Now with the supposed economic crisis, we've been receiving questions on FDIC coverage. One of our accountants, Megan Munsell, researched this subject and came up with answers to some of the questions you may be having.
Find out if you are FDIC Insured with these common questions:
Q: What types of bank accounts are insured?
A: Checking, Savings, Trust, Certificates of Deposit (CDs), IRA Retirement Accounts, and Money Market Deposit Accounts.
Q: What is not FDIC Insured?
A: Investments in mutual funds, annuities, stocks, bonds, Treasury securities and safe deposit boxes. See additional questions and answers below for more on these accounts.
Q: How much is insured?
A: The basic insurance amount is $100,000 per depositor per insured bank. Certain retirement accounts, such as Individual Retirement Accounts, are insured up to $250,000 per depositor per insured bank.
If you and your family have $100,000 or less in all of your deposit accounts at the same insured bank, you do not need to worry about your insurance coverage -- your deposits are fully insured.
Q: What if we have more that $100,000 deposited in the same bank?
A: The FDIC provides separate insurance coverage for deposit accounts held in different categories of ownership. You can qualify for more than $100,000 in coverage at one insured bank if you split up your deposit accounts into different ownership categories.
Q: What types of bank accounts are insured?
A: Checking, Savings, Trust, Certificates of Deposit (CDs), IRA Retirement Accounts, and Money Market Deposit Accounts.
Q: What is not FDIC Insured?
A: Investments in mutual funds, annuities, stocks, bonds, Treasury securities and safe deposit boxes. See additional questions and answers below for more on these accounts.
Q: How much is insured?
A: The basic insurance amount is $100,000 per depositor per insured bank. Certain retirement accounts, such as Individual Retirement Accounts, are insured up to $250,000 per depositor per insured bank.
If you and your family have $100,000 or less in all of your deposit accounts at the same insured bank, you do not need to worry about your insurance coverage -- your deposits are fully insured.
Q: What if we have more that $100,000 deposited in the same bank?
A: The FDIC provides separate insurance coverage for deposit accounts held in different categories of ownership. You can qualify for more than $100,000 in coverage at one insured bank if you split up your deposit accounts into different ownership categories.
The most common ownership categories are:
Single Accounts: these are deposit accounts owned by one person and titled in the person’s name only. All of your single accounts at the same bank are added together and the total is insured up to $100,000.
Note: Retirement and qualifying trust accounts are not included in this ownership category.
Certain Retirement Accounts: these are deposit accounts owned by one person and titled in the name of that person’s retirement plan.
Only the following types of retirement plans are insured in this ownership category:
Individual Retirement Accounts (IRAs) including traditional IRAs, Roth IRAs, Simplified Employee Pension (SEP) IRAs, and Savings Incentive Match Plans for Employees (SIMPLE) IRAs
Section 457 deferred compensation plan accounts (whether self-directed or not)
Self-directed defined contribution plan accounts
Self-directed Keogh plan (or H.R. 10 plan) accounts
Self-directed Keogh plan (or H.R. 10 plan) accounts
All deposits that an individual has in any of the types of retirement plans listed above at the same insured bank are added together and the total is insured up to $250,000. For example, if an individual has an IRA and a self-directed Keogh account at the same bank, the deposits in both accounts would be added together and insured up to $250,000.
Note: Naming beneficiaries on a retirement account does not increase deposit insurance coverage.
Joint Accounts: these are deposit accounts owned by two or more people. If both owners have equal rights to withdraw money from a joint account, each person’s shares of all joint accounts at the same insured bank are added together and the total is insured up to $100,000. For example, if a husband and wife share accounts at one bank, the total of their accounts is insured up to $200,000.
Revocable Trust Accounts: these are deposits held in either payable-on-death (POD) accounts or living trust accounts. Deposit insurance coverage for revocable trust accounts is based on each owner's trust relationship with each qualifying beneficiary. While the trust owner is the insured party, coverage is provided for the interests of each beneficiary in the account.
The FDIC insures the interests of each beneficiary up to $100,000 for each owner if all of the following requirements are met:
The beneficiary is the owner's spouse, child, grandchild, parent, or sibling. Adopted and stepchildren, grandchildren, parents, and siblings also qualify. In-laws, grandparents, great-grandchildren, cousins, nieces and nephews, friends, organizations (including charities), and trusts do not qualify.
The account title must indicate the existence of the trust relationship by including a term such as payable on death, in trust for, trust, living trust, family trust, or an acronym such as POD or ITF.
For POD accounts, each beneficiary must be identified by name in the bank's account records.
If any of these requirements are not met, the entire amount in the account, or any portion of the account that does not qualify, would be added to the owner's other single accounts, if any, at the same bank and insured up to $100,000. If the revocable trust account has more than one owner, the FDIC would insure each owner's share as his or her single account.
Note: In applying the $100,000 per-beneficiary insurance limit, the FDIC combines an owner’s POD accounts with the living trust accounts that name the same beneficiaries at the same bank.
Additional Questions and Answers:
Q: What about Mutual Funds?
A: The key point to remember when you contemplate purchasing mutual funds, stocks, bonds or other investment products, whether at a bank or elsewhere, is: Funds so invested are NOT deposits, and therefore are NOT insured by the FDIC – or any other agency of the federal government.
Q: Securities?
A: Securities you own, including mutual funds, that are held for your account by a broker, or a bank's brokerage subsidiary are not insured against loss in value. The value of your investments can go up or down depending on the demand for them in the market. The Securities Investors Protection Corporation (SIPC), a non government entity, replaces missing stocks and other securities in customer accounts held by its members up to $500,000, including up to $100,000 in cash, if a member brokerage or bank brokerage subsidiary fails.
Q: Treasury Securities?
A: Treasury securities include Treasury bills (T-bills), notes and bonds. T-bills are commonly purchased through a financial institution. Even though Treasury securities are not covered by federal deposit insurance, payments of interest and principal (including redemption proceeds) on those securities that are deposited to an investor's deposit account at an insured depository institution ARE covered by FDIC insurance up to the $100,000 limit.
Additional Questions and Answers:
Q: What about Mutual Funds?
A: The key point to remember when you contemplate purchasing mutual funds, stocks, bonds or other investment products, whether at a bank or elsewhere, is: Funds so invested are NOT deposits, and therefore are NOT insured by the FDIC – or any other agency of the federal government.
Q: Securities?
A: Securities you own, including mutual funds, that are held for your account by a broker, or a bank's brokerage subsidiary are not insured against loss in value. The value of your investments can go up or down depending on the demand for them in the market. The Securities Investors Protection Corporation (SIPC), a non government entity, replaces missing stocks and other securities in customer accounts held by its members up to $500,000, including up to $100,000 in cash, if a member brokerage or bank brokerage subsidiary fails.
Q: Treasury Securities?
A: Treasury securities include Treasury bills (T-bills), notes and bonds. T-bills are commonly purchased through a financial institution. Even though Treasury securities are not covered by federal deposit insurance, payments of interest and principal (including redemption proceeds) on those securities that are deposited to an investor's deposit account at an insured depository institution ARE covered by FDIC insurance up to the $100,000 limit.
Customers who hold Treasury securities purchased through a bank that later fails can request a document from the acquiring bank (or from the FDIC if there is no acquirer) showing proof of ownership and redeem the security at the nearest Federal Reserve Bank.
Q: Safe Deposit Boxes?
A: The contents of a safe deposit box are not insured by the FDIC. If you are concerned about the safety, or replacement, of items you have put in a safe deposit box, you may consider purchasing fire and theft insurance. Consult your insurance agent for more information.
Information provided by FDIC.gov
Q: Safe Deposit Boxes?
A: The contents of a safe deposit box are not insured by the FDIC. If you are concerned about the safety, or replacement, of items you have put in a safe deposit box, you may consider purchasing fire and theft insurance. Consult your insurance agent for more information.
Information provided by FDIC.gov
