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FDIC Consumer News
Update on Higher Coverage for Retirement Accounts
Readers of FDIC Consumer News know that as of April 1, 2006, FDIC insurance coverage for certain retirement deposits increased from $100,000 to $250,000. The basic insurance coverage for other deposit accounts remains at $100,000 per depositor but, as before, there are ways to qualify for more than the basic coverage. Now here's an update:
In September, the FDIC further clarified which retirement accounts qualify for the $250,000 coverage. They include traditional and Roth IRAs (Individual Retirement Accounts), Simplified Employee Pension (SEP) IRAs, and Savings Incentive Match Plans for Employees (SIMPLE) IRAs. Also included are self-directed Keogh accounts, "457 Plan" accounts for state government employees, and employer-sponsored "defined contribution plan" accounts that are self-directed, which are primarily self-directed 401(k) accounts and include SIMPLE 401(k) accounts. In general, self-directed means that the consumer chooses how and where the money is deposited.
As a result of the new rules, the FDIC has been updating its brochures and videos, the online Electronic Deposit Insurance Estimator (EDIE) and other resources for consumers about deposit insurance coverage. These resources can be viewed on the FDIC's Web site at www.fdic.gov/deposit/deposits. For more help or information, call the toll-free telephone number in the box on the right.
New Law Promotes Retirement Savings
A massive new law aimed primarily at protecting workers' pensions also includes provisions that encourage saving for retirement and education.
The federal Pension Protection Act of 2006, which became law on August 17, makes permanent various programs that had been due to expire at the end of 2009. These include tax-free withdrawals from "529-plan" college savings accounts and higher annual limits for contributions to 401(k) retirement plans. The law also features authority for employers to automatically enroll employees in 401(k) savings plans instead of requiring the worker to sign up on their own.
New Options for Direct Deposit of Tax Refunds
For years, taxpayers wanting to receive their federal income tax refund by direct deposit have had only one choice — to send the money to one checking or savings account. But starting January 1, 2007, the Internal Revenue Service will give taxpayers new flexibility to split their refunds in up to three different accounts and three different U.S. financial institutions The IRS said the change "will give taxpayers more options for managing their refunds, teamed with the speed and safety of direct deposit."
For more details, go to the IRS Web site at www.irs.gov and search for information about Form 8888.
Guide for Seniors Wins Consumer Award
The FDIC Consumer News special issue devoted to helping seniors and their families make smart decisions about retirement savings and daily money management has won a 2006 Achievement in Consumer Education Award from the National Association of Consumer Agency Administrators, which represents more than 160 consumer agencies at all levels of government in the United States and several other countries.
You can read or print our guide online at www.fdic.gov/consumers/consumer/news/cnfall05. It also is available from the FDIC's Public Information Center (1-877-275-3342 or by e-mail to email@example.com).
Last Updated 11/08/2006