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4000 - Advisory Opinions

Insurance Coverage of IRA Accounts


March 9, 1988

Walter P. Doyle, Counsel

This is in response to your letter dated February 20, 1988, in which you are requesting a written response to your telephone conversation with Ms. Diane Kowal of this office. Ms. Kowal had tried to reach you unsuccessfully by telephone on several occasions. We are pleased you have put your questions in writing.

Section 11(a)(3) of the Federal Deposit Insurance Act (12 U.S.C. § 1821(a)(3)) provides that IRAs held in time and savings deposits are insured "in the amount of $100,000 per account", separately from any other accounts within the same bank. The term "per account" is defined as "the present vested and ascertainable interest of each beneficiary under the plan, excluding any remainder interest. . . ."

For deposit insurance purposes, therefore, the person who establishes an IRA account is the owner of the deposit during his or her lifetime and is insured up to $100,000 as to all IRA funds he or she deposits in time and savings accounts at any one insured bank, separately from the $100,000 limit applicable to such person's non-IRA deposits at the same bank. When the person who set up the IRA account dies, the beneficiaries previously designated by the deceased depositor become the vested beneficial owners of the IRA funds and are then separately insured up to $100,000 as to the IRA funds owned by each such beneficiary at the same bank.

Therefore, your one-half interest and your daughter's one-half interest in your deceased husband's IRA account (both before and after they are split into separate accounts) are separately insured up to $100,000 each. However, if you should elect to treat your one-half interest in your deceased husband's IRA account as your own IRA account for federal income tax purposes, then any other IRA funds deposited by you in time and savings deposits at the same insured bank would be included within the applicable $100,000 limit.

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