 Member
FDIC. You’ve seen the sign many times, but have you
ever wondered what it means? Today, with some banks
closing, it is important that you see this sign at your
bank. If you and your family have $250,000 or less in
your deposit accounts at an insured bank, your deposits
are fully protected by the US government. And with
careful planning, the Federal Deposit Insurance
Corporation or FDIC will often insure more than $250,000
at a single bank. This column provides you with tips
from the FDIC to make sure your money is safe and
secure.Not long ago, the deposit insurance limit was
$100,000. Recently, Congress raised the limit to
$250,000. If you have more than $250,000 at your bank,
your deposits may also be protected under several
different types of “ownership” categories. Suppose you
have $575,000 in different ownership categories at your
bank, e.g. some funds in a single account, some in a
joint account, and the rest in retirement accounts. It
is possible that the entire $575,000 is insured by the
FDIC (as long as you don’t have more than $250,000
deposited in any one ownership category).
- Single (one name) accounts are insured up to
$250,000.
- Each depositor who has money in joint accounts
(accounts owned by two or more people) is protected
up to $250,000 for the funds he/she has in joint
accounts.
- Certain retirement accounts, including IRAs, are
covered to $250,000.
- Revocable trust accounts (deposits intended to
pass along to named beneficiaries when the account
owner dies) can be protected to $250,000 for each
named beneficiary. However, with this category, you
would need to confer with your personal banker.
What if I’m a single person with more than
$250,000 in my bank account? You might consider
putting the excess money in a joint account with
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another individual or put it in an
account with beneficiaries (revocable trust account).
You need to realize that with a joint account you are
giving the other joint owner legal ownership of the
money in the joint account. Check with your bank (who
must employ someone who understands the FDIC deposit
insurance) and your accountant or attorney before
finalizing your plans. Consider moving your excess funds
to another FDIC-insured institution. And, ask your bank
about other methods for insuring excess funds—there are
some third party methods available (e.g. CDARS).
Review your insurance coverage
periodically to make sure you still fall within the
$250,000 insured limit. Here are some things that might
trigger a reexamination of your accounts:
-
Before you open a new account,
review all of the accounts your family currently has
at the institution to make sure you will have
adequate coverage.
-
Death of a loved one. The FDIC
will automatically insure the deceased person’s
share for another six months, but after that, you
need to make sure there’s not more than $250,000 in
that account.
-
If you receive a large payment
from the sale of a house or insurance claim.
-
If you have accounts at two
institutions that merge, be sure the combined funds
do not exceed the $250,000 insurance limit.
If my bank fails tomorrow, how
quickly will the FDIC pay me the total amount of my
insured funds? Contrary to misinformation that
spreads as quickly as a wildfire, federal law requires
the FDIC to pay deposit insurance as soon as possible,
usually the first business day after the bank is closed.
And, if a bank failure or consolidation causes you to
exceed the $250,000 limit, you’ll want to move your
money around.
Remember, in 75 years, no one has lost a penny of
FDIC-insured deposits.
CONSUMER TIPS is provided as a public
service by the Missouri Independent Bankers Association
AND
Community Bank of the Ozarks
P.O. Box 43
Sunrise Beach, MO 65079
(573) 374-5245
1-800-927-4314
www.cbobanker.com
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