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A Better Partnership


Nov 2008
November 26, 2008

Safeguarding Your Investments In Turbulent Times

With financial markets and financial institutions experiencing turbulence not seen since the early 1930s, you may be asking: Are my financial accounts secure?

Well, it depends. The Federal Deposit Insurance Corp. (FDIC) provides some protection, depending on the type and ownership of account. You can learn more at

What Is Insured?

FDIC insurance covers essentially cash deposits at FDIC-insured banks up to $250,000 (the insurance coverage for non-IRA accounts was only $100,000 before October 3, 2008, at which time it was increased to $250,000). The types of deposit accounts covered include:

  • Checking accounts (including money market deposit accounts)
  • Savings accounts (including passbook accounts)
  • Certificates of deposit
  • IRA accounts consisting of the above (traditional, Roth, SEP and SIMPLE IRAs)
  • Self-directed Keogh accounts, 457 plans, 401(k) and SIMPLE 401(k) accounts consisting of the above

What Is Not Insured?

Notably, the above only covers cash accounts, and not other investments. The following, whether purchased from a bank, broker or dealer, are not covered by FDIC insurance:

  • Mutual funds (stock, bond or money market mutual funds)
  • Annuities (underwritten by insurance companies, but sold at some banks)
  • Stocks and bonds

Treasury Securities

Treasury bills, notes and bonds are often purchased through banks but, unlike bank accounts, treasury securities belong to the customer, and the bank is merely acting as custodian. Thus, if a bank-custodian fails, you can request a document from the acquiring bank or the FDIC showing your proof of ownership.

How Much Coverage?

Applying the insurance limit rules is tricky. Depending on the titling of your accounts at any given FDIC-insured institution, you may have more than an aggregate of $250,000 of coverage.

The $250,000 limit applies to each of an individual account, joint account, IRA, trust account and transfer-on-death account. That means if you own an individual checking account of $100,000, a joint account with your spouse of $240,000, an IRA of $200,000 and $50,000 in the name of your trust, you would have full coverage for each account, or $590,000 of coverage.

Further, you may qualify for multiple coverage on separate transfer-on-death accounts. If you have one account that names a son as beneficiary, and another account that names a daughter as beneficiary, both accounts qualify for the full $250,000 coverage.

Use Caution When Moving IRA Accounts!

If you have an IRA worth more than $250,000 at any one FDIC-insured institution and want to move all or part of it to another institution, be careful. Insist upon trustee-to-trustee transfers or, if that is not available, make sure you deposit the funds within 60 days of your withdrawal to avoid penalties and income taxation. In addition, if you have done a rollover to or from an IRA within the past 12 months, you must wait until 12 months have passed before doing a rollover for the same IRA.

In addition to the FDIC, there is the National Credit Union Administration (NCUA) and the Securities Investor Protection Corp. (SPIC), both of which provide some coverage for accounts. The limits and situations for coverage under NCUA and SPIC are different than FDIC, however, and you should investigate with your institution whether you have coverage.

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