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FDIC Common Ownership Categories

Common Ownership Categories

The most common ownership categories are:

Single Accounts

These are deposit accounts owned by one person and titled in that person’s name only. All of your single accounts at the same insured bank are added together and the total is insured up to $250,000. For example, if you have a checking account and a CD at the same insured bank, and both accounts are in your name only, the two accounts are added together and the total is insured up to $250,000.

Note: Retirement accounts and qualifying trust accounts are not included in this ownership category.

Certain Retirement Accounts

These are deposit accounts owned by one person and titled in the name of that person’s retirement plan. Only the following types of retirement plans are insured in this ownership category:

  • Individual Retirement Accounts (IRAs) including traditional IRAs, Roth IRAs, Simplified Employee Pension (SEP) IRAs, and Savings Incentive Match Plans for Employees (SIMPLE) IRAs

  • Section 457 deferred compensation plan accounts (whether self-directed or not)

  • Self-directed defined contribution plan accounts

  • Self-directed Keogh plan (or H.R. 10 plan) accounts

All deposits that an individual has in any of the types of retirement plans listed above at the same insured bank are added together and the total is insured up to $250,000. For example, if an individual has an IRA and a self-directed Keogh account at the same bank, the deposits in both accounts would be added together and insured up to $250,000.

Naming beneficiaries on a retirement account does not increase deposit insurance coverage.

Note: For information about FDIC insurance coverage for a type of retirement plan not listed above, refer to the FDIC resources below.

Joint Accounts

These are deposit accounts owned by two or more people. If both owners have equal rights to withdraw money from a joint account, each person’s shares of all joint accounts at the same insured bank are added together and the total is insured up to $250,000.

If a couple has a joint checking account and a joint savings account at the same insured bank, each co-owner's shares of the two accounts are added together and insured up to $250,000, providing up to $500,000 in coverage for the couple's joint accounts.

Example: John and Mary have a $520,000 CD at an insured bank. Under FDIC rules, each person's share of each joint account is considered equal unless otherwise stated in the bank’s records. John and Mary each own $260,000 in the joint account category, putting a total of $20,000 ($10,000 for each) over the insurance limit.

Account Holders

Ownership Share

Amount Insured

Amount Uninsured

John

$ 260,000

$ 250,000

$ 10,000

Mary

$ 260,000

$ 250,000

$ 10,000

Total

$ 520,000

$ 500,000

$ 20,000

Note: Jointly owned qualifying trust accounts are not included in this ownership category.

Revocable Trust Accounts

These are deposits held in either payable-on-death (POD) accounts or living trust accounts.

Payable-on-death (POD) accounts – also known as testamentary or Totten Trust accounts – are the most common form of revocable trust deposits. These informal revocable trusts are created when the account owner signs an agreement – usually part of the bank's signature card – stating that the deposits will be payable to one or more named beneficiaries upon the owner's death.

Living trusts – or family trusts – are formal revocable trusts created for estate planning purposes. The owner of a living trust controls the deposits in the trust during his or her lifetime.

Note: Determining coverage for living trust accounts can be complicated and may require more detailed information about the FDIC's insurance rules. If you have questios regarding a living trust account, you can contact the FDIC at 1-877-275-3342 for more information.

The FDIC has adopted new rules that simplify how revocable trust deposits are insured. The new rules, which became effective on September 26, 2008, ensure that a revocable trust owner has at least as much coverage as he or she had under the former revocable trust account rules. The new rules change the calculation of coverage for revocable trust deposits in two significant ways:

First, the new rules provide that the owner of a revocable trust deposit is eligible to receive per-beneficiary coverage for any beneficiary named in the revocable trust, as long as the beneficiary is an individual, a charity or another nonprofit organization (recognized as such in the Internal Revenue Code).

Second, the new rules provide for a streamlined method of calculating insurance coverage depending on the number of beneficiaries who are entitled to receive the deposits when the trust owner (or owners) dies. Specifically, the rules provide that:

  • For Revocable Trusts with Five or Fewer Beneficiaries: All revocable trust deposits belonging to one trust owner are insured up to $250,000 times the number of beneficiaries. For example, if a revocable trust owner has one beneficiary, his or her maximum coverage is $250,000 for all trust deposits at the same insured bank. If a revocable trust owner has five beneficiaries, his or her maximum coverage is $1,250,000 for all trust deposits at the same insured bank.

  • For Revocable Trusts with Six or More Beneficiaries: All revocable trust deposits belonging to one trust owner are insured to the greater of either $1,250,000 or the aggregate amount of all the beneficiaries’ actual proportional interests in the revocable trust(s), up to a maximum of $250,000 per beneficiary.

Note: The following example applies to POD accounts only. Coverage may be different for some living trusts.

Example: Bill has a $250,000 POD account with his wife Sue as beneficiary. Sue has a $250,000 POD account with Bill as beneficiary. In addition, Bill and Sue jointly have a $1,500,000 POD account with their three children as equal beneficiaries.

Account Title

Account Balance

Amount Insured

Amount Uninsured

Bill POD to Sue

$ 250,000

$ 250,000

$ 0

Sue POD to Bill

$ 250,000

$ 250,000

$ 0

Bill & Sue POD to 3 children

$ 1,500,000

$ 1,500,000

$ 0

Total

$ 2,000,000

$ 2,000,000

$ 0

These three accounts totaling $2,000,000 are fully insured because each owner is entitled to $250,000 of coverage for the interests of each beneficiary in the accounts. Bill has $1,000,000 of insurance coverage ($250,000 for the interests of each qualifying beneficiary – his wife in the first account and his three children in the third account). Sue also has $1,000,000 of insurance coverage ($250,000 for the interests of each qualifying beneficiary – her husband in the second account and her three children in the third account).

When calculating coverage for revocable trust accounts, be careful to avoid these common mistakes:

  • Do not assume that coverage is calculated as $250,000 times the number of people –owner(s) and beneficiary(ies) – named on a trust account. Coverage is provided for the interest of each beneficiary named by each owner. Additional coverage is not provided to the owners for naming themselves as owners. For example, a father's POD account naming two sons as equal beneficiaries is insured to $500,000 only -- $250,000 for the interest of each qualifying beneficiary.

  • Do not assume that the FDIC insures POD and living trust accounts separately. In applying the $250,000 per-beneficiary insurance limit, the FDIC combines an owner's POD accounts with the living trust accounts that name the same beneficiaries at the same bank.

To learn more or to discuss your particular accounts and coverage options, please call or stop by your bank today.