Posted by Mike Smith :: September 15, 2008 @ 11:40 amHaving too much money sounds like one of those problems we’d all like to have, but there are legitimate concerns over the safety of deposited money when FDIC insurance limits are exceeded. Understanding these limits and taking appropriate steps can help to ensure your cash, which is generally believed to be the investment with the lowest risk, is safe.
The Federal Deposit Insurance Corporation (FDIC) insures deposits at most banks. You should check with your bank before opening an account to verify that it is insured by the FDIC. The basic limit for FDIC insurance is $100,000 per depositor per financial institution. So a single person with $110,000 in one bank would be guaranteed to get back $100,000 if the bank were to fail. The simplest way to avoid a loss is to place any deposits exceeding the limits into an account with a different bank.
Married couples get the $100,000 protection for each of their individual accounts as well as their joint accounts. As much as $300,000 could be protected at a single bank if the husband held $100,000 in his account, the wife held $100,000 in her account, and they held another $100,000 in a joint account.
Due to the larger amounts typically associated with retirement accounts, FDIC insurance limits increase to $250,000 for traditional IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs, self-directed 401(k) plans, and self-directed Keogh plans
For people with deposits that considerably exceed the FDIC insurance limits, there are more advanced strategies to protect their money. Such topics are beyond the scope of this overview, but it’s important to remember that they do exist. For most of us, managing accounts at multiple banks will suffice if we are lucky enough to accumulate sufficient deposits to exceed FDIC insurance limits.
4 Comments
And please note here that "bank" means each bank corporation, not an individual branch.
In other words, maintaining two different accounts one a checking account at Bank A's branch near work and a savings account at Bank A's branch near your house is the same as having a single account in the view of the insurance regulations. If you have more than $100K (or up to $300K per couple as discussed in the article), you really should place the rest at Bank B.
Believe it or not, there are those with funds that make 100k ins a prob. It is clear that our gov knows that by limiting FDIC ins they have chased all wealthy customers to the largest banks. There is always a method to their madness! If there was sufficient insurance funds would not have been pulled from all the the institutions that have gone belly up lately.
and you should actually look at that joint account category. For 2 people the account is insured up to $100,000 per account owner, not just $100,000. So, in reality a husband and wife can have the single accounts and a joint acount and be insured up to $400,000, not just $300,000. There are more options but, as stated, go into more detail. I am simply correcting the $300,000 issue.
Very timely and informative on life isnurance. Thanks for sharing this.
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