Recent FAQs – Appraisals, Regulation D, and an IRS IRA Deadline
A few questions have come up on both recent developments and an existing deadline. We wanted to cover these today and hopefully save you a little time.
When is the appraisal threshold increase effective?
As a reminder, NCUA approved a rule increasing the threshold where certain real estate related transactions would require an appraisal. Specifically, this threshold is increasing from $250,000 to $400,000 but was not effective until publication. There is good news here – this is scheduled to publish in the Federal Register today. For more information, check out this NAFCU Compliance Blog post.
Is the removal of the six-transfer limit in Regulation D temporary or permanent?
It does seem somewhat ambiguous as to whether the recent amendment to Regulation D is permanent (more information in this NAFCU Compliance Blog post). In explaining why they made the change, the Federal Reserve did mention the temporary disruptions related to COVID-19, but seemed to indicate that the primary reason was the elimination of reserve requirements from last month. This makes the transaction/non-transaction account distinction moot from the standpoint of conducting monetary policy. However, it is also important to note that the Federal Reserve has not committed to making the elimination of reserve requirements permanent either. Overall, these recent changes are more in line with how the Federal Reserve has implemented monetary policy since the Great Recession. It seems that, absent significant changes in the Fed’s approach to monetary policy, there would not be a need to reinstitute the limit. Overall, there is reason to believe this will be a permanent change, but it is just not clear at this time. NAFCU will certainly continue to advocate for the change to be permanent in the meantime. NAFCU members can find more information here, and NAFCU is seeking comments from members which can be provided here.
Our credit union offers Individual Retirement Accounts (IRAs). Since taxpayers have an extension to make contributions towards the 2019 tax year, do we have an extension for sending out contribution reports?
As a starting point, the IRS requires those credit unions offering IRAs to annually provide Form 5498 to members outlining contributions made for the prior tax year. The due date listed on the 2019 edition of the form is June 1, 2020. The IRS extended the deadline for individuals to make prior year contributions to IRAs to July 15, 2020. This means the Form 5498 is due six weeks before the deadline for a member to make a 2019 contribution to their IRA. Unfortunately, the IRS has not yet announced a comparable extension for the deadline to provide Form 5498. NAFCU has reached out to the IRS and the agency is aware of the issue. Given the stimulus payments, tax credits, and other issues the IRS is tasked with in the CARES Act, it is possible there could be guidance on this but it is not clear.
On this landing page, under “Recent Developments” is where the IRS usually places any guidance that arises so those credit unions with obligations to provide Form 5498 to members may want to check back here periodically: