By Nicolas Hamm, CPA – Senior Audit Associate, Financial Institutions Group

Effective Jan. 1, 2026, the National Credit Union Administration’s (NCUA) final rule (12 CFR Parts 701 and 741, RIN 3133-AF42) will require both consumer federal credit unions and consumer federally-insured, state-charted credit unions to establish written succession planning. 

General Requirements

The final rule will now require applicable credit unions to establish a Board-approved, written succession plan consistent with their size, complexity and risk of operations. Smaller credit unions are more likely to have a simple succession plan only addressing a few key leadership positions, plus less expansive employee recruitment, development and retention strategies. The NCUA has developed a sample template for smaller credit unions to leverage, but may prove valuable for others as well. 

Covered Positions

The credit union’s positions, or their equivalents, required to be covered under the written succession plan (at a minimum) are as follows:

• Members of the Board of Directors.
• Management officials and assistant management officials, as those terms are defined in Appendix A, if provided for in the federal credit union’s bylaws, and, to the extent not already covered, the senior executive officers identified in § 701.14(b)(2); and
  • Appendix A to Part 701 – Federal Credit Union Bylaws defines “management official” as:
    • General manager, manager, president or chief executive officer.
  • § 701.14(b)(2) defines “senior executive officer” as:
    • A credit union's chief executive officer (typically this individual holds the title of president or treasurer/manager), any assistant chief executive officer (e.g., any assistant president, any vice president or any assistant treasurer/manager) and the chief financial officer (controller). The term “senior executive officer” also includes employees of an entity, such as a consulting firm, hired to perform the functions of positions covered by the regulation.
• Any other personnel the Board of Directors deemed critical given the federal credit union’s size, complexity or risk of operations. This includes new positions that may be required due to planned changes in operations, supervisory landscape or corporate structure.

Contents of a Succession Plan

The following information is required to be covered under the succession plan: 

• The title for each covered position and expiration of the incumbent’s term (if serving in a term-limited capacity), or other anticipated vacancy date, if known (such as the incumbent’s retirement eligibility date or announced departure date).
  • Use of a specific date for the anticipated vacancy date is not required. Other options include using the anticipated retirement date or noting the retirement/departure date is unknown.
• The credit union’s plan for permanently filling vacancies for each of the positions.
• The strategy for recruiting candidates with the potential to assume each of the positions. It must consider how the selection and diversity of skills among the employees covered by the succession plan, collectively and individually, promotes the safe and sound operation of the credit union. 

Board Responsibilities

The final rule outlines that the credit union’s Board of Directors must: 

• Approve a written succession plan meeting the requirements previously described.
• Review, and update as necessary, the succession plan in accordance with a schedule established by the Board of Directors, but no less than every 24 months.
• At the time of election or appointment, or within a reasonable time thereafter, not to exceed six months, have at least a working familiarity with, and to ask as appropriate, substantive questions of management, and the internal and external auditors of the established succession plan.

Other Considerations

• There is no requirement that succession plans be made available to the public or posted anywhere.
• The NCUA encourages smaller federally-insured, state-charted credit unions to seek assistance from larger or more sophisticated ones in the development of the required succession plans.
• Smaller credit unions with less than $100 million in total assets and minority depository institutions of all sizes may also be eligible for assistance in a variety of areas, including succession planning through the agency’s Small Credit Union and Minority Depository Institution Support Program.
• Existing information, such as data used to develop the recommended program to prepare for a catastrophic act, can be utilized to reduce the costs of preparing succession plans.
• Credit unions can leverage a video series created by the NCUA covering succession planning for further clarification on what is required.
• In the event exigent circumstances require a substantial deviation from the Board-approved plan, management and/or the Board have the flexibility to do what it deems necessary at the time, consistent with their fiduciary duties and legal responsibilities. While not required to be documented in the Board’s meeting minutes, any substantial deviation from the approved plan should be reported to the Board as soon as practicable.

Next Steps

The NCUA has submitted this final rule to the Office of Management and Budget to determine if it is a “major rule,” in which case it may be subject to a delayed effective date. Doeren Mayhew’s credit union pros will continue to monitor this rule, and any other updates, and provide helpful insight and advice along the way.