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4000 - Advisory Opinions

Accounts Are Not Separately Insured When Surviving Spousal Beneficiary Rolls Over Portion of Funds from Deceased Spouse's IRA into His or Her Own IRA in Same Depository Institution


November 28, 1990

J. William Via, Jr., Counsel

This is in response to a letter dated August 9, 1990, written on your behalf by *** Savings Bank, which was recently forwarded to the Legal Division by the FDIC's Office of Consumer Affairs.

Your inquiry concerns whether the FDIC insures accounts separately when a spousal beneficiary rolls over a portion of funds from the deceased spouse's IRA into his or her own IRA at the same insured depository institution. The remaining balance in either account is less than $100,000, but the sum of both IRAs exceeds $100,000.

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 held at the same insured depository institution. The term "per account" is defined as "the present vested and ascertainable interest of each beneficiary [i.e., owner] under the plan, excluding any remainder interest...."

For deposit insurance purposes, the individual who establishes an IRA is the owner (and beneficiary) of the deposit during his or her lifetime and is insured up to $100,000 for the total of all IRA funds he or she deposits in any given insured institution, separately from the insurance coverage afforded the same person's non-IRA deposits at the same institution. When the individual who established the IRA dies, the succeeding beneficiaries previously designated 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 depository institution.

If a beneficiary should choose to roll over part of a decedent's IRA into his or her own IRA, then the two accounts would be aggregated for deposit insurance purposes and insured up to the $100,000 insurance limit since the beneficiary is the vested beneficial owner of both accounts.

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