4000 - Advisory Opinions
Effect of FDICIA Amendments on Insurance Coverage of Decedent's IRA and Keogh Accounts, of which Spouse is Beneficiary, and Spouse's Own IRAs Held at Same Depository Institution
December 14, 1992
Adrienne George, Attorney
I am writing in response to your letter of November 24, and our telephone conversation of December 7, 1992, concerning the insurance coverage of your Individual Retirement Accounts ("IRAs") and an IRA and Keogh account in the name of your late husband, ***.
In your letter, you write that you hold the following accounts in the same insured depository institution:
(1) Keogh account in the name of [husband] $61,000;
(2) IRA in the name of [husband] 14,000; and
(3) Four IRAs in the name of [wife] 98,000.
You ask how these six accounts would be insured.
At present, and until December 19, 1993, the vested interests, excluding remainder interests, of any one natural person in one or more IRAs held at a single insured depository institution will be added together and insured for up to $100,000, separately from any other interests in such accounts held by the accounts' beneficiary, trustee or custodian. In a similar way, the vested interests, excluding remainder interests, of any one natural person held in one or more Keogh accounts held at a single insured depository institution will be added together and insured for up to $100,000, separately from any other interests in such accounts held by the accounts' beneficiary, trustee or custodian. Thus, the interests of the same individual in IRAs will be separately insured from his or her interests in Keogh accounts held at the same institution. In determining insurance coverage, the FDIC looks to the ownership of the funds, as indicated by the name on the accounts (in determining ownership, the FDIC does not consider the Social Security Number or Estate Tax Number to be dispositive).
Thus, even though your husband is deceased, for FDIC insurance purposes he is still considered the owner of his Keogh account and his IRA. According to the rule mentioned above, each of these accounts would be separately insured, for up to a maximum of $100,000. Because his Keogh account contains $61,000 and his IRA, $14,000, both of these accounts would be fully insured.
In a similar way, your four IRAs, totalling $98,000, would also be fully insured, and separately insured from your husband's Keogh and IRA.
Of course, if you transferred $3,000 from your husband's IRA into one of your own IRAs, then your total interest in IRAs would be $101,000, of which only $100,000 would be insured.
I am attaching the appropriate page from the FDIC's insurance regulations, which explains the insurance coverage of IRA and Keogh accounts. As I explained to you on the phone, last year Congress passed the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"). FDICIA states that, as of December 19, 1993, the interests of the same individual in IRAs, 457 plans, self-directed Keogh plans and self-directed defined contribution plans which are held at the same institution will be added together and the total amount insured for a maximum of $100,000. It is my understanding that your husband holds no interests in 457 plans or self-directed defined contribution plans at the institution that holds his IRA and Keogh account. Assuming that his Keogh plan is a self-directed one, after December 19, 1993, your husband's Keogh account and IRA would be added together--yielding a total of $75,000--and insured for up to $100,000; that is, even under the new rule, these accounts would be fully insured, and separately insured from your $98,000 in IRAs. (The effect of the new rule on certain deposits may be somewhat delayed by a "grandfather provision" which appears in a recently proposed regulation; however, because your accounts would be fully insured even without the delayed effect, you need not concern yourself with the applicability of this grandfather provision to your accounts.)
I hope that this information will prove useful to you. If you have any further questions, I can be reached at (202) 898-3859.