To be approved, a financial institution must sign an agreement with the Court that it will report checks that are presented against insufficient funds on trust accounts, including IOLTA accounts, maintained by attorneys.
It must also agree to pay a yield rate on IOLTA accounts that is comparable to the rate offered to other bank customers that are similarly situated as documented in a Certification that is submitted to the IOLTA Board per 204 Pa. Code § 81.106(c) and § 81.306(c).
The account must be opened as an interest-bearing trust account that is associated with the PA IOLTA Board’s Tax Identification number (25-1802119) so that the interest is remitted to the PA IOLTA Board per 204 Pa. Code § 81.101, et seq..
An attorney should complete a PA IOLTA Enrollment Form at the bank branch where the account is being opened, and we ask that the bank keep a completed copy of this form on file. Attorneys are directed to send a copy to the IOLTA Board, but we may reach out to the bank for a copy if we do not receive one from the attorney. If a District Court seeks to open an MJ-IOTA, please follow the same procedure, but use the MJ-IOTA Enrollment Form.
Once the account is opened, please add it to the list of PA IOLTA accounts on the remittance report sent to us each month, even if there is a zero balance.
Please note the Pennsylvania IOLTA Board does not require that attorneys or banks receive permission from the PA IOLTA Board to open PA IOLTA or MJ-IOTA accounts.
The Enrollment Form serves to inform the PA IOLTA Board that a new PA IOLTA account has been opened and provides the information needed for our records. Both the Pennsylvania IOLTA and MJ-IOTA Enrollment Forms list the PA IOLTA Board’s Tax ID (25-1802119) at the top of the form to ensure that interest earned on the account is remitted to the PA IOLTA Board.
(insert links to two enrollment forms)
At least one Pennsylvania-licensed attorney must be a signatory on the account, and that attorney has oversight responsibility for the account.
Attorneys licensed in Pennsylvania must register each year with the Disciplinary Board and list their IOLTA accounts. If an attorney lists an account that is not being reported by the bank, our office will contact the bank to determine why the account has not been reported. In a situation where interest rates have changed or the account began to accrue interest, it may be determined that back interest is owed.
Regarding service charges, financial institutions may impose reasonable service charges for the administration of IOLTA Accounts. A financial institution may not deduct service charges from the principal balance, but should instead deduct service charges from the total amount of interest to be paid on the IOLTA account to which the service charges apply. For certain accounts, deducting service charges from interest accrued may result in a deficiency of interest. In such cases, institutions may not deduct the balance of the unpaid service charge from the principal in the account, nor may the excess service charges be deducted from the IOLTA interest earned on other accounts at the financial institution.
Non-routine charges or fees such as costs associated with check printing, overdraft charges, wire transfers, charges for a temporary extension of credit and similar bank charges shall not be assessed against the principal balance or interest earned on any IOLTA account. The lawyer maintaining the account shall be responsible for these costs.
To change the interest rate applied to IOLTA accounts, the bank is required to submit an updated Certification form (available online here),
If one of the options indexed to the Federal Funds Target Rate is not selected, the bank will need to provide copies of rate sheets verifying that the rate will be no less than the highest offered on any interest bearing deposit product that permits an unlimited number of transactions offered by the bank, regardless of whether marketed to consumers, businesses, or municipalities.
Once received, the PA IOLTA Board will review the Certification and supporting documentation, and, if all is in order, issue the approval letter confirming that it has been accepted and filed with the IOLTA Board per 204 Pa. Code § 81.106(c).
The Pennsylvania Rule of Disciplinary Enforcement 221 requires that the financial institution complete and submit a report to the Pennsylvania Lawyers Fund for Client Security within five banking days of the presentment of a check or any similar instrument is presented against a trust account with insufficient funds to pay the instrument. This report must be filed even if the financial institution chooses to pay the item that has been presented against insufficient funds.
Overdraft Reporting Form and Process:
https://palawfund.com/wp-content/uploads/2017/03/Overdraft-Reporting-Form.pdf
https://palawfund.com/mandatory-overdraft-notification/
The Lawyers’ Fund for Client Security may be reached at admin@palawfund.com or (717) 231-9510.
Please note the date of closure on the monthly PA IOLTA interest remittance report and remove the account from future reports. Attorneys do not need permission from the PA IOLTA Board to close an account.