Compilation of Legal Opinion Letters on Board Compensation
Written by Brandy Bruyere, Director of Regulatory Compliance
At NAFCU, we're often asked about where the line is between reasonable reimbursements for a federal credit union's board of directors and impermissible compensation that is prohibited by section 701.33 of NCUA's regulations. As it turns out, there are many legal opinion letters from NCUA on this subject. This chart provides the letter number, title with hyperlink to the letter, and a very short description of the letter. Because legal opinion letters can be rather nuanced, this is not a substitute for giving these a detailed review when answering a question about what kinds of costs are permitted for reimbursement. But, it can help hone in initial research efforts and save some time digging around NCUA's website.
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Board Compensation |
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11-0152 |
Permissibility of reimbursing "appropriate" training and related travel expenses |
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11-0805 |
Nominal monetary awards permitted to recognize multiple years of service |
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10-0919 |
Section 701.33 definition of compensation versus IRS 1099 definition |
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10-0913 |
Provision of Long-term Care Insurance to Credit Union Officials |
Long term care insurance as permissible health care coverage for directors (discussion regarding nonvoting directors later rescinded for those directors serving beyond mere "honorary" capacity by 11-0152 included above) |
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03-1053 |
Use of office equipment like computers and cell phones to perform official duties permitted |
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03-1030 |
Permissibility of paid employees serving on the board where paid responsibilities are distinct from board duties |
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00-0508 |
Impermissibility of Free Safe Deposit Boxes for Board and Committee Members |
Free safe deposit box is impermissible compensation |
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99-0621 |
Providing health insurance either directly or by reimbursing costs |
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98-1215 |
Reimbursement of child care is impermissible (same conclusion reached in letter 92-0507) |
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97-0305 |
Reimbursement of travel and lodging to attend board meetings is permissible, reimbursement for lost wages is impermissible |
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95-1218 |
Reimbursement of lost wages is impermissible (but board meetings can be attended by phone) |
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93-0233 |
Gifts of nominal value are permissible (notes that IRS interpretation of "compensation" used to some extent on this issue) |
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93-0733 |
Reimbursement for lost wages impermissible |
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91-0215 |
Reasonable costs for meal reimbursements are permissible |
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The overall takeaway is that NCUA has historically taken a pretty narrow view of what expenses can be reimbursed for a FCU's board of directors. Besides health care costs which are permitted by §111 of the FCU Act (12 U.SC. § 1761), expenses that can be covered are generally those that relate to the directors' official duties. Examples include relevant training and related travel, lodging and meal reimbursement, use of office equipment. In some narrow cases, a nominal gift like a volunteer service award is permissible, but other expenses that may seem reasonable in a colloquial sense, such as child care costs or lost wage reimbursement, are not permitted.
A PDF version of this chart can be downloaded here: BOD Compensation Chart
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