Deposit Insurance Coverage Frequently Asked Questions

• Common Questions and Answers
• Single Accounts
• Self-Directed Retirement Accounts
• Joint Accounts
• Revocable Trust Accounts
• Irrevocable Trust Accounts
• Employee Benefit Plan Accounts
• Corporation, Partnership, and Unincorporated Association Accounts
• Government Accounts

Employee Benefit Plan Accounts

1. What is the deposit insurance coverage for employee benefit plans, such as pension plans and profit-sharing plans?
   The general rule is that deposits belonging to pension plans and profit-sharing plans receive "pass-through insurance," meaning that each participant's non-contingent and ascertainable interest in a deposit-as opposed to the deposit as a whole-is insured up to $100,000. In order for a pension or profit-sharing plan to receive pass-through insurance, the institution's deposit account records must specifically disclose the fact that the funds are owned by an employee benefit plan. In addition, the details of the participants' beneficial interests in the account must be ascertainable from the institution's deposit account records or from the records that the plan (or some person or entity that has agreed to maintain records for the plan) maintains in good faith and in the regular course of business.



2. Is Employee Benefit Plan coverage based on the number of participants?
   Coverage for an employee benefit plan's deposits is based on each participant's share of the plan. Because plan participants normally have different interests in the plan, insurance coverage cannot be determined by simply multiply the number of participants' times $100,000.
   
   

   Example Employee Benefit Plan that Qualifies for "Pass-Through" Coverage

   Account Title	Balance
   Happy Pet Clinic Benefit Plan	$285,000

   
   

   Plan Participants	Plan Share	Share of Deposit	Amount Insured	Amount Uninsured
   Dr. Todd	35%	$99,750	$99,750	-0-
   Dr. Jones	30%	85,500	85,500	-0-
   Tech Evans	20%	57,500	57,500	-0-
   Tech Barnes	15%	42,750	42,750	-0-
   Plan Total	100%	$285,000	$285,000	-0-

   
   Explanation:
   This employee benefit plan can deposit $285,000 in at a separately chartered FDIC-insured bank and have all of its participants fully insured. The $285,000 deposit results in Dr. Todd's interest (the largest participant) being insured for $ 99,750 (35% of $285,000). When Dr. Todd's interest is fully insured, the rest of the participants will be insured, since they have smaller shares of the plan.

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