The
Federal Deposit Insurance Corporation (FDIC), an independent agency
that’s backed by the federal government, protects the funds depositors
place in banks and savings associations. FDIC insurance covers all
deposit accounts, including checking and savings accounts, money market
deposit accounts and certificates of deposit, but not additional
services, such as stocks, bonds, mutual fund shares, life insurance
policies, annuities or securities.
The current standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.
In
2009, as the housing crisis continued to weigh down the US financial
system, President Obama signed a bill extending the temporary increase
in FDIC and NCUA deposit insurance limits from $100,000 to $250,000.
This increase in insured deposits will expire on December 31st, 2013.
With
insurable deposit amounts set to decrease soon, now is a good time to
examine your exposure and take any needed action to minimize your risk.
In two posts this week we’ll take a look at the six different FDIC
account categories and the guidelines that govern the amount of coverage
you’d receive from making deposits in each. In this post we’ll be
examining the first three, more common types of FDIC insurable deposit
types. Keep in mind that the listed amounts covered are only valid
through the end of this year. Then in the second, we’ll take a look at
three of the less common types of deposits eligible to receive FDIC
coverage.
Single accounts
– This is the most common type of account category. A single account is
held in one person’s name and doesn’t list any beneficiaries. In this
case, the account is insured up to the maximum coverage of $250,000.
Joint accounts –
Joint accounts allow for two or more account owners. Provided each
owner has the same withdraw rights and there are no named beneficiaries
on the account, each co-owner is insured for $250,000. As an example, if
you and a spouse hold a joint account, each of you is insured for
$250,000, for a total of $500,000 per account.
Certain Retirement Accounts
– Some types of retirement accounts such as an IRA with funds deposited
in an FDIC-insured bank are also insured by the FDIC. Providing that
its a self-directed account with you choosing where to invest your money
and in what amount, you are entitled the full FDIC insured amount.
Corporation, Partnership, and Unincorporated Association Accounts
– These accounts are designed for businesses and associations. The FDIC
covers these accounts at $250,000 per corporation, partnership or
unincorporated association.