The following is a step by step guide to complying with the IOLTA
Rule (Rule 1:28A). This Rule applies to attorneys admitted to the
Bar of New Jersey who must maintain attorney trust accounts pursuant
to Rule 1:21-6.
First determine if Rule 1:28A applies to you. If it does, follow
the steps outlined.
DOES RULE 1:28A APPLY?
You must comply with the IOLTA Rule if:
- You are a sole practitioner.
- You are employed by a law firm of any size even if you are
not a signatory on a trust account.
- You have a part time or occasional practice.
The IOLTA Rule does NOT apply if:
- You are employed as a government attorney and cannot, as a
condition of employment, have a separate practice.
- You are employed as in house counsel to a corporation and cannot,
as a condition of employment, have a separate practice.
- You are not practicing law.
- You are otherwise exempt from the requirements of R.1: 21-6
(i.e. not required to maintain a trust account).
STEPS FOR ASSOCIATES (OR PARTNERS) OF LAW FIRMS:
- Even if you are not a signatory on a trust account, you must
have a registered trust account. Usually, this trust account is
maintained by the firm for the use of all of its attorneys.
- All law firms register their trust accounts annually with the
IOLTA Fund and are asked to submit a list of all attorneys in
the firm. These attorneys are then in compliance with Rule 1:28A.
It is, however, the responsibility of individual attorneys to
ensure that they are in compliance.
You should check with the firm's administrator to be sure the
firm has complied and that your name has been submitted as part
of the firm. (If you join the firm after the forms have been submitted
for the year, write us a letter on firm letterhead and tell us
that you are now part of the firm.)
- If you prefer to check with us on the status of your firm's
compliance with IOLTA, please call.
- If you are part of an out of state law firm that has a branch
office in New Jersey, but you are not assigned to the New Jersey
office, please call us.
STEPS FOR SOLE PRACTITIONERS (including part time and occasional
- Establish a trust account in an approved trust account depository.
Initially, this should be a non-interest bearing account. It is
best not to discuss IOLTA requirements with your financial institution
since not all personnel fully understand the IOLTA process. Do
not open the trust account as an interest bearing IOLTA account.
- Contact the IOLTA Fund at 732-247-8222 or email us at www.ioltanj.org
to obtain the necessary forms for registering your account.
- Once the forms are received determine whether your trust account
should be designated a Low Balance account or an IOLTA account.
Both types of accounts must be registered with the IOLTA Fund.
LOW BALANCE ACCOUNTS:
Usually, trust accounts of new sole practitioners (and, almost always,
those of part time and occasional practitioners) fall into IOLTA's
low balance category. This means that the balance and activity in
the account are low, and the accounts would cost the IOLTA Fund
more in service charges than would be generated in interest. These
accounts are NOT converted to interest bearing IOLTA accounts. You
will be designated an inactive IOLTA participant until these circumstances
change. (NOTE: If you are uncertain whether yours is a low balance
account please call us.)
If your account falls into this category indicate this on the Registration
Form and return the form to IOLTA. You will then be in compliance
with Rule 1:28A. You must register your Low Balance account annually
with the IOLTA Fund.
If you have determined that your trust account will have an adequate
balance to earn enough interest for IOLTA, fill out the Participation
Form and return it to the IOLTA Fund. The Fund's staff will then
contact the bank to convert it to an interest bearing IOLTA account.
You should NOT contact the bank about converting your account to
Once you have filed the Registration form and the Participation
Form with the IOLTA Fund, you will be in compliance with Rule 1:28A.
You must register your IOLTA account annually with the Fund.