Insuring your deposits through the FDIC
The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the U.S. government that protects you against the loss of your bank deposits accounts—including checking, savings and CDs. There is no need to apply for FDIC insurance—coverage is automatic and backed by the full faith and credit of the U.S. government. The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.
Individuals can maximize their FDIC coverage
The FDIC deposit insurance fully protects the deposits in each "ownership category." Common ownership categories include individual accounts, joint accounts, and revocable trust accounts, such as "payable on death" or "in trust for" accounts. IRA's are a separate ownership category and are covered up to $250,000 for each IRA account owner, increasing the FDIC deposit coverage.
For example, with careful planning a family of three may obtain deposit insurance coverage up to $2,500,000 on their accounts as follows:
| Ownership Category | FDIC Coverage | Ownership Examples |
|---|---|---|
| Individual Account | $250,000 | Wife |
| $250,000 | Husband | |
| $250,000 | Child | |
| Joint Account | $250,000 | Wife OR Husband |
| $250,000 | Wife OR Child | |
| $250,000 | Husband OR Child | |
| Revocable Trust Account (also known as POD) |
$250,000 | Wife in Trust for Husband |
| $250,000 | Husband in Trust for Wife | |
| $250,000 | Wife in Trust for Child | |
| $250,000 | Husband in Trust for Child |
Establishing accounts under different forms of account ownership may have significant tax or estate planning impacts. Review your plans with an attorney or qualified financial advisor.