessary for gainful employment and dependent care assistance
programs.\39\ However, volunteer work is not considered gainful
employment.\40\ In this regard, these guidelines may not align with the
unique characteristics of FCUs, which are inherently volunteer based.
By law, all but one FCU board member must serve without compensation.
For these volunteers, section 111 allows FCUs to pay their reasonable
expenses incurred in conducting credit union business.
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\39\ See 26 U.S.C. 21; 26 U.S.C. 129.
\40\ 26 CFR 1.21-1(c)(1) (``Work as a volunteer or for a nominal
consideration is not gainful employment'').
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Guidance from the Office of Management and Budget (OMB) allows
temporary dependent care costs as travel costs for federal awards.\41\
In 2013, OMB introduced this flexibility to ease the financial burden
of dependent care costs.\42\ To prevent waste, fraud, and abuse, the
guidance requires such costs be reasonable, temporary, above and beyond
regular dependent care costs, and consistent with documented travel
policies.\43\
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\41\ See 2 CFR 200.475(c)(1)(2024) (formerly 2 CFR 200.474).
\42\ See 2 CFR 200.404; Final Guidance, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal
Awards, 78 FR 78590, 78602 (Dec. 26, 2013).
\43\ 2 CFR 200.475(c).
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The FCU Act and the NCUA regulations incorporate similar
guardrails. Section 111 requires that the cost must be reasonable and
incurred in the execution of official credit union duties.
Additionally, under Sec. 701.33, the FCU board must determine whether
the cost is necessary or appropriate to carry out official credit union
business and is in accordance with its written policies and procedures,
including documentation requirements. Further, the NCUA may take
exception or object to FCU policies and procedures that are
unreasonable, unsafe and unsound, or present an undue risk to the
National Credit Union Share Insurance Fund. The NCUA Board believes the
existing regulation provides sufficient boundaries while keeping
flexibility for FCUs. However, the NCUA Board invites comments on
whether other federal agency guidance on dependent care costs provide
fitting parallels in the credit union context.
B. Legal Authority
The NCUA Board is issuing this proposed rule under its plenary
rulemaking authority under the FCU Act.\44\ Under the FCU Act, the NCUA
is the chartering and supervisory authority for FCUs and the federal
supervisory authority for federally insured credit unions (FICUs).\45\
The FCU Act grants the NCUA a broad mandate to issue regulations
governing both FCUs and all federally insured, state-chartered credit
unions (FISCUs). Section 120 of the FCU Act is a general grant of
regulatory authority and authorizes the NCUA Board to prescribe rules
and regulations for the administration of the FCU Act.\46\ Section 207
of the FCU Act is a specific grant of authority over share insurance
coverage, conservatorships, and liquidations.\47\ Section 209 of the
FCU Act is a plenary grant of regulatory authority to the NCUA Board to
issue rules and regulations necessary or appropriate to carry out its
role as share insurer for all FICUs.\48\ Accordingly, the FCU Act
grants the NCUA Board broad rulemaking authority to ensure that the
credit union industry and the National Credit Union Share Insurance
Fund remain safe and sound.
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\44\ 12 U.S.C. 1751 et seq.
\45\ 12 U.S.C. 1752-1775.
\46\ 12 U.S.C. 1766(a).
\47\ 12 U.S.C. 1787(b)(1).
\48\ 12 U.S.C. 1789(a)(11).
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Under the FCU Act, only one FCU board member may be compensated as
a board officer. By statute, such compensation excludes the
reimbursement of reasonable expenses incurred in executing their
official duties. The 1982 amendment allowing such reasonable expenses
provides no further definition. Further, while the legislative history
on section 520 is limited, the 1982 amendment was among several changes
designed to facilitate FCU management and operating flexibility.\49\
Under the rules of statutory construction, words of a statute are
interpreted according to their ordinary, contemporary, common meaning
unless Congress clearly expressed a different intent.\50\
``Reasonable'' is generally understood to mean ``possessing sound
judgement'' and ``not extreme or excessive.'' Reasonable reflects good
judgment that is ``fair and proper under the circumstances'' or
``rational, sound, and sensible.'' \51\ The Supreme Court has also
recognized that statutes using terms such as ``appropriate'' or
``reasonable'' leaves agencies with flexibility and authority to
exercise a ``degree of discretion'' in interpreting statutes.\52\ The
NCUA regulation, Sec. 701.33, implements section 111 and thus
interprets these terms. Given this framework, the NCUA Board has used
its discretion under the FCU Act to give FCU boards latitude in
fashioning reimbursement policies and making individualized
determinations.\53\
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\49\ S. Conf. Rep. No. 97-641 (1982), reprinted in 1982
U.S.C.C.A.N. 3128, 3133. See also NCUA, 1982 Annual Report 42 (Apr.
1983), <a href="https://ncua.gov/files/annual-reports/AR1982.pdf">https://ncua.gov/files/annual-reports/AR1982.pdf</a>.
\50\ Pioneer Investment Service Co. v. Brunswick Associates Ltd
Partnership, 507 U.S. 380, 388 (1993) (quoting Perrin v. United
States, 444 U.S. 37, 42 (1979)).
\51\ Reasonable, Webster's New Collegiate Dictionary 955 (1981),
<a href="https://archive.org/details/webstersnewcolle0000unse_l2m2">https://archive.org/details/webstersnewcolle0000unse_l2m2</a>;
Reasonable, Merriam-Webster On-line Dictionary, <a href="https://www.merriam-webster.com/dictionary/reasonable">https://www.merriam-webster.com/dictionary/reasonable</a> (last visited Nov. 21, 2024);
Reasonable, Black's Law Dictionary (12th ed. 2024).
\52\ Loper Bright Enterprises v. Raimondo Relentless, Inc. v.
Department of Commerce, 603 U.S. 369, 144 S. Ct. 2244 (2024)
(collectively Loper Bright).
\53\ See Final Rule, 57 FR 54499, 54501-02 (Nov. 19, 1992).
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II. Proposed Rule
The NCUA Board has historically been, and continues to be,
circumspect about expanding the exclusions from compensation under
Sec. 701.33(b)(2)(i). This NCUA regulation has not changed since
adding the travel costs for one guest per official in 2001.\54\ The
NCUA's objective of ensuring a safe and sound credit union system that
protects credit union members can be fulfilled only when the agency
adapts to the ever-changing economic and technological landscape.\55\
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\54\ See Final Rule, 66 FR 65629 (Dec. 20, 2001).
\55\ NCUA, Letter to Credit Unions 24-CU-01, NCUA's 2025
Supervisory Priorities (Jan. 2025), <a href="https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/ncuas-2025-supervisory-priorities">https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/ncuas-2025-supervisory-priorities</a>.
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As noted previously in this preamble, past NCUA staff
interpretations advised that childcare costs were not reasonable and
proper under Sec. 701.33. Based on public feedback and other factors
described in this preamble, the NCUA Board recognizes the current
treatment
[[Page 3077]]
of childcare costs may be outdated. The following sections detail the
proposed regulatory amendments.
A. Applicability of Proposed Rule
1. Federal Credit Unions
The proposed amendments would apply solely to FCUs, including
corporate FCUs. In addition to granting broad rulemaking authority,
section 120(a) of the FCU Act provides that, except as otherwise
specifically provided in the NCUA rules, regulations, or orders,
federally chartered corporate credit unions are subject to the same
rights, privileges, duties, restrictions, penalties, liabilities,
conditions, and limitations that would apply to all FCUs under the
law.\56\ Because the NCUA Board has not created any exceptions for
corporate credit unions, sections 111 and 112 of the FCU Act apply to
all FCUs. This uniformity is further reflected in the current Corporate
FCU Standard Bylaws. These bylaws allow one board officer to be
compensated as such and prohibit other board members from receiving any
compensation or benefit solely as a result or by virtue of their
service as an FCU board member, except for reimbursement for reasonable
expenses incurred in the performance of official duties.\57\
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\56\ 12 U.S.C. 1766(a). This section was also added by the Garn-
St Germain Depository Institutions Act of 1982. Public Law 97-320,
title V, sec. 526 (Oct. 15, 1982). As noted in the legislative
history, ``[t]his section gives the [NCUA] more flexibility to
design regulations for central credit unions which are otherwise
consistent as opposed to credit unions whose members are natural
persons. The separate regulations which the [NCUA] may establish for
central credit unions must be consistent with the other provisions
of the Federal Credit Union Act.'' S. Rep. No. 97-536, at 70 (1982).
\57\ See Article VIII, section 1 and Article VII, section 9 of
the FCU corporate bylaws, 68 FR 32127 (May 29, 2003) as amended by
75 FR 81378 (Dec. 28, 2010). Article VIII, section 5 of the FCU
corporate bylaws also permits the financial officer to be the
compensated board officer only if the financial officer is actually
managing the corporate credit union. Id.
---------------------------------------------------------------------------
This proposed rule would not amend 12 CFR part 704. This part
establishes specific requirements applicable to federally insured
corporate credit unions. The NCUA Board welcomes public comment on
whether the regulatory treatment for corporate FCUs should differ in
this area and whether specific changes to 12 CFR part 704 or the
Corporate FCU Standard Bylaws are necessary to achieve the purposes of
the proposed regulatory amendments.
2. FISCUs
The NCUA Board recognizes the importance of state law in regulating
FISCUs and that FISCUs may be subject to state-specific board
reimbursement policies.\58\ The state supervisory authority is the
primary regulator for FISCUs. The NCUA is primarily responsible for
managing risk to the National Credit Union Share Insurance Fund through
effective regulation and supervision. FISCUs are not subject to Sec.
701.33 and must comply with applicable state laws pertaining to board
member compensation.\59\ The NCUA Board also recognizes that, under its
statutory authorities relating to unsafe or unsound practices, the NCUA
may act to address such practices in all FICUs.\60\ In such instances,
the NCUA intends to work collaboratively with the relevant state
supervisory authority.
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\58\ The NCUA Board recognizes that state law also plays a role
in FCU governance, as the model FCU bylaws reflect in several
instances; however, the NCUA Board performs a significant role in
this process in preparing the form of the bylaws under 12 U.S.C.
1758.
\59\ 12 CFR 741.3(c).
\60\ See 12 U.S.C. 1786(e), (k). See also 12 CFR 741.3(g).
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3. Associate Directors and Directors Emeriti
In its letter, the national trade organization requested dependent
care reimbursement for volunteer board members but did not specifically
address other credit union officials that may perform board designated
duties. In 2011, NCUA staff interpretations clarified an FCU's
authority to reimburse training and travel costs for associate
directors or similar FCU officials who occupy volunteer positions
established by the FCU board.\61\ Section 701.33(a) defines
``official'' to include a member of the board of directors, credit
committee or supervisory committee, or other volunteer committee
established by the board of directors. Section 701.33(b), however, only
allows expense reimbursement when an official carries out the
responsibilities of their credit union position. Accordingly, if the
official in question provides board designated services that go beyond
merely serving in an honorary capacity, the usual requirements
governing payments apply. Directors emeriti that simply act in an
honorary capacity are not given any responsibilities and therefore
would not meet the criteria for reimbursement. However, the NCUA Board
invites public comments on the inclusion of associate directors,
directors emeriti and other volunteer officials in FCU reimbursement
policies that include dependent care costs.
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\61\ OGC Legal Op. 11-0152 (Mar. 2011), <a href="https://ncua.gov/regulation-supervision/legal-opinions/2011/training-reimbursement-credit-union-officials">https://ncua.gov/regulation-supervision/legal-opinions/2011/training-reimbursement-credit-union-officials</a>.
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B. Proposed Regulatory Amendments
The NCUA Board proposes to amend Sec. 701.33(b)(2)(i) to clarify
that dependent care may be a reasonable and proper cost for a volunteer
official. The proposed rule defines ``volunteer official'' based on 12
CFR 701.21(c)(8)(ii). Under that section, ``volunteer official'' means
an official of a credit union who does not receive compensation from
the credit union solely for his or her service as an official.
As discussed earlier in the preamble, the NCUA has considered IRS
guidelines in assessing the reasonableness of expenses under Sec.
701.33. As defined in the Internal Revenue Code, a qualifying
individual is generally a dependent under the age of 13 or a spouse or
dependent of any age who is incapable of self-care and shares the same
residence for more than half of the year.\62\ Given this standard, the
NCUA Board proposes to define ``dependent care costs'' as expenses for
the care of a qualifying individual (as defined in 26 U.S.C. 21(b)).
All other sections of the regulation would remain unchanged.
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\62\ 26 U.S.C. 21(b)(2). Section 21 of the Internal Revenue Code
allows a nonrefundable tax credit for a percentage of expenses for
household and dependent care services necessary for gainful
employment. A similar standard applies to dependent care assistance
programs. 26 U.S.C. 129(e)(1).
---------------------------------------------------------------------------
This proposed rule would provide FCUs with greater flexibility to
accommodate the needs of volunteer officials whose duties include
credit union business. With this proposed amendment, the FCU board
would have discretion to adopt policies that provide for the
reimbursement or direct payment of dependent care costs. Under the
proposed rule, such payments would continue to be discretionary rather
than mandatory. An FCU board of directors may adopt a more stringent
policy or prohibit such payments entirely. Such decisions would be left
to the FCU board of directors, within the boundaries of the rule.
The NCUA also cautions FCUs that this proposal has no effect on IRS
regulations governing the reporting and taxing of any payments or
reimbursements.\63\ The term ``compensation'' in Sec. 701.33 is only
intended to describe the kind and amount of payment or reimbursement an
FCU is permitted to provide to its
[[Page 3078]]
volunteer officials. FCUs and their officials should consult with tax
advisors or attorneys about IRS requirements.
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\63\ See also NCUA, Letter to Federal Credit Unions 05-FCU-02,
Tax Consequences of Payment of Travel Expenses for FCU Volunteer
Officials and Their Guests (July 2005), <a href="https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/tax-consequences-payment-travel-expenses-fcu-volunteer-officials-and-their-guests">https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/tax-consequences-payment-travel-expenses-fcu-volunteer-officials-and-their-guests</a>.
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C. Request for Comments
The NCUA Board welcomes comments, data, views, and arguments on
this proposed rule. The proposal allows FCUs to adopt written policies
that permit the payment of a volunteer official's dependent care costs
if the payment meets all other requirements. In addition, the NCUA
Board specifically requests comments addressing the following areas:
1. Other Federal Agency Guidance
As discussed earlier in the preamble, the proposed rule defines
dependent care costs using the Internal Revenue Code's definition of a
qualifying individual. This term applies to the dependent care tax
credit and dependent care assistance programs.\64\ Conversely, OMB used
the Internal Revenue Code's definition of dependent in allowing
temporary dependent care costs.\65\ OMB also added regulatory
constraints to address concerns of waste, fraud, and abuse.\66\
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\64\ 26 U.S.C. 21(b)(2), 26 U.S.C. 129(e)(1).
\65\ See 2 CFR 200.475(c) (citing 26 U.S.C. 152).
\66\ See 2 CFR 200.404; Final Guidance, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal
Award, 78 FR 78590, 78602 (Dec. 26, 2013).
---------------------------------------------------------------------------
Questions
(1) Should the NCUA adopt additional conditions on paying dependent
care costs, such as limiting reimbursement to temporary costs that are
above and beyond regular day care expenses that a volunteer official
would ordinarily incur outside of carrying out official credit union
business?
(2) Should the terms ``dependent'' or ``dependent care'' be defined
by the NCUA regulations, the required FCU written reimbursement policy,
or in some other governing document? If so, how should they be defined?
(3) Are there any other terms, definitions, or standards that the
NCUA Board should consider in updating the regulation? Specifically,
are there terms that could be clarified?
(4) What documentation requirements could ensure the direct
application of funds to reasonable dependent care costs and that the
FCU is not compensating its volunteer officials?
2. Lost Wages and Indirect Costs
In 1988, the NCUA proposed adding lost wages as a reimbursable
expense.\67\ Given the credit union community's overwhelming opposition
to reimbursing volunteer officials for lost pay or leave, the NCUA
Board decided not to go forward with the 1988 proposal.\68\ In its
letter, the national trade organization maintained that lost wages to
attend a meeting are not similar to childcare expenses. The letter
noted that dependent care reimbursement may be necessary or appropriate
when attending in-person board meetings as part of the official's
credit union duties.
---------------------------------------------------------------------------
\67\ Proposed Rule, 53 FR 4992 (Feb. 19, 1988).
\68\ Final Rule, 53 FR at 29641.
---------------------------------------------------------------------------
Questions
(5) Are similar considerations for prohibiting the payment of lost
wages (for example, dissension among FCU board members, additional IRS
reporting requirements, and difficulty substantiating officials'
claims) relevant to dependent care costs?
(6) How many FCU board meetings are in the evenings or at other
times when dependent care for volunteer officials would be necessary or
appropriate (for example, virtual meetings)?
(7) What are other situations where dependent care cost
reimbursement for volunteer officials would be necessary or appropriate
(for example, trainings)?
(8) What industry data or estimates provide insight into the number
of volunteer officials affected by this proposal, both presently and in
the future?
3. FCU Board of Directors' Responsibilities
The NCUA Board invites comments on the FCU board's responsibilities
in amending payment policies to include dependent care costs for
volunteer officials. A board of directors should consider budgetary
impacts in developing its written reimbursement policies. Decisions
about board member reimbursement, including dependent care costs, may
affect the FCU's ability to budget for other staffing needs. Expending
FCU assets may also open the FCU board to shareholder/member suits for
corporate waste depending on state law.
Questions
(9) What impediments, including estimated costs and logistics, does
your credit union anticipate in developing and applying reimbursement
policies that include dependent care costs?
(10) Should an FCU get an attorney's opinion about state laws
related to corporate waste before it adopts and applies such a policy?
(11) If reimbursing dependent care costs would result in possible
increases in costs to members, are there less costly alternatives?
4. FISCUs
Several states permit state-chartered credit unions to compensate
all board members or reimburse board members for reasonable expenses.
The NCUA Board specifically invites public comment on state
requirements and FISCU policies governing reimbursing credit union
officials for dependent care expenses.
Question
(12) Are there best practices from FISCUs or other suggested
boundaries for dependent care cost reimbursement that the NCUA Board
should consider?
Depending on the comments and its continued consideration of the
issues discussed in this section, in finalizing the proposed rule, the
NCUA Board may adopt changes or additions to meet the proposal's
articulated goals.
III. Regulatory Procedures
A. Providing Accountability Through Transparency Act of 2023
The Providing Accountability Through Transparency Act of 2023 (5
U.S.C. 553(b)(4)) requires that a notice of proposed rulemaking include
the internet address of a summary of not more than 100 words in length
of a proposed rule, in plain language, that shall be posted on the
internet website under section 206(d) of the E-Government Act of 2002
(44 U.S.C. 3501 note) (commonly known as <a href="http://regulations.gov">regulations.gov</a>).
In summary, the NCUA Board proposes to amend its regulations
concerning the reimbursement of reasonable expenses for FCU officials.
The proposed rule would enable FCU boards to establish policies that
allow for the payment of reasonable dependent care costs incurred by
volunteer officials while attending board meetings and performing their
official duties. This proposed amendment would include dependent care
costs as a reimbursable expense. The proposed changes aim to provide
FCUs with greater flexibility to create family-friendly policies,
thereby alleviating dependent care costs for volunteer officials, which
may otherwise hinder their ability to volunteer.
The proposal and the required summary can be found at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
[[Page 3079]]
B. Executive Orders 12866, 13563, and 14192
Pursuant to Executive Order 12866 (``Regulatory Planning and
Review''), as amended by Executive Order 14215, a determination must be
made whether a regulatory action is significant and therefore subject
to review by the Office of Management and Budget (OMB) in accordance
with the requirements of the Executive Order.\69\ Executive Order 13563
(``Improving Regulation and Regulatory Review'') supplements and
reaffirms the principles, structures, and definitions governing
contemporary regulatory review established in Executive Order
12866.\70\ This proposed rule was drafted and reviewed in accordance
with Executive Order 12866 and Executive Order 13563. OMB has
determined that this proposed rule is not a ``significant regulatory
action'' as defined in section 3(f) of Executive Order 12866. This
proposed rule will increase flexibility for FCU boards to develop
family friendly reimbursement policies and is consistent with Executive
Order 13563.
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\69\ 58 FR 51735 (Oct. 4, 1993).
\70\ 76 FR 3821 (Jan. 21, 2011).
---------------------------------------------------------------------------
Executive Order 14192 (``Unleashing Prosperity Through
Deregulation'') requires that any new incremental costs associated with
new regulations shall, to the extent permitted by law, be offset by the
elimination of existing costs associated with at least 10 prior
regulations.\71\ This rule is not an E.O. 14192 regulatory action
because this rule is not significant under E.O. 12866.
---------------------------------------------------------------------------
\71\ 90 FR 9065 (Feb. 6, 2025).
---------------------------------------------------------------------------
C. Regulatory Flexibility Act
The Regulatory Flexibility Act \72\ generally requires an agency to
conduct a regulatory flexibility analysis of any rule subject to notice
and comment rulemaking requirements, unless the agency certifies that
the rule will not have a significant economic impact on a substantial
number of small entities. If the agency makes such a certification, it
must publish the certification at the time of publication of either the
proposed rule or the final rule, along with a statement providing the
factual basis for such certification.\73\ For purposes of this
analysis, the NCUA considers small credit unions to be those having
under $100 million in assets.\74\ The Board fully considered the
potential economic impacts of the proposed regulatory amendments on
small credit unions.
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\72\ 5 U.S.C. 601 et seq.
\73\ 5 U.S.C. 605(b).
\74\ 80 FR 57512 (Sept. 24, 2015).
---------------------------------------------------------------------------
The proposed rule would permit FCU boards of directors to adopt
family friendly policies that directly pay or reimburse volunteer
officials for reasonable dependent care costs incurred in carrying out
their official board duties. Consistent with long-standing practices,
the NCUA Board expects that FCU payment policies including dependent
care costs will continue to be reasonable in relation to the resources
and financial condition of the credit union while maintaining financial
stability and capital adequacy.\75\ As proposed, small FCU boards would
have discretion to set cost limits or decline to adopt such payment
policies entirely. Small FCUs electing to adopt such policies may
experience higher reimbursement costs. The NCUA offers small credit
unions technical assistance in a variety of areas, including developing
written reimbursement policies.
---------------------------------------------------------------------------
\75\ See Proposed Rule, 57 FR 18837, 18838-39 (May 1, 1992).
---------------------------------------------------------------------------
Accordingly, the NCUA certifies the proposed rule would not have a
significant economic impact on a substantial number of small credit
unions. The NCUA Board invites comment from small credit unions on the
proposed rule, as well as other suggestions, to improve board
recruitment and reduce any burden associated with the proposal.
D. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in
which an agency creates a new or amends existing information collection
requirements. For purposes of the PRA, an information-collection
requirement may take the form of a reporting, recordkeeping, or a
third-party disclosure requirement. The NCUA may not conduct or
sponsor, and the respondent is not required to respond to an
information collection unless it displays a valid OMB control number.
The proposed rule changes will require revision of an existing
information collection to be submitted to the Office of Information and
Regulatory Affairs at OMB for approval under the PRA. The NCUA is
proposing to extend for three years, with revision, this information
collection.
Title of Information Collection: Written Reimbursement Policy, 12
CFR 701.33.
OMB Control Number: 3133-0130.
Respondents: All FCUs.
Estimated Annual Burden: 2,263.
The proposed rule contains information collection recordkeeping
requirements that would impose PRA burden governing reimbursement of
dependent care costs. This burden is associated with modifying the
written reimbursement policy to incorporate dependent care costs for
volunteer board members.
As of September 30, 2025, the NCUA supervised approximately 2,715
FCUs. For each information collection activity, the burden table lists
the estimated annual number of responses per respondent and estimated
time per response. Note that the number of respondents for information
collection activity 2 have been annualized to reflect a three-year PRA
cycle in which respondents incur implementation burden in the first
year and ongoing burden in the second and third years.
Since the implementation burden is incurred only in year one of the
three-year PRA clearance cycle, the annual burden is the average of the
implementation burden imposed over three years or .3333 hours per year.
(1 hour in year one, plus zero hours for years two and three; divided
by three).
The NCUA estimates a total annual burden of 2,263 hours as follows:
NCUA Summary of Estimated Annual Burden
[3133-0130]
----------------------------------------------------------------------------------------------------------------
Total
Information collection Type of burden Number of Number of Average time estimated
activity (frequency of respondents responses per per response annual burden
response) respondent (hours) hours
----------------------------------------------------------------------------------------------------------------
1. Maintain Written Recordkeeping 2,715 1 0.5 1,358
Reimbursement Policy (Annual).
(Ongoing).
[[Page 3080]]
2. Establish Dependent Care Recordkeeping 2,715 .3 1 905
Costs (Implementation). (One-Time).
----------------------------------------------------------------
Total Estimated Annual ................ .............. ............... .............. 2,263
Burden.
----------------------------------------------------------------------------------------------------------------
The NCUA invites comments on: (a) Whether the proposed collection
of information is necessary for the proper performance of the functions
of the agency, including whether the information will have practical
utility; (b) the accuracy of the agency's estimate of the burden of the
proposed collection of information, including the validity of the
methodology and assumptions used; (c) ways to enhance the quality,
utility, and clarity of the information to be collected; and (d) ways
to minimize the burden of the collection of information on those who
are to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology; and (e) estimates of capital or
start-up costs and cost of operation, maintenance, and purchase of
services to provide information.
All comments are a matter of public record. Interested persons are
invited to submit written comments via email to (1)
<a href="/cdn-cgi/l/email-protection#9bcbc9dad8f4f6f6fef5efe8dbf5f8eefab5fcf4ed"><span class="__cf_email__" data-cfemail="c292908381adafafa7acb6b182aca1b7a3eca5adb4">[email protected]</span></a> or (2) visit <a href="http://www.reginfo.gov/public/do/PRAMain">www.reginfo.gov/public/do/PRAMain</a>
(find this particular information collection by selecting the tab
titled ``Information Collection Review'' and click on to the section
titled ``Currently under Review--Open for Public comment'').
E. Executive Order 13132 on Federalism
Executive Order 13132 encourages certain regulatory agencies to
consider the impact of their actions on state and local interests. The
NCUA, an agency as defined in 44 U.S.C. 3502(5), complies with the
executive order to adhere to fundamental federalism principles. This
proposed rule does not have substantial direct effects on the states,
on the relationship between the national government and the states, or
on the distribution of power and responsibilities among the various
levels of government. While some states incorporate federal regulations
by law or by practice, states may still decide for themselves whether
to incorporate the proposed changes by reference. States are also free
to establish their own policies for board compensation and reimbursing
FISCU officials for reasonable expenses incurred in executing official
credit union duties.\76\ The NCUA has therefore determined that this
proposed rule does not constitute a policy that has federalism
implications for purposes of the executive order. The NCUA Board
specifically requests comment on potential conflicts and ways to
harmonize state-specific requirements in this area. Based on the
comments received, the final rule may modify the requirements as
necessary to carry out the purposes of this rulemaking and the intent
of the Executive Order.
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\76\ See Final Rule, 57 FR at 54502.
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F. Assessment of Federal Regulations and Policies on Families
Section 654 of the Treasury and General Government Appropriations
Act of 1999, Public Law 105-277, 112 Stat. 2681 (1998) requires federal
agencies to determine whether a proposed policy or regulation may
affect family well-being. Relative to the current state, reimbursements
for childcare expenses will increase disposable income and thus
decrease financial strain (and potentially poverty) for the families
receiving such reimbursement. As discussed earlier in the preamble,
median full-day childcare price for one child in 2022 ranged from
$6,552 ($7,266 in 2024 dollars) to $15,600 ($17,300) per year,
depending on provider type, the child's age, and geographic location.
These costs represented 8.9 percent to 16.0 percent of median family
income per child in paid care.\77\ The financial impact on the family
in question is, therefore, positive. The funds needed for reimbursement
may come from credit union members in the form of reduced interest on
deposits/higher interest on loans. The cost per member, however, should
be minimal. In addition, based on the NCUA Call Report data, the
benefit to FCU members from having volunteers versus paid employees
should outweigh the cost of reimbursing for childcare.\78\ Based on
these considerations, the NCUA has determined that this proposed rule
will not affect family well-being within the meaning of section 654 of
the Treasury and General Government Appropriations Act, 1999, Public
Law 105-277, 112 Stat. 2681 (1998).
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\77\ Poyatzis and Livingston. ``NEW DATA: Childcare Costs Remain
an Almost Prohibitive Expense.'' U.S. Department of Labor. DOL Blog,
19 Nov. 2024. Retrieved Dec. 15, 2025 from <a href="https://blog.dol.gov/2024/11/19/new-data-childcare-costs-remain-an-almost-prohibitive-expense">https://blog.dol.gov/2024/11/19/new-data-childcare-costs-remain-an-almost-prohibitive-expense</a>.
\78\ The NCUA collects the number of employees and compensation
on the Call Report, from which average paid employee compensation
can be computed.
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List of Subjects in 12 CFR Part 701
Advertising, Aged, Civil rights, Credit, Credit unions, Fair
housing, Individuals with disabilities, Insurance, Marital status
discrimination, Mortgages, Religious discrimination, Reporting and
recordkeeping requirements, Sex discrimination, Signs and symbols,
Surety bonds.
By the National Credit Union Administration Board, this 14th day
of January, 2026.
Melane Conyers-Ausbrooks,
Secretary of the Board.
For the reasons stated in the preamble, the NCUA Board proposes to
amend 12 CFR part 701 as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS
0
1. The authority citation for part 701 continues to read as follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759,
1761a, 1761b, 1766, 1767, 1782, 1784, 1785, 1786, 1787, 1788, 1789.
Section 701.6 is also authorized by 15 U.S.C. 3717. Section 701.31
is also authorized by 15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and
3601-3610. Section 701.35 is also authorized by 42 U.S.C. 4311-4312.
Sec. 701.33 [Amended]
0
2. Amend Sec. 701.33 by:
0
a. Adding the definition of ``Dependent care costs'' to the beginning
of paragraph (a) and
[[Page 3081]]
0
b. Revising the last sentence of paragraph (b)(2)(i).
The addition and revision to read as follows:
Sec. 701.33 Reimbursement, Insurance, and Indemnification of
Officials and Employees.
(a) Dependent care costs. Dependent care costs mean expenses for
the care of a qualifying individual (as defined in 26 U.S.C. 21)).
* * * * *
(b) * * *
(2) * * *
(i) * * * Such payments may include the payment of: (A) travel
costs for officials and one guest per official and (B) dependent care
costs for a volunteer official (as defined in Sec. 701.21(c)(8)(ii));
* * * * *
[FR Doc. 2026-01382 Filed 1-23-26; 8:45 am]
BILLING CODE 7535-01-P
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