Insuring Your Deposits: Categories of Ownership
The deposits held in different account ownership categories at FDIC member banks are insured separately from each other, thus maximizing the possible coverage at one financial institution. Below we’ve outlined common categories of ownership and the limits in each.
Single Owner
$250,000
A single account is a deposit owned by one person. All single accounts owned by the same person at the same insured bank are added together and the total is insured up to $250,000. The total includes sole proprietorships and DBA accounts.
Joint Owners
Each individual owner’s share of their joint accounts is added together and insured up to $250,000 regardless of number of joint accounts. This is in addition to their individual insured accounts.
The balance of a joint account can exceed $250,000 and still be fully insured. For example, spouses could have one joint account with $500,000 fully covered. Spouse A’s ownership share is insured up to $250,000 and Spouse B’s ownership share is insured up to $250,000. The FDIC assumes that all co-owners’ shares are equal unless the account records state otherwise. Insurance protection is not increased by merely rearranging the names of owners or by having more than one joint account for the same combination of owners.
Retirement Accounts
$250,000
Owned by one person, these accounts are specifically for retirement needs. Examples include the cash accounts for IRAs and 401(k) plans. (Funds that are invested in stocks or bonds, including mutual funds, exchange-traded funds and annuities, are not FDIC-insured.) Cash in retirement accounts is insured separately from single, joint and trust accounts. Retirement accounts are subject to special rules for deposits and withdrawals. The cash in retirement accounts owned by the same person at the same bank are added together and the total is insured to $250,000. Adding beneficiaries on a retirement account does not increase coverage.
Trust Accounts
$250,000 FDIC insurance is provided for each qualifying beneficiary up to a total of five (5). You can have more than five beneficiaries for a trust, but the maximum insured per owner is $1.25 million.
Cash deposited into trust accounts is separately insured to $250,000 per owner, per qualified beneficiary up to a maximum of five beneficiaries. (Balances that are invested in stocks or bonds are not FDIC-insured.) These accounts include payable-on-death (POD), in-trust-for (ITF), as-trustee-for (ATF) and living/family trust accounts. These provide that, at the death of the owner, funds will pass to a named beneficiary. If a charity or qualified non-profit organization is named as a beneficiary, it must qualify as such under the Internal Revenue Service (IRS) regulations.
Corporation/Partnership/Association Accounts
$250,000
Deposits owned by a corporation, partnership or unincorporated association are insured up to $250,000 at a single bank but are insured separately from personal accounts of the entity’s stockholders, partners or members. Accounts owned by the same entity but designated for different purposes are not insured separately.
Learn more on the FDIC website. An experienced financial services professional can help you maximize your coverage depending on how your accounts are set up. See examples.
