Could a South Carolina political subdivision use an insurance company’s deferred compensation plan under the 1996 statute?

Plain-English summary

A legislator asked whether a political subdivision could participate in a deferred compensation plan offered by an insurance company, particularly whether an insurer counted as a trust company under the governing law. In 1996, the AG gave a conditional answer. At a minimum, the insurer would have to fit the applicable definition of a supervised trust institution and hold deferred amounts in one of the insured savings forms specified in the deferred compensation statute.

The opinion did not decide that all insurance companies met those conditions or that satisfying them settled every possible requirement. It invited a further question if an insurer qualified on those two points but another requirement remained in doubt.

Currency note

This opinion was issued in 1996. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Did the AG say any insurance company could offer the plan?

No. He required, at least, trust-institution status under the definition discussed and supervision by a named financial regulator.

How did the opinion say employee deferrals had to be held?

It said the deferred amounts had to be kept in the insured savings vehicles named in the deferred compensation provision.

Did the opinion resolve all other plan conditions?

No. It expressly left open whether additional requirements would apply after the stated conditions were met.

Background and legal framework

The opinion interpreted the deferred compensation statute's list of permitted financial institutions alongside the definition of a trust institution in another provision. Its cited section numbers are visibly garbled in the PDF extraction, so this summary describes those provisions without supplying a reconstructed citation. The letter was an informal view of the signing assistant deputy attorney general.

Citations

• The deferred compensation and trust-institution provisions quoted in the original letter below.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/february-26-1996-3/
• Original PDF: https://www.scag.gov/wp-content/uploads/2013/12/96feb26limehouse.pdf

Original opinion text

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The State of South Carolina

OFFICE OF THE ATTORNEY GENERAL
CHARLES MOLONY CONDON
ATTORNEY GENERAL

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February 26, 1996

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The Honorable Harry B. "Chip" Limehouse, III Member, House of Representatives Room 320-D Blatt Building Columbia, s.c. 29211 Re:

Informal Opinion

Dear Representative Limehouse:
You have requested advice as to the legality of a political subdivision's participating in a deferred compensation plan offered by an insurance company. In particular, you ask whether insurance companies constitute trust companies under s.c. Code Ann. S 8-23-70 (1986).

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As you know, S 8-23-70 (1986) permits school districts and other subdivisions to contract with various financial institutions for participation in deferred compensation programs offered by those institutions. See Ops. Atty. Gen. (December 8, 1993 and June 26, 1981). The institutions named are "savings and loan associations, banks, trust companies and credit unions." The term "trust company" is not defined in this statute or elsewhere in the Code. See S 34-21-210 (1987); 1 however, under S 34-21-210, a "trust institution" is defined as, in part, to be "under the supervision of· the Comptroller of the Currency ... or the Federal Reserve System or the (State Board of Financial Ins ti tutions 2 ] " See also Ops. Atty. Gen. (November S, 1980). In addition, S 8-23-70 further provides as follows: " ... (b) all deferred amounts shall be held in "Trust institution" defined to include banks, savings and loan associations and undefined "trust compan( ies]" among other financial institutions named therein. 2

See S 34-1-10 (1987) as to use of this term intead of Board of Bank Control.

REMBERT

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c DENNIS BL:ILDING
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PosT OFFICE Box 11549

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COLL'~1BIA.

s.c 29211-1549

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TELEPHONE:

803-734-3970

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FACSIMILE: 803-253-6283

The Honorable Harry B. "Chip" Limehouse, III February 26, 1996 Page 2 accounts, certificates of deposit or other forms of savings vehicles which are insured by the Federal Savings and Loan associations in the case of savings and loan associations, the Federal Deposit Insurance Corporation in the case of commercial banks, and the National Credit Union Administration in the case of credit unions."

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Therefore, in order to offer deferred compensation plans to political subdivisions, an insurance company would, at least, have to fall within the definition of "trust institution" under S 34-21210 and be subject to the supervision of one of the entities named therein. The company would also have to hold the deferred amounts in one of the above named insured forms under S 8-23-70. If these requirements are met and a question exists as to whether any other requirements must be met, please let us know. This letter is an informal opinion. It has been written by the designated Assistant Deputy Attorney General and represents the opinion of the undersigned attorney as to the specific questions asked. It has not, however, been personally reviewed by the Attorney General nor officially published in the manner of a formal opinion. Please contact me if you have other questions.

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