When does the reserves law go into effect?
The law went into effect on January 1, 1993, BUT associations which already exist on that date will have until January 1, 2000 to establish statutory reserves. The reserves law requires more than just reserves - it requires that the association follow a budget process, beginning on January 1, 1993. Administrative rules require that existing associations start their reserve process in the year beginning January 1, 1993, but allow them a full SEVEN years to actually collect a statutory reserve. Example: An association's financial year runs from January until December. On January 1, 1993, the association will already have developed and adopted its 1993 budget. Therefore, the budget the association develops and adopts in 1993 to comply with the reserves law will be for the financial year beginning in January 1994. The association must include reserves in the budget developed in 1993 but will not have to begin collecting those reserves until 1994. Associations which come into existence after January 1, 1993, need not start reserve collection until the financial year following their first annual meeting.