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The Federal Deposit Insurance Corporation (FDIC) protects depositors against the loss of their insured deposits if an FDIC-insured bank or savings association fails. If a depositor’s accounts at one FDIC-insured bank or savings association total $100,000 or less, the deposits are fully insured.

What Does FDIC Deposit Insurance Cover?

FDIC insurance covers all types of deposits received at an insured bank, including deposits in checking, NOW, and savings accounts, money market deposit accounts, and time deposits such as certificates of deposit (CDs). FDIC deposit insurance covers the balance of each depositor’s account, dollar-for-dollar, up to the insurance limit, including principal and any accrued interest through the date of the insured bank’s closing. The FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if these investments were bought from an insured bank.

How Much Insurance Coverage Does the FDIC Provide?

The basic insurance amount is $100,000 per depositor, per insured bank. The $100,000 amount applies to all depositors of an insured bank except for owners of certain retirement accounts, which are insured up to $250,000 per owner, per insured bank. Deposits in separate branches of an insured bank are not separately insured. Deposits in one insured bank are insured separately from deposits in another insured bank.
Deposits maintained in different categories of legal ownership at the same bank can be separately insured. Therefore, it is possible to have deposits of more than $100,000 at one insured bank and still be fully insured.
The FDIC provides several different categories of ownership and the amount insured varies based on the category.

Single Accounts

A single account is a deposit owned by one person. The following deposit account types are included in this ownership category:

• Accounts held in one person’s name alone

• Accounts established for one person by an agent, nominee, guardian, custodian, or conservator, including Uniform Transfers to Minors Act accounts, escrow accounts, and brokered deposit accounts

• Accounts held in the name of a business that is a sole proprietorship (for example, a “DBA account”)

• Accounts established for a decedent’s estate, and Any account that fails to qualify for coverage under another ownership category.
  

All single accounts owned by the same person at the same insured bank are added together and the total is insured up to $100,000.

If an individual has a deposit account titled in his or her name alone but gives another person the right to withdraw deposits from the account, the account will be insured as a single account only if the insured bank’s deposit account records indicate that:

• the other signer is authorized to make withdrawals pursuant to a Power of Attorney, or

• the account is owned by one person and the other person is authorized to withdraw deposits on the owner’s behalf (for example, a convenience account)

If the insured bank’s account records do not indicate that such a relationship exists, the deposit would be insured as a joint account.

EXAMPLE 1:
Kevin Personal checking $5,000
Kevin Savings $25,000
Kevin Certified Deposit (CD) $100,000
Kevin’s Gear (a sole proprietorship) Checking $50,000
Total Deposits $180,000 - Amount Insured $100,000 = Amount Uninsured $80,000

Deposits owned by a sole proprietorship are insured as the single ownership deposits of the person who owns the business. Thus, the deposits in all of these accounts are added together and the total balance: $180,000, is insured for $100,000, leaving $80,000 uninsured.

Retirement Accounts

All retirement accounts listed below, if owned by the same person in the same FDIC-insured bank are added together and the total is insured up to $250,000.

• All types of IRAs, including: Traditional IRAs; Roth IRAs; Simplified Employee Pension (SEP) IRAs; Savings Incentive Match Plans for Employees (SIMPLE) IRAs.
• All Section 457 deferred compensation plan accounts, such as eligible deferred compensation plans provided by state and local governments, regardless of whether they are self-directed
• Self-directed defined contribution plan accounts, such as self-directed 401(k) plans, self-directed SIMPLE IRAs held in the form of 401(k) plans, self-directed defined contribution money purchase plans, and self-directed defined contribution profit-sharing plans
• Self-directed Keogh plan accounts (or H.R. 10 plan accounts) designed for self-employed individuals

EXAMPLE 2
John’s Roth IRA $115,000
John’s IRA $90,000
The total $205,000 is fully insured, as it is less than $250,000.

Naming beneficiaries on a retirement account does not increase deposit insurance coverage. Coverdell Education Savings Accounts (formerly known as an Education IRAs), Health Savings Accounts, and Medical Savings Accounts are not included and are not eligible for the increased coverage of $250,000. Defined-benefit plans (benefits predetermined by an employee’s compensation, years of service, and age) are not eligible for the $250,000 coverage limit either.

Joint Accounts

A joint account is a deposit owned by two or more people. To qualify for insurance under this ownership category, all of the following requirements must be met:
1. All co-owners must be people. Legal entities such as corporations, trusts, estates, or partnerships are not eligible for joint account coverage.
2. All co-owners must have equal rights to withdraw funds from the account. For example, if one co-owner can withdraw funds on his or her signature alone but the other co-owner can withdraw deposits only with the signature of both co-owners, the co-owners do not have equal withdrawal rights.
3. All co-owners must sign the deposit account signature card unless the account is a CD or is established by an agent, nominee, guardian, custodian, executor or conservator.

If all of these requirements are met, each co-owner’s share of every account that is jointly held at the same insured bank is added together with the co-owner’s other shares, and the total is insured up to $100,000.

The FDIC assumes that all co-owners’ shares are equal.
For example, a husband and wife could have up to $200,000 in one or more joint accounts at the same insured bank and the deposits would be fully insured. The husband’s ownership share is insured up to $100,000 and the wife’s ownership share is insured up to $100,000.

EXAMPLE 3
Joe and Gavin  Joint Checking Account $30,000/2 = $15,000 each
Joe and Gavin Joint Savings Account $100,000/2 = $50,000 each
Joe and George and Phil CDs $225,000/3 = $75,000 each.
Gavin and Phil Joint Checking Account $70,000/2 = $35,000 each
Total Deposits $ 425,000

Insurance coverage for each owner is calculated as follows:
Joe’s total equal value share for FDIC computations is $140,000, in which only $100,000 is insured, leaving $40,000 uninsured.
Gavin has $100,000 and is fully insured.
George has $75,000 and is fully insured.
Phil has $110,000, of which $100,000 is insured, leaving $10,000 uninsured.
A total of $50,000 is uninsured.

...(Information on Trust Accounts continued to next page)....

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