How to be sure your deposits are fully insured
For the last 75 years, especially during times of economic uncertainty, families have counted on the certainty of federal deposit insurance. “The American people can rest comfortably knowing that their FDIC-insured deposits are 100 percent safe,” said FDIC Chairman Sheila C. Bair. “In fact, there’s no safer place in the world for their checking, savings or retirement money.” How can you make sure all your deposits are safely protected within the federal insurance limits?
Learn the rules for deposit insurance coverage. In particular, be aware that Congress has temporarily raised the basic deposit insurance coverage from at least $100,000 to at least $250,000 per depositor, through (under current law) December 31, 2009. That means, through 2009, if you (or your family) have up to $250,000 in your deposit accounts at one insured bank, you don’t need to be concerned about the safety of your money.
Also remember that you may qualify for more than the basic insurance coverage at one insured bank if the funds are held in different “ownership categories.” For example, under existing law, if a couple has deposits in single accounts, joint accounts and Individual Retirement Accounts (IRAs) at the same bank, through year-end 2009, they could qualify for up to $1.5 million of FDIC insurance coverage (see table).
An Example of How FDIC Insurance Can Add Up
- Husband’s Single Account: $250,000
- Wife’s Single Account: $250,000
- Husband and Wife’s Joint Account: $500,000
- Husband’s IRA: $250,000
- Wife’s IRA: $250,000
- Total Insurance Coverage: $1,500,000
In addition, if you have deposits in another category called revocable trust accounts — typically payable-on-death and living trust accounts — you’d receive up to $250,000 in FDIC insurance coverage for each beneficiary.
That means a revocable trust account owned by a husband and wife naming four beneficiaries would be insured up to $2 million. (The husband is insured up to $1 million because he has named four beneficiaries, and the same applies to the wife.)
If you have more than $250,000 at one insured institution, find out if it is fully insured. It’s especially important to take a closer look at your deposit insurance coverage after an unusually large deposit, such as after a home sale, an inheritance, or if you “roll over” a large company pension into an IRA at a bank.
Another time to review your insurance coverage would be after the death of a joint account owner or a beneficiary on a revocable trust deposit account. Likewise, look at your deposit insurance if you have accounts at two institutions that merge.