IOLTA Nuts & Bolts

How is an IOLTA account established?
Establish the account as you would any new account at your bank.
Use the tax ID number of the SC Bar Foundation (can be obtained by calling the Foundation office at 803-765-0517). IOLTA accounts are exempt from any withholding tax. No 1099s are necessary for these accounts.

Attorneys should complete the Enrollment Form for Lawyers and Law Firms to open an IOLTA account or convert a non-interest bearing trust account to an interest-bearing IOLTA account. This form can be found on our website and may be copied as necessary. The original belongs to the financial institution and a copy may be sent to the Foundation via fax or mail.

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What about service charges and fees?
If your bank does not wish to waive service charges or handling fees, please note that only customary, routine account maintenance fees may be assessed against IOLTA accounts.

Allowable fees include:

• Per check or per deposit charges
  
• Maintenance fee
  
• A “reasonable” IOLTA remittance fee to defray the cost attributable to calculating and remitting the interest on the account to the Bar Foundation

Non-routine fees* not covered by the IOLTA program include:

• Wire Transfer
  
• Insufficient Funds
  
• Bad Checks
  
• Stop Payment
  
• Account Reconciliation
  
• Negative Interest Earnings**
  
• Checking Printing

*Non-routine fees must be brought to the attention of the lawyer or firm, who may absorb these costs or pass them along to the client(s) being served by the transaction (in accordance with client agreements).

**Negative interest earnings are those which result from service charges exceeding the interest earned and are strictly prohibited on IOLTA accounts. This would result in service charges exceeding the interested earned and would constitute an invasion of principal. These charges may not be collected from the interest earned by other IOLTA accounts as this would constitute a payment of fees of one account with earnings from another account without the account holder’s consent. Service charges may only be imposed to the extent of interest earned on an individual account.

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How do I report?
Transmit monthly to the depositing lawyer or law firm a report or statement that provides the appropriate information. A spreadsheet containing all the required information is available to facilitate the reporting process.

To improve accuracy and speed data entry, the Foundation will institute electronic forms for use in remittance of IOLTA reports for larger banks. The Foundation will contact you should you become a candidate for this type of reporting.

Banks should forward the remittance report to the Foundation within 45 days of the end of each month.

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How is interest transmitted?
Interest earned on IOLTA accounts can be transmitted to the SC Bar Foundation by three different methods. For more information on submitting remittances, contact our office by phone at (803) 765-0517 or by e-mailing iolta@scbar.org.

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How does IOLTA benefit my bank?
Publicity: Participation in IOLTA is publicized across SC and nationally by the Foundation through media including publications of the American Bar Association, the SC Bar and the Bar Foundation. Financial institutions with favorable account structures (e.g., waived service charges, competitive interest rates, etc.) are highlighted when possible and may, as a result, receive significant referral business.

Helping the Community: Participation may also be described in your publications to let shareholders, existing customers, potential customers and investors know that you are a partner in developing resources to ensure access to justice across the state and in your own community.

The Community Reinvestment Act: Institutions have cited their IOLTA participation within their Community Reinvestment Act statements to state and federal regulatory agencies. The SC Bar Foundation can provide grant information in your geographic service area to facilitate this process.

Good Business: Promoting IOLTA is good business for your institution. Since an IOLTA account consists of pooled client funds, average balances can often run significantly higher than similar deposit accounts and, as a class of accounts, offer greater potential for low-cost deposits. Further, attorneys are an excellent source for cross-selling banking services, such as consumer and business loans, other deposit accounts, mortgage services, and escrow services. For these reasons, and the charitable purpose for which IOLTA accounts were developed, your participation can be a very positive undertaking.

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Where can I view Rule 412 in its entirety?

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Can I receive a hardcopy of IOLTA information?
Absolutely! The Foundation has put together a booklet of information called The Nuts and Bolts for Financial Institutions. To request that a copy be mailed to you, contact our office at (803) 765-0517.

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What do we need to do to become a participating financial institution?
Enrolling as a participant in the South Carolina IOLTA program is easy. All you have to do is request a copy of the packet for new IOLTA banks.

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