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Key: (1) language to be deleted (2) new language


                         Laws of Minnesota 1986 

                        CHAPTER 353-H.F.No. 1806 
           An act relating to financial institutions; permitting 
          state banks and credit unions to offer self-directed 
          individual retirement accounts; removing loans made by 
          the energy and economic development authority from a 
          bank's lending limitations; amending Minnesota 
          Statutes 1984, sections 48.15, by adding a 
          subdivision; 48.24, subdivision 5; and Minnesota 
          Statutes 1985 Supplement, section 52.04, subdivision 1.
    Section 1.  Minnesota Statutes 1984, section 48.15, is 
amended by adding a subdivision to read: 
    Subd. 4.  [RETIREMENT ACCOUNTS.] A state bank may act as 
trustee or custodian of a self-employed retirement plan under 
the Federal Self-Employed Individual Tax Retirement Act of 1962, 
as amended, and of an individual retirement account under the 
Federal Employee Retirement Income Security Act of 1974, as 
amended, if the bank's duties as trustee or custodian are 
essentially ministerial or custodial in nature and the funds are 
invested only (1) in the bank's own savings or time deposits; or 
(2) in any other assets at the direction of the customer if the 
bank does not exercise any investment discretion, invest the 
funds in collective investment funds administered by it, or 
provide any investment advice with respect to those account 
    Affiliated discount brokers may be utilized by the bank 
acting as trustee or custodian for self-directed IRAs, if 
specifically authorized and directed in appropriate documents.  
The relationship between the affiliated broker and the bank must 
be fully disclosed.  Brokerage commissions to be charged to the 
IRA by the affiliated broker should be accurately disclosed.  
Provisions should be made for disclosure of any changes in 
commission rates prior to their becoming effective.  The 
affiliated broker may not provide investment advice to the 
customer.  All funds held in the fiduciary capacity may be 
commingled by the financial institution in the conduct of its 
business, but individual records shall be maintained by the 
fiduciary for each participant and shall show in detail all 
transactions engaged under authority of this subdivision.  The 
authority granted by this section is in addition to, and not 
limited by, section 47.75. 
    Sec. 2.  Minnesota Statutes 1984, section 48.24, 
subdivision 5, is amended to read: 
    Subd. 5.  Loans or obligations shall not be subject under 
this section to any limitation based upon such capital and 
surplus to the extent that they are secured or covered by 
guarantees, or by commitments or agreements to take over or to 
purchase the same, made by: 
    (1) the commissioner of agriculture on the purchase of 
agricultural land or by; 
    (2) any Federal Reserve bank or by; 
    (3) the United States or any department, bureau, board, 
commission, or establishment of the United States, including any 
corporation wholly owned directly or indirectly by the United 
States; or 
    (4) the Minnesota energy and economic development authority.
    Sec. 3.  Minnesota Statutes 1985 Supplement, section 52.04, 
subdivision 1, is amended to read: 
    Subdivision 1.  A credit union has the following powers: 
    (1) to offer its members and other credit unions various 
classes of shares, share certificates, deposits, or deposit 
    (2) to receive the savings of its members either as payment 
on shares or as deposits, including the right to conduct 
Christmas clubs, vacation clubs, and other thrift organizations 
within its membership; 
    (3) to make loans to members for provident or productive 
purposes as provided in section 52.16; 
    (4) to make loans to a cooperative society or other 
organization having membership in the credit union; 
    (5) to deposit in state and national banks and trust 
companies authorized to receive deposits; 
    (6) to invest in any investment legal for savings banks or 
for trust funds in the state and, notwithstanding clause (3), to 
invest in and make loans of unsecured days funds (federal funds 
or similar unsecured loans) to financial institutions insured by 
an agency of the federal government and a member of the Federal 
Reserve System or required to maintain reserves at the Federal 
     (7) to borrow money as hereinafter indicated; 
     (8) to adopt and use a common seal and alter the same at 
     (9) to make payments on shares of and deposit with any 
other credit union chartered by this or any other state or 
operating under the provisions of the federal Credit Union Act, 
in amounts not exceeding in the aggregate 25 percent of its 
unimpaired assets.  However, payments on shares of and deposit 
with credit unions chartered by other states are restricted to 
credit unions insured by the National Credit Union 
Administration.  The restrictions imposed by this clause do not 
apply to share accounts and deposit accounts of the Minnesota 
corporate credit union in United States central credit union or 
to share accounts and deposit accounts of credit unions in the 
Minnesota corporate credit union; 
     (10) to contract with any licensed insurance company or 
society to insure the lives of members to the extent of their 
share accounts, in whole or in part, and to pay all or a portion 
of the premium therefor; 
     (11) to indemnify each director, officer, or committee 
member, or former director, officer, or committee member against 
all expenses, including attorney's fees but excluding amounts 
paid pursuant to a judgment or settlement agreement, reasonably 
incurred by him in connection with or arising out of any action, 
suit, or proceeding to which he is a party by reason of being or 
having been a director, officer, or committee member of the 
credit union, except with respect to matters as to which he is 
finally adjudged in the action, suit, or proceeding to be liable 
for negligence or misconduct in the performance of his duties.  
The indemnification is not exclusive of any other rights to 
which he may be entitled under any bylaw, agreement, vote of 
members, or otherwise; 
     (12) upon written authorization from a member, retained at 
the credit union, to make payments to third parties by 
withdrawals from the member's share or deposit accounts or 
through proceeds of loans made to such member, or by permitting 
the credit union to make those payments from the member's funds 
prior to deposit; to permit draft withdrawals from member 
accounts, but a credit union proposing to permit draft 
withdrawals shall notify the commissioner of commerce, in the 
form prescribed, of its intent not less than 90 days prior to 
authorizing draft withdrawals.  The board of directors of a 
credit union may restrict one class of shares to the extent that 
it may not be redeemed, withdrawn, or transferred except upon 
termination of membership in the credit union; 
     (13) to inform its members as to the availability of 
various group purchasing plans which are related to the 
promotion of thrift or the borrowing of money for provident and 
productive purposes by means of informational materials placed 
in the credit union's office, through its publications, or by 
direct mailings to members by the credit union; 
     (14) to facilitate its members' voluntary purchase of types 
of insurance incidental to promotion of thrift or the borrowing 
of money for provident and productive purposes including, but 
not limited to the following types of group or individual 
insurance:  Fire, theft, automobile, life and temporary 
disability; to be the policy holder of a group insurance plan or 
a subgroup under a master policy plan and to disseminate 
information to its members concerning the insurance provided 
thereunder; to remit premiums to an insurer or the holder of a 
master policy on behalf of a credit union member, if the credit 
union obtains written authorization from the member for 
remittance by share or deposit withdrawals or through proceeds 
of loans made by the members, or by permitting the credit union 
to make the payments from the member's funds prior to deposit; 
and to accept from the insurer reimbursement for expenses 
incurred or in the case of credit life and accident and health 
insurance within the meaning of chapter 62B commissions for the 
handling of the insurance.  The amount reimbursed or the 
commissions received may constitute the general income of the 
credit union.  The directors, officers, committee members and 
employees of a credit union shall not profit on any insurance 
sale facilitated through the credit unions; 
     (15) to contract with another credit union to furnish 
services which either could otherwise perform.  Contracted 
services under this clause are subject to regulation and 
examination by the commissioner of commerce like other services; 
     (16) in furtherance of the twofold purpose of promoting 
thrift among its members and creating a source of credit for 
them at legitimate rates of interest for provident purposes, and 
not in limitation of the specific powers hereinbefore conferred, 
to have all the powers enumerated, authorized, and permitted by 
this chapter, and such other rights, privileges and powers 
incidental to, or necessary for, the accomplishment of the 
objectives and purposes of the credit union; 
     (17) to rent safe deposit boxes to its members if the 
credit union obtains adequate insurance or bonding coverage for 
losses which might result from the rental of safe deposit boxes; 
     (18) notwithstanding the provisions of section 52.05, to 
accept deposits of public funds in an amount secured by 
insurance or other means pursuant to chapter 118; 
     (19) to accept and maintain treasury tax and loan accounts 
of the United States and to pledge collateral to secure the 
treasury tax or loan accounts, in accordance with the 
regulations of the Department of Treasury of the United States; 
     (20) to accept deposits pursuant to section 149.12, 
notwithstanding the provisions of section 52.05, if the deposits 
represent funding of prepaid funeral plans of members; 
     (21) to sell, in whole or in part, real estate secured 
loans provided that:  
     (a) the loan is secured by a first lien;  
     (b) the board of directors approves the sale;  
     (c) if the sale is partial, the agreement to sell a partial 
interest shall, at a minimum:  
     (i) identify the loan or loans covered by the agreement;  
     (ii) provide for the collection, processing, remittance of 
payments of principal and interest, taxes and insurance premiums 
and other charges or escrows, if any;  
     (iii) define the responsibilities of each party in the 
event the loan becomes subject to collection, loss or 
     (iv) provide that in the event of loss, each owner shall 
share in the loss in proportion to its interest in the loan or 
     (v) provide for the distribution of payments of principal 
to each owner proportionate to its interest in the loan or loans;
     (vi) provide for loan status reports;  
     (vii) state the terms and conditions under which the 
agreement may be terminated or modified; and 
    (d) the sale is without recourse or repurchase unless the 
    (i) requires repurchase of a loan because of any breach of 
warranty or misrepresentation;  
    (ii) allows the seller to repurchase at its discretion; or 
    (iii) allows substitution of one loan for another;  
    (22) in addition to the sale of loans secured by a first 
lien on real estate, to sell, pledge, discount, or otherwise 
dispose of, in whole or in part, to any source, a loan or group 
of loans, other than a self-replenishing line of credit; 
provided, that within a calendar year beginning January 1 the 
total dollar value of loans sold, other than loans secured by 
real estate or insured by a state or federal agency, shall not 
exceed 25 percent of the dollar amount of all loans and 
participating interests in loans held by the credit union at the 
beginning of the calendar year, unless otherwise authorized in 
writing by the commissioner;  
    (23) to designate the par value of the shares of the credit 
union by board resolution; 
    (24) to exercise by resolution the powers set forth in 
United States Code, title 12, section 1757, as amended through 
August 1, 1985.  Before exercising each power, the board must 
submit a plan to the commissioner of commerce detailing 
implementation of the power to be used;  
    (25) To offer self-directed individual retirement accounts 
and Keough accounts and act as custodian and trustee of these 
accounts if: 
    (1) all contributions of funds are initially made to a 
deposit, share or share certificate account in the credit union; 
    (2) any subsequent transfer of funds to other assets is 
solely at the direction of the member and the credit union 
exercises no investment discretion and provides no investment 
advice with respect to plan assets; and 
    (3) the member is clearly notified of the fact that 
National Credit Union Share Insurance Fund coverage is limited 
to funds held in deposit, share or share certificate accounts of 
National Credit Union Share Insurance Fund-insured credit unions.
    Sec. 4.  [EFFECTIVE DATE.] 
    Sections 1 and 3 are effective the day after final 
    Approved March 19, 1986

Official Publication of the State of Minnesota
Revisor of Statutes