Rule2026-11507
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
June 9, 2026
Effective
July 9, 2026
Issuing agencies
National Credit Union Administration
Abstract
The NCUA Board is amending its regulations concerning the reimbursement of reasonable expenses for federal credit union (FCU) officials. The amendment revises the definition of compensation to exclude dependent care costs incurred by volunteer officials while attending board meetings and performing official credit union duties. By recognizing these costs as reimbursable, the NCUA Board is authorizing FCUs to remove a potential barrier to volunteer service for persons with dependent care responsibilities. The final rule also provides flexibility for FCU boards to adopt more family-friendly policies tailored to their size, region, and operations. The final rule follows publication of the January 26, 2026, proposed rule, and takes into consideration the public comments received.
Full Text
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<title>Federal Register, Volume 91 Issue 110 (Tuesday, June 9, 2026)</title>
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[Federal Register Volume 91, Number 110 (Tuesday, June 9, 2026)]
[Rules and Regulations]
[Pages 34733-34740]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-11507]
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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: Final rule.
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SUMMARY: The NCUA Board is amending its regulations concerning the
reimbursement of reasonable expenses for federal credit union (FCU)
officials. The amendment revises the definition of compensation to
exclude dependent care costs incurred by volunteer officials while
attending board meetings and performing official credit union duties.
By recognizing these costs as reimbursable, the NCUA Board is
authorizing FCUs to remove a potential barrier to volunteer service for
persons with dependent care responsibilities. The final rule also
provides flexibility for FCU boards to adopt more family-friendly
policies tailored to their size, region, and operations. The final rule
follows publication of the January 26, 2026, proposed rule, and takes
into consideration the public comments received.
DATES: This final rule is effective on July 9, 2026.
FOR FURTHER INFORMATION CONTACT: Office of General Counsel: Keisha L.
Brooks, Attorney-Advisor, Office of General Counsel, at (703) 518-6540
or by mail at 1775 Duke Street, Alexandria, VA 22314. Office of
Examination and Insurance: 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. Under section 111 of the FCU Act
(section 111), only one FCU board member may be compensated as a board
officer, and no other FCU official may receive compensation for serving
as a board or committee member.\1\ By statute, such compensation
excludes the payment of reasonable expenses incurred in executing
official credit union duties.\2\
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\1\ Federal Credit Union Act, 12 U.S.C. 1761(a), 1761(c), 1761a.
\2\ Section 520 of the Garn-St. Germain Depository Institutions
Act of 1982 amended section to codify that such expenses are not
considered compensation. 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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The NCUA regulation at 12 CFR 701.33 (Sec. 701.33) implements
section 111. 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.\3\ 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
(including documentation requirements) established by the FCU 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. FCU board policies should also ensure
that such payments are reasonable in amount in relation to the FCU's
resources and financial condition.\4\
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\3\ 40 FR 30261 (July 18, 1975) (adding 12 CFR 701.33).
\4\ Proposed Rule, 57 FR 18837, 18838-39 (May 1, 1992).
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On January 26, 2026, the NCUA Board published a proposed rule to
amend the definition of the term compensation under Sec. 701.33 to
exclude dependent care costs incurred by volunteer officials while
attending board meetings and performing official credit union
duties.\5\ The proposed rule followed feedback that the NCUA Board
received on 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.\6\ As discussed in the preamble to the
proposed rule, a national trade association representing credit unions
requested that the NCUA Board reconsider this position. The association
cited several factors supporting dependent care reimbursement to
encourage board participation, noting evolving family needs and
recruitment benefits,
[[Page 34734]]
especially for single parents or caregivers.\7\
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\5\ Proposed Rule, 91 FR 3073 (Jan. 26, 2026).
\6\ 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>.
\7\ Proposed Rule, 91 FR at 3074.
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The NCUA Board, after considering public feedback and other factors
described in the preamble to the proposed rule, proposed amending Sec.
701.33(b)(2)(i) to clarify that dependent care costs may be reasonable
and proper in certain situations. For this purpose, the NCUA Board
proposed adding a definition for dependent care costs using the
Internal Revenue Code's definition of a qualifying individual.\8\ Based
on 12 CFR 701.21(c)(8)(ii), the proposed rule also defined volunteer
official to mean an official of a credit union who does not receive
compensation from the credit union solely for his or her service as an
official. All other sections of the regulation would remain unchanged.
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\8\ 26 U.S.C. 21(b). 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.
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).
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As proposed, the amendments would apply to FCUs, including
corporate FCUs. The NCUA Board solicited public comments on the
proposed changes providing a 60-day comment period that concluded on
March 27, 2026.
B. Legal Authority
The NCUA Board is issuing this final rule pursuant to its authority
under the FCU Act. Under the FCU Act, NCUA is the chartering and
supervisory authority for FCUs and the federal supervisory authority
for federally insured credit unions (FICUs).\9\ The FCU Act grants NCUA
a broad mandate to issue regulations governing both FCUs and all FICUs.
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.\10\ Section 207 of the FCU Act is a
specific grant of authority over share insurance coverage,
conservatorships, and liquidations.\11\ Section 209 of the FCU Act is a
plenary grant of regulatory authority to issue rules and regulations
necessary or appropriate to carry out its role as share insurer for all
FICUs.\12\ Accordingly, the FCU Act grants the NCUA Board broad
rulemaking authority to ensure that the federally insured credit union
industry and the National Credit Union Share Insurance Fund (``Share
Insurance Fund'') remain safe and sound.
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\9\ 12 U.S.C. 1752-1775.
\10\ 12 U.S.C. 1766(a).
\11\ 12 U.S.C. 1787.
\12\ 12 U.S.C. 1789.
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Section 111 allows the reimbursement of reasonable expenses
incurred by volunteer officials in executing their official credit
union duties but provides no further definition or standards for
assessing reasonableness. While the legislative history is limited, the
statutory amendment allowing reasonable expenses was among several
changes designed to facilitate FCU management and operating
flexibility.\13\
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\13\ See 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)); 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>.
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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.\14\
``Reasonable'' is generally understood to mean ``possessing sound
judgement,'' ``within sensible or rational limits,'' and ``not extreme
or excessive.'' \15\ ``Reasonable'' reflects good judgment that is
``fair and proper under the circumstances'' or ``rational, sound, and
sensible.'' \16\ 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.\17\ The NCUA regulation, Sec. 701.33,
implements section 111. Given this framework, the NCUA Board has used
its discretion under the FCU Act to interpret these terms and give FCU
boards latitude in fashioning reimbursement policies and making
individualized determinations.\18\
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\14\ 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)).
\15\ Reasonable, Webster's New Collegiate Dictionary 955 (1981),
<a href="https://archive.org/">https://archive.org/</a>(lastvisitedApril17,2026); 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 April 17, 2026); Reasonable,
Black's Law Dictionary (12th ed. 2024).
\16\ Id.
\17\ Loper Bright Enterprises v. Raimondo Relentless, Inc. v.
Department of Commerce, 603 U.S. 369, 144 S. Ct. 2244 (2024)
(collectively Loper Bright).
\18\ See Final Rule, 57 FR 54499, 54501-02 (Nov. 19, 1992).
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II. Final Rule
A. Overview
This final rule follows publication of the January 26, 2026,
proposed rule and takes into consideration the comments received on the
proposal. By the close of the public comment period on March 27, 2026,
NCUA received 19 comment letters regarding the proposed rule. Comments
were received from trade associations, credit union leagues, federal
credit unions, and individuals. After carefully considering the
comments, NCUA is publishing this final rule with one non-substantive
edit for clarity and precision. All other sections of the regulation
remain unchanged.
B. Discussion of Public Comments
The NCUA Board requested comments on all aspects of the proposed
rule and, specifically, the following topics: broadening board
participation, eligible officials, other federal agency standards
regarding dependent care costs, FCU board responsibilities, lost wage
comparisons, reimbursement situations, industry statistics, state-level
best practices, and corporate FCUs. Most commenters opted to provide
general comments rather than address the specific questions posed in
the preamble to the proposed rule. Only two commenters specifically
addressed each of the 12 questions presented. This section of the
preamble discusses the significant issues raised by the commenters, and
the NCUA Board's responses to the comments.
1. The Comments, Generally
The comments were largely supportive of the proposed regulatory
amendments. Most comments supported reimbursing reasonable dependent
care costs for volunteer officials, citing reduced financial barriers
and increased board participation. One commenter questioned the
proposal's practical benefit for small FCUs but ultimately supported
NCUA's intent and the proposal if it would benefit some credit unions.
2. Comments on Broadening Board Participation
Most commenters described dependent care costs as a tangible
barrier that can discourage skilled candidates with caregiving
responsibilities from board service--particularly single parents,
working parents, military families, and caregivers for persons with
disabilities. The rising expenses of childcare and eldercare were
frequently cited by commenters. Several commenters observed that
offering reimbursement can ease this financial burden, making
volunteering more accessible to those with caregiving duties. One
commenter noted that reimbursing dependent care costs would give FCUs
greater flexibility
[[Page 34735]]
to support work-life balance among volunteer officials. Others
emphasized its potential to strengthen credit union governance and
improve recruitment efforts to attract skilled candidates.
NCUA Response. The NCUA Board appreciates the support expressed by
the commenters. Based on the public feedback and other factors
described in the preamble to the proposed rule, the NCUA Board agrees
that recognizing dependent care costs as a reimbursable expense will
provide FCUs with greater flexibility to support volunteer officials
with caregiver responsibilities and whose duties include credit union
business.
3. Comments on Eligible Officials
As proposed, the NCUA Board would authorize FCUs to extend
dependent care reimbursement to a ``volunteer official,'' as defined in
12 CFR 701.21(c)(8)(ii). This term refers to a credit union official
who does not receive compensation from the credit union solely for his
or her service as an official. Under the current regulation, Sec.
701.33(a) defines ``official'' to include a member of the FCU board of
directors, credit committee or supervisory committee, or other
volunteer committee established by the FCU board. Section 701.33(b),
however, only allows payments when an official carries out the
responsibilities of their credit union position.
Four comments discussed whether dependent care reimbursement should
extend to officials other than FCU board members like associate
directors, directors emeriti, and committee members. Two commenters
suggested eligibility should be based on board-assigned duties, noting
that associate directors and committee members frequently undertake
significant responsibilities that may justify reimbursement. The other
two commenters supported extending reimbursement to all volunteers
engaged in credit union governance.
NCUA Response. After careful consideration of the public comments,
the NCUA Board has decided not to exclude volunteer officials, such as
associate directors and committee members, who provide board designated
services and who act in more than an honorary capacity from the final
rule. As noted in the preamble to the proposed rule, since 2011,
associate directors or similar FCU officials who meet these conditions
have been eligible for reimbursement of training and travel costs under
Sec. 701.33.\19\ The NCUA Board believes that these volunteer
officials are distinguishable from directors emeritus who are not
authorized to perform any duties other than providing advice to the
credit union's board, staff, and other committees as needed.\20\ The
NCUA Board agrees that, if the volunteer official in question provides
board designated services that go beyond merely serving in an honorary
capacity, the usual requirements governing payments apply to dependent
care costs.
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\19\ 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>.
\20\ Unless separately elected or appointed, directors emeriti
are not members of any other committee of the credit union.
Directors emeriti are not a member or officer of the board of
directors; they may not vote on any matter before the board or any
other committee of the credit union; they may not receive any
compensation from the credit union; and they are not required to
attend any meetings or authorized to perform any duties other than
providing advice to the credit union's board, staff and other
committees as needed. See FCU Standard Bylaws Article VI. Board of
Directors, Section 10. Director Emeritus,12 CFR part 701, App. A.
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4. Comments on Other Federal Agency Guidance
In the preamble to the proposed rule, the NCUA Board invited
comment on whether the final rule should include other federal agency
standards addressing dependent care costs. The NCUA Board proposed
defining dependent care costs as expenses for the care of a qualifying
individual (as defined in 26 U.S.C. 21). The proposed provision adopted
the Internal Revenue Code's definition for qualifying individual under
26 U.S.C. 21. In the proposal, the NCUA Board noted that the qualifying
individual standard also applies to dependent care assistance programs,
such as flexible spending accounts.\21\ As proposed, examples of
qualifying individuals would include: (1) a dependent child under 13
years of age; (2) a spouse who is physically or mentally incapable of
self-care and resides with the volunteer official for more than half of
the year, or (3) other dependents (such as an adult child or elderly
relative) who are physically or mentally unable to care for themselves
and who live with the volunteer official for more than half of the
year.
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\21\ 26 U.S.C. 21(b), 26 U.S.C. 129(e)(1).
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While NCUA has historically found Internal Revenue Service (IRS)
interpretations to be persuasive, the proposed rule did not further
define ``care of a qualifying individual'' based on IRS regulations.
For example, under the IRS regulation at 26 CFR 1.21-1(d), expenses are
considered for the care of a qualifying individual if the primary
function is to assure the individual's well-being and protection. The
IRS regulation also outlines additional requirements regarding the care
of a qualifying individual, including expense allocation, indirect
expenses, incidentals, and the manner of care. The IRS regulation
provides illustrations for determining whether a particular dependent
care cost may be eligible for the dependent care tax credit.\22\
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\22\ 26 CFR 1.21-1(d).
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The preamble to the proposed rule also discussed the Office of
Management and Budget's (OMB) approach as another potential
alternative. For federal financial assistance awards, OMB regulations
allow temporary dependent care costs beyond regular dependent care, if
they: (i) directly result from travel to a conference for the Federal
award; (ii) align with written travel policies; and (iii) are only
temporary during travel.\23\ The OMB regulation adopted the Internal
Revenue Code's definition of dependent (26 U.S.C. 152) but did not
specifically define ``dependent care costs.'' \24\
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\23\ 2 CFR 200.475(c)(1).
\24\ See 2 CFR 200.475(c) (citing 26 U.S.C. 152); 2 CFR 200.404;
Final Guidance, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Award, 78 FR 78590,
78602 (Dec. 26, 2013).
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Eight comments responded to defining dependent care costs using
other federal agency guidelines. Commenters differed on whether the
final rule should define ``dependent care costs.'' Several urged the
NCUA Board to avoid strict definitions or monetary limits, citing
regional cost variations and differences in credit union size. Some
opposed regulatory definitions, warning such measures might
inadvertently exclude certain groups or overlook regional needs. Many
of these commenters noted that FCU boards are best suited to set
relevant policies and suggested NCUA manage safety and soundness via
supervision. Others recommended clarifications in the preamble to the
final rule or through guidance.
Two commenters supported defining ``dependent care costs'' using
the Internal Revenue Code's definition for qualifying individual but
preferred leaving documentation requirements to FCU board discretion.
Others cited the OMB regulation as persuasive. As an alternative, one
FCU suggested defining ``dependent'' to include any qualifying
individual for whom the volunteer official has primary caregiving
responsibility and for whom care is necessary for the official's credit
union
[[Page 34736]]
duties. According to the commenter, this would encompass minor
children, spouses, adult children, parents, and other household members
incapable of self-care and residing with the official most of the year.
The commenter recommended ``dependent care costs'' include reasonable,
necessary, and documented expenses for supervision, care, or custodial
support incurred specifically for credit union activities, such as
meetings, training, travel, or other approved functions. The commenter
wrote that these costs could involve payments to licensed childcare
providers, in-home caregivers, adult day care services, or similar
arrangements, provided they are reasonable in amount, properly
documented, and related to official duties.
NCUA Response. The NCUA Board welcomes feedback on regulatory
clarity and remains committed to working to ensure clear regulatory
obligations. As noted in the preamble to the proposed rule, FCUs face
the task of balancing the FCU Act's restriction on compensation with
the need to recruit skilled volunteer officials. The NCUA Board
appreciates the thorough review and recommendations provided by
commenters.
After careful consideration of the comments and alternatives, the
NCUA Board believes it is appropriate to maintain a regulatory
definition for dependent care costs in the final rule. The final rule
incorporates only the Internal Revenue Code's statutory definition for
qualifying individual under 26 U.S.C. 21(b). Additionally, a non-
substantive change has been made to the proposed definition of
dependent care costs. The proposed rule referenced the statutory
definition of qualifying individual found in 26 U.S.C. 21. For clarity,
the final rule now refers to paragraph (b) in 26 U.S.C. 21, which
specifically defines qualifying individual. Accordingly, the NCUA Board
is adopting this clarification in the final rule, with dependent care
costs meaning expenses for the care of a qualifying individual (as
defined in 26 U.S.C. 21(b)).
The NCUA Board also finds the comments cautioning against
additional prescriptive requirements to be persuasive. As such, the
NCUA Board agrees that it is not necessary to incorporate additional
detailed requirements into the final rule. The NCUA Board considered
the alternatives but has determined that the final rule offers the most
appropriate balance to clarify supervisory expectations while
preserving FCU board flexibility. The NCUA Board has not further
defined terms such as ``care'' or ``care of'' in the final rule as they
should generally be understood according to their common, ordinary
meaning. For example, care refers to ``responsibility or attention to
health, well-being, and safety,'' while take care of means ``providing
for or attending to someone's needs''.\25\ The NCUA Board believes this
plain-language meaning allows FCU boards to create written policies,
including documentation requirements, suitable for their size,
financial condition, governance, operational complexity, and the
volunteer ethos of FCUs. As stated in the proposed rule, the NCUA Board
has historically left such details to each FCU's board of directors,
within the boundaries of reasonableness and safety and soundness.\26\
While the final rule does not impose more prescriptive requirements,
the NCUA Board recognizes that FCU boards may refer to the noted
alternatives when establishing comparable or stricter procedures in
their reimbursement policies. Further, the NCUA Board believes the
plain meaning of dependent care costs is sufficient to enable the
agency to address any instances where a credit union's policy allows
remuneration beyond what reasonably would qualify as dependent care
costs for a volunteer official.
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\25\ Care, Merriam-Webster On-line Dictionary, <a href="https://www.merriam-webster.com/dictionary/care">https://www.merriam-webster.com/dictionary/care</a> (last visited April 29,
2026); take care of, Merriam-Webster On-line Dictionary, <a href="https://www.merriam-webster.com/dictionary/take%20care%20of">https://www.merriam-webster.com/dictionary/take%20care%20of</a> (last visited
April 29, 2026).
\26\ Proposed Rule, 91 FR at 3074; Final Rule, 57 FR 54499,
54501-02 (Nov. 19, 1992).
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5. Comments on FCU Board of Directors' Responsibilities
In the proposed rule, the NCUA Board invited public comment on an
FCU board's responsibilities in amending payment policies to include
dependent care costs for volunteer officials. The NCUA Board also
solicited comments on potential obstacles and associated cost
considerations for FCU boards electing to pay dependent care costs for
volunteer officials.
The general consensus among commenters was that dependent care
reimbursement should be voluntary and that FCU boards should have
discretion to adopt more restrictive policies or to disallow such
reimbursements entirely. Some commenters recommended that credit unions
not planning to use this authority should not be forced to adopt a
standalone policy, as it could create unnecessary administrative
burden, especially for smaller FCUs with limited resources. Commenters
anticipated that related expenditures should be negligible due to the
discretionary nature of reimbursement, existing regulatory boundaries,
and if a targeted approach is adopted by FCU boards. They noted that
FCUs are adequately equipped to manage costs through measures such as
restricting eligibility, documentation standards, and internal approval
processes. And, if needed, FCU boards can implement alternative
measures should reimbursement prove overly costly or impractical.
Commenters also supported a principles-based supervisory model that
requires reasonable documentation to validate actual costs related to
official credit union duties. Many suggested FCU boards should, subject
to supervisory oversight, establish reasonableness standards with
written policies tailored to each institution's size and complexity.
These policies would address documentation, internal controls,
eligibility criteria, and duty-based connections. Commenters proposed
substantiating dependent care costs through invoices or receipts
clearly showing the nature of services provided, dates and duration of
care, amounts paid, and the official purposes necessitating these
costs. While acknowledging that tax matters fall outside the NCUA
Board's purview, some commenters requested clarification on possible
tax reporting consequences, such as relevant reporting thresholds.
NCUA Response: The NCUA Board agrees that provided the dependent
care costs are reasonable, within the bounds of Sec. 701.33, and
safety and soundness concerns are met, payments should be with the
discretion of the individual FCU's board of directors. The NCUA Board
observes that the current NCUA regulation, Sec. 701.33, requires an
FCU board to satisfy several conditions to reimburse volunteer
officials for out-of-pocket expenses. First, the payment must be for
reasonable and proper costs incurred by an official in carrying out
their credit union responsibilities. As the NCUA Board has noted on
prior occasions, this step includes determining whether the payment is
reasonable in amount in relation to the resources and financial
condition of the FCU. Second, the FCU board must determine that the
payment is necessary or appropriate in order to carry out the official
business of the credit union. Third, the payment must be in accordance
with the board-adopted written policies and procedures, including
documentation requirements.
With this regulatory amendment, the NCUA Board is authorizing FCU
boards to choose whether to adopt written policies for reimbursing or
directly paying dependent care costs, as long as
[[Page 34737]]
these conditions are met. The NCUA Board agrees with commenters that
any cost increase for members should be minimal if these requirements
are followed. The NCUA Board emphasizes that, under the final rule,
dependent care payments remain optional and are not mandatory. The NCUA
Board also acknowledges that an FCU board of directors can set stricter
policies or ban these payments altogether. Ultimately, these decisions
are up to each FCU board, within the boundaries of the rule.
As noted in the preamble to the proposed rule, the NCUA Board
cautions FCUs that the final rule has no effect on applicable IRS
regulations governing the reporting and taxing of any payments or
reimbursements. In 2005, NCUA issued guidance to FCUs addressing the
tax consequences of paying travel expenses for FCU volunteer officials
and their guests.\27\ The NCUA Board believes that the same
considerations would apply to paying dependent care costs and
encourages FCUs to review the 2005 guidance, which is available on
<a href="http://NCUA.gov">NCUA.gov</a>. For information on IRS requirements, NCUA recommends that
FCUs and their officials consult with tax advisors or attorneys.
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\27\ See 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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6. Comments on Small FCUs
Several comments addressed small FCUs. One commenter underscored
the benefit for smaller FCUs, which often operate with a limited pool
of volunteers and may face recruitment difficulties if prospective
board members must absorb out-of-pocket expenses. Two commenters noted
that dependent care reimbursement should not be viewed as an
entitlement or perk. Conversely, one commenter wrote that the proposal
would provide minimal value to small FCUs given their restricted
budgets and the credit union volunteer philosophy. This commenter also
observed that the increased use of remote meetings diminishes the
necessity for dependent care reimbursement, and that such reimbursement
is unlikely to substantially influence volunteer recruitment or
retention for small FCUs. This commenter emphasized that there are more
pressing regulatory burdens on small FCUs, such as lengthy
examinations, punitive findings, ``over-compliance'' pressures,
unrealistic expectations for unpaid supervisory committee volunteers,
and complex regulations. The commenter urged additional tiered relief
in these areas as more meaningful for small credit unions. Another
commenter recommended that NCUA offer additional guidance, flexibility,
or financial support to mitigate any financial impact on smaller FCUs.
NCUA Response. The NCUA Board welcomes the public comments
submitted on the proposed rule and appreciates the support expressed by
most commenters. Requests for additional regulatory relief are outside
the scope of the proposed rule. Although the comments are outside the
scope of this rulemaking, the NCUA Board values this feedback and will
bear the suggestions in mind in considering other regulatory changes as
appropriate in the future.
While the NCUA Board is sympathetic to the financial constraints
raised by the commenters, the requests for federal financial assistance
is beyond the purview of this final rule. This final rule follows
established principles for paying reasonable expenses under section 111
and Sec. 701.33. As discussed in more detail in this preamble, the
NCUA Board observes that payments under Sec. 701.33 remain optional
and are not mandatory. The NCUA Board has long recognized that
discretionary reimbursements under Sec. 701.33 should be reasonable in
amount in relation to the FCU's resources and financial condition. For
example, smaller FCUs may have fewer board members, or have fewer
volunteers who would qualify for dependent care reimbursement. While
section 111 permits FCUs to pay reasonable expenses incurred by
volunteer officials in performing official credit union business, the
provision does not authorize NCUA to provide federal financial
assistance for such costs. Accordingly, the NCUA Board has not revised
the rule in response to these comments.
7. Comments on Federally Insured, State-Chartered Credit Unions
(FISCUs)
FISCUs are not subject to Sec. 701.33 and must comply with
applicable state laws pertaining to board member compensation.\28\ The
NCUA Board invited public comment on state requirements and FISCU
policies governing reimbursing credit union officials for dependent
care expenses. Six commenters responded to the question on state-level
practices for reimbursing dependent care expenses. Several commenters
noted that some state frameworks already permit compensation or broader
reimbursement. These commenters supported the proposal, noting it would
help federal charters remain competitive while maintaining volunteer-
governance principles. Another commenter suggested that adopting this
proposal may encourage some state regulators to implement similar
policies for state-chartered credit unions. One national trade
association is currently reviewing state policies and plans to share
best practices with NCUA.
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\28\ 12 CFR 741.3(c).
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NCUA Response. The NCUA Board recognizes the importance of state
law in regulating FISCUs and that FISCUs may be subject to state-
specific board reimbursement policies.\29\ No comments provided further
information on state-level practices or requirements for the NCUA
Board's consideration.
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\29\ 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.
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8. Comments on Lost Wages and Lost Opportunity Costs
The NCUA Board requested public comments on whether similar
considerations for prohibiting the payment of lost wages apply to
dependent care costs. As discussed in the preamble to the proposed
rule, a national trade organization maintained that lost wages to
attend a board meeting are not similar to childcare expenses.\30\ A few
comments agreed that dependent care costs are out-of-pocket expenses
similar to travel costs incurred for official duties. Several
commenters suggested that the NCUA Board should reconsider permitting
reimbursement for lost wages or leave taken to attend board meetings or
conferences. Another commenter urged expanding the final rule to allow
reimbursement for lost opportunity costs like honoraria for speaking
engagements or representing the credit union at events, and retainers
for professional services performed in an official role.
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\30\ Proposed Rule, 91 FR 3073, 3078 (Jan. 26, 2026).
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NCUA Response. The NCUA Board agrees that dependent care costs are
distinguishable from lost wages. The NCUA Board believes that, unlike
lost wages, dependent care costs are actual out-of-pocket expenses. The
other suggestions made by commenters to add lost wages and lost
opportunity costs to the final rule are outside the scope of this
rulemaking. The NCUA Board notes that, in 1988, the credit union
community overwhelmingly opposed reimbursing volunteer officials for
lost
[[Page 34738]]
pay or leave.\31\ Therefore, the NCUA Board has not revised the rule in
response to these comments.
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\31\ Final Rule, 53 FR 29640 (Aug. 8, 1988); Proposed Rule, 53
FR 4992 (Feb. 19, 1988).
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9. Comments on Corporate Federal Credit Unions
The NCUA Board requested feedback on whether corporate FCUs should
be regulated differently but received no substantive comments.
Accordingly, the final rule applies to corporate FCUs.
III. Regulatory Procedures
A. Executive Orders 12866, 13563, and 14192
Pursuant to Executive Order 12866 (``Regulatory Planning and
Review''), a determination must be made whether a regulatory action is
significant and therefore subject to review by the Office of
Information and Regulatory Affairs (OIRA), within the Office of
Management and Budget (OMB), in accordance with the requirements of the
Executive Order.\32\ 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.\33\ This final rule was drafted
and reviewed in accordance with Executive Order 12866 and Executive
Order 13563. OIRA has determined that this final rule is ``not
significant'' under section 3(f) of Executive Order 12866.
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\32\ 58 FR 51735 (Oct. 4, 1993).
\33\ 76 FR 3821 (Jan. 21, 2011).
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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.\34\ This rule is not an Executive Order 14192 regulatory
action because this rule is not significant under Executive Order
12866.
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\34\ 90 FR 9065 (Feb. 6, 2025).
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B. Regulatory Flexibility Act
The Regulatory Flexibility Act 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.\35\ If the agency makes such a certification,
it shall 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.\36\ For purposes of this
analysis, NCUA considers small credit unions to be those having under
$100 million in assets.\37\ The NCUA Board fully considered the
potential economic impacts of the regulatory amendments on small credit
unions.
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\35\ 5 U.S.C. 601 et seq.
\36\ 5 U.S.C. 605(b).
\37\ 80 FR 57512 (Sept. 24, 2015).
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The final rule would permit small 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. Small FCUs traditionally have had the most
difficulty recruiting volunteer officials, and this rule provides them
with another recruiting tool. Consistent with long-standing practices,
the NCUA Board expects that small FCU payment policies including
dependent care costs will continue to be reasonable in relation to its
resources and financial condition while maintaining financial stability
and capital adequacy. As outlined in the preamble to this rule, smaller
FCU boards would be able to set their own cost limits or opt not to
implement payment policies entirely. Additionally, the NCUA Board
anticipates that small FCU boards are unlikely to opt to pay dependent
care expenses without evaluating whether the recruiting benefits (for
example, the enhanced ability to attract and keep talented volunteer
officials) outweigh the associated expenses. Small FCUs choosing to
adopt such policies can also mitigate costs by limiting eligibility
requirements, setting monetary limits, and establishing internal
approval procedures. The NCUA Board anticipates that related expenses
will remain minimal given the optional nature of reimbursements,
current regulatory frameworks, remote meeting capabilities, and the
possibility for small FCU boards to take a targeted approach.
Accordingly, NCUA certifies the final rule will not have a significant
economic impact on a substantial number of small credit unions.
C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) applies to rulemaking 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. 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 final rule 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. NCUA is proposing to extend
for three years, with revision, this information collection.
OMB Control Number: 3133-0130.
Title of Information Collection: Written Reimbursement Policy, 12
CFR 701.33.
Estimated Number of Respondents: 2,715.
Estimated Number of Responses per Respondent: 1.3.
Estimated Annual Responses: 3,620.
Estimated Hours per Response: Varies.
Estimated Total Annual Burden Hours: 2,263.
The final 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.
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).
NCUA estimates a total annual burden of 2,263 hours as follows:
[[Page 34739]]
NCUA Summary of Estimated Annual Burden
[3133-0130]
----------------------------------------------------------------------------------------------------------------
Average
Type of burden Number of Number of time per Total estimated
Information collection activity (frequency of respondents responses per response annual burden
response) respondent (hours) hours
----------------------------------------------------------------------------------------------------------------
1. Maintain Written Recordkeeping 2,715 1 0.5 1,358
Reimbursement Policy (Ongoing). (Annual).
2. Establish Dependent Care Recordkeeping (One- 2,715 .3 1 905
Costs (Implementation). Time).
----------------------------------------------------------
Total Estimated Annual ................... ............ .............. .......... 2,263
Burden.
----------------------------------------------------------------------------------------------------------------
D. Executive Order 13132 on Federalism
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests.
NCUA, an agency as defined in 44 U.S.C. 3502(5), voluntarily complies
with the executive order to adhere to fundamental federalism
principles. This final 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 remain free to establish their own policies for board
compensation and for reimbursing FISCU officials for reasonable
expenses incurred in executing official credit union duties.\38\ NCUA
has therefore determined that this final rule does not constitute a
policy that has federalism implications for purposes of the executive
order.
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\38\ See Final Rule, 57 FR at 54502.
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E. Assessment of Federal Regulations and Policies on Families
NCUA has determined that this final rule will not affect family
well-being within the meaning of Section 654 of the Treasury and
General Government Appropriations Act, 1999.\39\ 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 in
the preamble to the proposed rule, 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.\40\ 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.\41\
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\39\ Public Law 105-277, 112 Stat. 2681 (1998).
\40\ 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>.
\41\ 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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F. Congressional Review Act
Subtitle E of the Small Business Regulatory Enforcement Fairness
Act of 1996, also known as the Congressional Review Act (CRA),
generally provides for congressional review of agency rules.\42\ NCUA
must submit a report to Congress and the Comptroller General when it
issues a final rule, as defined by the CRA.\43\ An agency rule, in
addition to being subject to congressional oversight, may also be
subject to a delayed effective date if the rule is a ``major rule.''
The Office of Information and Regulatory Affairs (OIRA), within the
Office of Management and Budget (OMB), has determined that this rule is
not a ``major rule'' within the meaning of the relevant sections of the
CRA. Specifically, the rule will not (i) have an aggregate economic
impact greater than or equal to $100 million, (ii) produce an increase
in prices/costs for consumers or other industry stakeholders/
regulators, or (iii) adversely affect domestic competition or the
ability of U.S. enterprises to compete in foreign markets. NCUA will
file appropriate reports with Congress and the Comptroller General so
this rule may be reviewed.
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\42\ 5 U.S.C. 801-808.
\43\ 5 U.S.C. 551; 5 U.S.C. 804(3).
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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 4th day
of June, 2026.
Melane Conyers-Ausbrooks,
Secretary of the Board.
For the reasons stated in the preamble, the NCUA Board amends 12
CFR part 701 as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS
0
1. The authority citation for part 701 is revised to read as follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759,
1761, 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 12 U.S.C. 4311-
4312.
Sec. 701.33 [Amended]
0
2. Amend Sec. 701.33 by revising paragraph (a) and the last sentence
of paragraph (b)(2)(i) to read as follows:
Sec. 701.33 Reimbursement, insurance, and indemnification of
officials and employees.
(a) Definitions. The following definitions apply to this section:
Dependent care costs. Dependent care costs mean expenses for the
care of a qualifying individual (as defined in 26 U.S.C. 21(b)).
Official. An official is a person who is or was a member of the
board of directors, credit committee or supervisory committee, or other
[[Page 34740]]
volunteer committee established by the board of directors.
(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. 2026-11507 Filed 6-8-26; 8:45 am]
BILLING CODE 7535-01-P
</pre></body>
</html>Indexed from Federal Register on June 9, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.