AB 290 — Revises provisions relating to financial institutions. (BDR 55-979)

(ReprintedAssembly withBill amendmentsNo. adopted on May 18, 2021) FIRST REPRINT A.B.

290290–Assemblywoman AJauregui SSEMBLYCHAPTER.......... B ILLN O.

290–A SSEMBLYWOMAN JAUREGUI M ARCH 16, 2021 ____________ Referred to Committee on Commerce and Labor SUMMARY—Revises provisions relating to financial institutions.

(BDR 55-979) FISCAL NOTE:

Effect on Local Government:

No.

Effect on the State:

No.

~ EXPLANATION – Matter in bolded italics is new;

matter between brackets [omitted material] is material to be omitted.

Existing law defines “fiduciary” for the purposes of certain provisions governing the business of a trust company to include a servicer or administrator of individual retirement accounts.

(NRS 669.045) Section 1.3 of this bill excludesexcludesr of from the definition of “fiduciary” a trust company or a savings bank that acts as a orcustodian savingsof bankindividual thatretirement providesaccounts services to the trust company or savingsan bank.companyaffiliate Existingof lawsuch authorizes a savings bank to engage in the business of a trust company andor imposes certain requirements and restrictions on a savings bank that engagesprovides inservices suchto the trust company business.or savings bank.

(NRSExisting 673.228)law Sectionauthorizes 2a ofsavings thisbank bill makes various changes to reflectengage thein addition of the provisionsbusiness of section 1.3 which account does not act as a fiduciary.strust acompany custodianand ofimposes ancertain individualrequirements retirementand Existingrestrictions lawon prohibits funds held in a fiduciary capacity by a savings bank fromthat beingengages used in the conduct of its business, but allows such funds to be invested in the - *AB290_R1* – 2 – deposit accounts maintained at the savings bank if a trust orcompany custodialbusiness. retirement plan does not prohibit the investment.

(NRS 673.228) Section 2 revisesof thesethis provisionsbill makes various changes to insteadreflect authorizethe addition of the provisions of section 1.3 which account does not act as a fiduciary.s a custodian of an individual retirement Existing law prohibits funds held in a fiduciary capacity by a savings bank instrumentfrom governingbeing used in the trustconduct retirementof planits business, but allows such funds to be invested in the deposit accounts maintained at the savings bank if a trust or othercustodial fiduciaryretirement accountplan does not prohibit the practice.investment.

Existing(NRS 673.228) Section 2 revises these provisions to instead authorize funds held in a fiduciary capacity by a savings bank to be invested in or swept to the deposit accounts of a savings bank if the instrument governing the trust retirement plan or other fiduciary account does not prohExisting federal regulations set forth certain requirements for a national bank with respect to funds in a fiduciary account administered by the national bank that are awaiting investment or distribution.

§ 9.10) Section 2 sets forth certain requirements for a savings bank with respect to funds in a fiduciary account administered by the savings bank that are awaiting investment or distribution whichtwhich are similar to the requirements for national banks set forth in existing federal regulations.

Sectionsassumes 1the androle 1.7 of thiscustodian billof requirean aindividual trustretirement companyaccount orfrom savingsan bankaffiliate thatof assumes the roletrust ofcompany custodianor ofsavings anbank, individualas retirementapplicable, accountor from ananother affiliatetrust company or savings bank or affiliate thereof, to provide to each holder of the account certain notice of the assumption of the role of custodian of the account.

- 81st Session (2021) – 2 – EXPLANATION – Matter in bolded italics is new;

matter between brackets [omitted material] is material to be omitted.

If a trust company or savings bank assumes the role of custodian for any individual retirement account within the meaning of section 408(a) of the Internal Revenue Code of 1986, 26 U.S.C.

“Fiduciary” means a trustee, executor, administrator, guardian of an estate, personal representative, conservator, assignee for the benefit of creditors, receiver, depositary or person that receives on deposit money or property from a public administrator or a person employed or contracted with - *AB290_R1* – 3 – pursuant to NRS 253.125, as applicable, under any provision of this chapter or from another fiduciary.

(a) Includes servicers or administrators of individual retirement accounts within the meaning of section 408(a) of the InternalInternalirement Revenue Code of 1986, 26 U.S.C.

(b) Does not include a trust company or savings bank that acts as a custodian for individual retirement accounts within the meaning of section 408(a) of the Internal Revenue Code of 1986, 26- 81st Session (2021) – 3 – U.S.C.

Chapter 673 of NRS is hereby amended by adding theretothe1.toIf a newtrust company or savings bank assumes the role of custodian for any individual retirement account within the meaning of section to408(a) readof asthe follows:Internal Revenue Code of 1986, U.S.C.

1.

If a trust company or savings bank assumes the role of custodian for any individual retirement account within the meaning of section 408(a) of the Internal Revenue Code of 1986, 26 U.S.C.

A savings bank shall have the powers, privileges and authorities to engage in trust company business, including engaging in fiduciary or custodial activities and establishing common trust funds, either directly or indirectly through a subsidiary, that any state bank, foreign bank, foreign savings bank, national bank or federal savings bank may exercise, subject to thethek, requirements and conditions for engaging in such business of a trust company set forth in this section.

- *AB290_R1* – 4 – 2.

- 81st Session (2021) – 4 – 3.

A savings bank subscribing to trustee and custodial power authorized by this section shall be required to segregate all funds held in [such] a fiduciary or custodial capacity from the general assets of the savings bank and keep a separate set of books and recordsthe showingauthority inof properthis detailsection.il all transactions engaged in under the4. authority of this section.

4.

7.that are awaiting investment or distribution in the commercial, savings or another department of the savings bank, unless prohibited by applicable law.

ATo savingsthe bankextent maythat depositthe funds ofare anot fiduciaryinsured accountby thatthe areFederal awaitingDeposit investmentInsurance orCorporation, distributionthe insavings thebank commercial,shall savingsset oraside anothercollateral departmentas ofsecurity, under the savingscontrol bank,of unlessappropriate prohibitedfiduciary byofficers applicableand law.employees, in accordance with subsection 8.

To the extent that the funds are not insured by the Federal Deposit Insurance Corporation, the savings bank shall set aside collateral as security, under the control of appropriate fiduciary officers and employees, in - *AB290_R1* – 5 – accordance with subsection 8.

- 81st Session (2021) – 5 – (c) Readily marketable securities of the classes in which state banks, trust companies or other corporations exercising fiduciary powers are permitted to invest fiduciary funds under applicable state law;

(d) Surety bonds, to the extent that they provide adequate security, unless prohibited by applicable law;

andandde adequate (e) Any other assets that qualify under applicable state law as appropriate security for deposits of fiduciary funds.

(2) Executor;

-(10) *AB290_R1*Investment –advisor, 6 – for its investment advice;sor, if the savings bank receives a fee (11)for Anyits capacity in which the savings bank possesses investment discretionadvice; on behalf of another;

(11) Any capacity in which the savings bank possesses investment discretion on behalf of another;