- July 31, 2008 at 6:30 pm #260922
Is my bank safe?
Hearing about bank closings will make any optimist uneasy about the future. so I
thought this might be a good time for everyone to know if their accounts are
insured and if their bank is healthy or not. Here is some info about FDIC..from
What Is the FDIC?
The FDIC – short for the Federal Deposit Insurance Corporation – is
an independent agency of the United States government. The FDIC protects you
against the loss of your deposits if an FDIC-insured bank or savings association
fails. FDIC insurance is backed by the full faith and credit of the United
States government. The term “insured bank” is used in this brochure
to mean any bank or savings association with FDIC insurance.
To check whether your bank or savings association is insured by FDIC, call
toll-free 1-877-275-3342, use “Bank Find” at http://www.fdic.gov/deposit/index.html, or
look for the official FDIC sign where deposits are received.
FDIC Official Teller Sign
Why Is FDIC Insurance Important to You?
All FDIC-insured banks must meet high standards for financial strength and
stability. The FDIC, with other federal and state regulatory agencies, regularly
reviews the operations of insured banks to ensure these standards are met. Even
with these safeguards, some insured banks fail. If your insured bank fails, FDIC
insurance will cover your deposits, dollar for dollar, including principal and
any accrued interest, up to the insurance limit.
Historically, insured deposits are available to customers of a failed bank
within just a few days. Since the start of the FDIC in 1933, no depositor has
ever lost a penny of insured deposits.
What Does the FDIC Insure?
The FDIC insures all deposits at insured banks, including checking, NOW and
savings accounts, money market deposit accounts, and certificates of deposit
(CDs), up to the insurance limit.
The FDIC does not insure the money you invest in stocks, bonds, mutual funds,
life insurance policies, annuities, or municipal securities, even if you
purchased these products from an insured bank.
Basic Insurance Amount Is $100,000
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.
Coverage Over $100,000
The FDIC provides separate insurance coverage for deposit accounts held in
different categories of ownership.
You may qualify for more than $100,000 in coverage at one insured bank if you
own deposit accounts in different ownership categories.
Common Ownership Categories
The most common ownership categories are:
* Single Accounts
* Certain Retirement Accounts
* Joint Accounts
* Revocable Trust Accounts
These are deposit accounts owned by one person and titled in that person’s
name only. All of your single accounts at the same insured bank are added
together and the total is insured up to $100,000. For example, if you have a
checking account and a CD at the same insured bank, and both accounts are in
your name only, the two accounts are added together and the total is insured up
Note: Retirement accounts and qualifying trust accounts are not included in this
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
* Self-directed defined contribution 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.
Naming beneficiaries on a retirement account does not increase deposit insurance
Note: For information about FDIC insurance coverage for a type of retirement
plan not listed above, refer to the FDIC resources on the back of this brochure.
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.
If a couple has a joint checking account and a joint savings account at the same
insured bank, each co-owner’s shares of the two accounts are added together and
insured up to $100,000, providing up to $200,000 in coverage for the couple’s
Example: John and Mary have a $220,000 CD at an insured bank. Under FDIC rules,
each person’s share of each joint account is considered equal unless otherwise
stated in the bank’s records. John and Mary each own $110,000 in the joint
account category, putting a total of $20,000 ($10,000 for each) over the
Account Holders Ownership Share Amount Insured Amount Uninsured
John $ 110,000 $ 100,000 $ 10,000
Mary $ 110,000 $ 100,000 $ 10,000
Total $ 220,000 $ 200,000 $ 20,000
Note: Jointly owned qualifying trust accounts are not included in this ownership
Revocable Trust Accounts
These are deposits held in either payable-on-death (POD) accounts or living
Payable-on-death (POD) accounts – also known as testamentary or Totten
Trust accounts – are the most common form of revocable trust deposits.
These informal revocable trusts are created when the account owner signs an
agreement – usually part of the bank’s signature card – stating that
the deposits will be payable to one or more named beneficiaries upon the owner’s
Living trusts – or family trusts – are formal revocable trusts
created for estate planning purposes. The owner of a living trust controls the
deposits in the trust during his or her lifetime.
Note: Determining coverage for living trust accounts can be complicated and
requires more detailed information about the FDIC’s insurance rules than can be
provided in this publication. If you have a living trust account, contact the
FDIC at 1-877-275-3342 for more information.
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
* 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: The following example applies to POD accounts only. Coverage may be
different for some living trusts.
Example: Bill has a $100,000 POD account with his wife Sue as beneficiary. Sue
has a $100,000 POD account with Bill as beneficiary. In addition, Bill and Sue
jointly have a $600,000 POD account with their three children as equal
Account Title Account Balance Amount Insured Amount Uninsured
Bill POD to Sue $ 100,000 $ 100,000 $ 0
Sue POD to Bill $ 100,000 $ 100,000 $ 0
Bill & Sue POD to 3 children $ 600,000 $ 600,000 $ 0
Total $ 800,000 $ 800,000 $ 0
These three accounts totaling $800,000 are fully insured because each owner is
entitled to $100,000 of coverage for the interests of each qualifying
beneficiary in the accounts. Bill has $400,000 of insurance coverage ($100,000
for the interests of each qualifying beneficiary – his wife in the first
account and his three children in the third account). Sue also has $400,000 of
insurance coverage ($100,000 for the interests of each qualifying beneficiary
– her husband in the second account and her three children in the third
When calculating coverage for revocable trust accounts, be careful to avoid
these common mistakes:
* Do not assume that coverage is calculated as $100,000 times the number of
people –owner(s) and beneficiary(ies) – named on a trust account.
Coverage is provided for the interest of each qualifying beneficiary named by
each owner. Additional coverage is not provided to the owners for naming
themselves as owners. For example, a father’s POD account naming two sons as
equal beneficiaries is insured to $200,000 only — $100,000 for the interest of
each qualifying beneficiary.
* Do not assume that the FDIC insures POD and living trust accounts
separately. 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.
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