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Important Update: Changes in FDIC Deposit Insurance Coverage

The FDIC deposit insurance rules have undergone a series of changes starting in the fall of 2008. As a result, certain previously published information related to FDIC insurance coverage may not reflect the current rules. For details about the changes, visit Changes in FDIC Deposit Insurance Coverage. For more information about FDIC insurance, go to www.fdic.gov/deposit/deposits/index.html or call toll-free 1-877-ASK-FDIC (1-877-275-3342). For the hearing-impaired, the number is 1-800-925-4618.

Special 10th Anniversary Edition - Fall 2003

What You Can Learn from Recent Bank Failures
These are examples of common mistakes and misconceptions that led to uninsured deposits at bank failures, and the lessons that all depositors should remember.

Payable-on-Death (POD) and other Revocable Trust Accounts:
These types of deposit accounts (sometimes called testamentary, Totten trust or In-Trust-For accounts) can provide for expanded insurance coverage, but the rules can be complicated. Each beneficiary's share of a POD account can be insured up to $100,000 ($200,000 if there are two beneficiaries, $300,000 if there are three, and so on) but the beneficiary must be the grantor/depositor's spouse, child, grandchild, parent or sibling. Other relatives, such as nieces, nephews, cousins or in-laws, as well as friends, do not qualify.

If you name a non-qualifying beneficiary, the portion payable to that person would be added to any accounts you have at the bank in the single (or individual) account category and the total will be insured to $100,000.

The Lesson: If you've got POD deposits over $100,000, be aware of whom you've listed as beneficiaries, review your insurance coverage and make adjustments if necessary.

Retirement Accounts:
Individual Retirement Accounts (IRAs) are added together and insured up to $100,000 separately from your other types of deposits at the same bank. It's common, however, to find customers with retirement funds over the limit.

Some people take a large, lump-sum distribution from a pension fund and deposit it into one account simply because they didn't realize they could (and needed to) divide that money among different financial institutions to keep it insured. Other people mistakenly believe that adding beneficiaries will increase insurance coverage.

The Lesson: To fully protect your retirement funds, don't have more than $100,000 of your retirement money at any one FDIC-insured institution.

Joint Accounts:
The FDIC insures each person's share in all joint accounts at an institution up to $100,000. Even though the joint account rules are straightforward, recent bank failures indicate that there are still depositors exceeding the insurance limit.

The Lesson: You cannot increase your insurance coverage by changing the order of the names or Social Security numbers on the accounts, changing the wording from "and" to "or" in joint account titles, or opening new joint accounts at different branches of the same bank. The FDIC will simply add your share of all the joint accounts at the same institution and insure the total up to $100,000.

Excerpted from "Lessons from Losses: What You Can Learn from Recent Bank Failures," Fall 2001.


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Last Updated 01/22/2009 communications@fdic.gov