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What do FDIC limit changes at end of year mean?

Updated: May 3, 2013 12:15PM

Q. I read that something is changing about FDIC deposit insurance at the end of the year. Should I be worried?

A. The only changes to FDIC deposit insurance that will take place at year-end relate to the unlimited insurance given to non-interest bearing checking accounts, which are typically used by big corporations to pay bills and handle payroll accounts. The FDIC extended unlimited insurance coverage to those accounts during the financial crisis of 2008, to keep large business deposits in the banking system. That coverage will now be reduced to the $250,000 that is standard for all deposit accounts.

But nothing is changing with regard to the FDIC insurance coverage for interest-earning deposits. The coverage limit remains at $250,000 per separately named account. However, if you are planning to keep more than $250,000 in any one financial institution, you should be aware of how this definition of insured accounts applies. Specifics are available at

Insurance limits

If you have an individual account in a Certificate of Deposit, money market or a combination of accounts in your name only, the accounts are insured up to $250,000.

If you also have a joint account with your spouse, each of the co-owners would have $250,000 of insurance (regardless of other accounts you have in the bank). However, you cannot expand on this insurance by having the names on the account reversed, such as John Smith and Mary Smith for one account, and Mary Smith and John Smith for another account.

IRA accounts are insured for up to $250,000 per owner. This category also includes Roth IRAs, SEP IRAs, Keogh plans, and SIMPLE IRAs. All deposits in any type of retirement plan are added up, and the total is insured up to $250,000.

And Revocable Trust accounts are insured up to $250,000 for “each unique eligible beneficiary named or identified in the revocable trust.”

If you’re involved in those situations, get written advice from your bank as to the total coverage of your deposits. Or consider spreading your deposits among several banks. Some banking groups can arrange for your deposits to be separately covered in individual banks within their holding company. One example of this type of arrangement can be found at

And here’s one more thing to remember when worrying about deposit coverage: Not all products sold by banks carry deposit insurance! That is, if you purchase mutual funds or insurance investment products through the securities department inside your bank, those products are not covered against loss by FDIC insurance. Similarly, debt securities that are sold by the investment divisions of a bank do not carry FDIC insurance — although they may look and sound as if they do.

Bottom line: Even if you purchase a financial product at your bank, it is not FDIC insured unless that insurance is explicitly stated. The sign on the glass door applies only to specifically insured deposit and checking accounts.

If you have so much money that you’re bumping up against the limits, you should be smart enough to know the rules that apply. And that’s The Savage Truth.

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