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How to Make Sure All Your Deposits Are Protected by FDIC Insurance
If you (or your family) have deposits at one FDIC-insured bank with a combined total balance less than the basic maximum insurance amount under federal law – currently $250,000 through year-end 2013 – all of that money is fully protected. And, as always, you may qualify for much more than the standard maximum insurance amount at the same bank – perhaps millions of dollars of coverage – if you have funds in different "ownership" categories. That's because the FDIC's rules allow for separate $250,000 coverage for deposits held in your name alone (single accounts), accounts with one or more other people (joint accounts), accounts that name beneficiaries when you die (testamentary or revocable trust accounts), and certain retirement accounts, such as Individual Retirement Accounts (IRAs).
How can you be sure you're fully protected in the unlikely event of a bank failure?
Use "EDIE," the FDIC's online tool for analyzing your insurance coverage. You can find EDIE – short for "Electronic Deposit Insurance Estimator" – at www.fdic.gov/edie. If you don't have Internet access at home, ask a trusted friend or relative or your banker to help you use EDIE.
"EDIE is ideal for verifying your deposit insurance coverage for existing deposit accounts as well any new accounts you might consider opening at your bank," said James Deveney, Chief of the FDIC's Deposit Insurance Outreach Section.
In general, here's how EDIE works. You'll be asked to provide information about all the accounts you have at one bank, including the balance in each account, the ownership category (see the previous examples), and the names of the owners and any beneficiaries. If it will make you feel more comfortable, you don't have to use real names when you answer the questions, but the other basic information should reflect what is in your account records. Then click on the "calculate" button. EDIE will produce a report that will show if you are fully insured or, if not, where your deposits exceed the limits. EDIE can be used for all but a few deposit categories, such as complex trust deposits.
See the FDIC video on the basics of deposit insurance coverage. This 30-minute video, called "Overview on Deposit Insurance Coverage," provides an understanding of your options for insuring funds in multiple ownership categories.
The video is available in both English and Spanish at www.fdic.gov/deposit/deposits. To order the video on DVD or CD-ROM, click on the link to the online order form. The video also can be downloaded for use on a portable audio (MP3) player by clicking on the link to the video and then going to the "resources" tab.
Read the FDIC's two main consumer publications about deposit insurance. One is a brochure called "Deposit Insurance Summary." It's a two-page overview of the information most people want to know about their FDIC coverage. The other is "Your Insured Deposits," a handy guide intended to provide basic information on the rules for the most common account ownership categories.
Both publications are available in English, Spanish, Chinese (traditional and simplified), Korean and Vietnamese. You can read them and order free printed copies at www.fdic.gov/deposit/deposits.
When in doubt about the amount of your deposit insurance coverage, call or write the FDIC. Call toll-free 1-877-ASK-FDIC (1-877-275-3342) to speak with an information specialist and request copies of free educational materials. If you'd prefer to ask your questions in writing, you can e-mail the FDIC using our Customer Assistance Form at www2.fdic.gov/starsmail.
Periodically review your coverage if you have close to or more than the standard maximum deposit insurance amount (currently $250,000) at one institution. "Events such as the death of an owner or a beneficiary on a deposit account can result in changes in the calculation of coverage, including possibly reducing the amount of insurance coverage," emphasized Martin Becker, an FDIC Senior Deposit Insurance Specialist.
As an example, if two people own one account at a bank – a joint account with a balance of $400,000 – all of that money would be insured because each person's share (here presumed to be $200,000) would be protected for up to $250,000 in the joint account category. But what if one of them dies? The FDIC will insure the deceased person's share as if he or she were still alive for another six months. This grace period is intended to give executors or other authorized representatives time to make changes to the account, if necessary, without having to worry about a drop in FDIC coverage. But if the joint account is not restructured by the end of the grace period, the $400,000 balance will only be insured up to $250,000 as the surviving co-owner's funds in the single account category, and the excess amount of $150,000 will be uninsured.
If some of your deposits are over the FDIC insurance limit, consider your options for getting them fully insured. One option is to move excess funds to another FDIC-insured institution. This option works well for people who don't want, or don't qualify for, other ownership categories at their existing bank. If possible, another option is to divide your deposits into accounts in different ownership categories at the same institution, because different categories are separately insured up to $250,000 (or more in some cases). However, this is a change you need to think about carefully because there could be unanticipated consequences.
"For example," Becker explained, "changing a single account without beneficiaries to a testamentary account with beneficiaries may solve a problem with uninsured funds but may not be consistent with the account owner's estate planning." He added that for estate planning advice, the FDIC recommends contacting a financial advisor or an attorney.
Again, remember that the FDIC has an array of resources – EDIE the online estimator, our insurance video, consumer publications and information specialists available by phone or e-mail – that can answer questions about your coverage.
Last Updated 11/17/2009