first time in more than 25 years, federal deposit insurance coverage, which
protects against loss if a banking institution fails, got its limit raised by
Congress. However, the higher insurance limit only applies to certain kinds of
retirement accounts that people may have at banks and savings associations
insured by the Federal Deposit Insurance Corporation (FDIC) and at credit
unions insured by the National Credit Union Administration (NCUA).
information for bank customers to know what’s new and what hasn’t changed is
the necessity of FDIC.
retirement accounts at federally insured banks and savings associations soon
will be insured up to $250,000, up from $100,000 previously. Primarily to
traditional and Roth IRAs (Individual Retirement Accounts), applies the higher
insurance coverage. Also included are self-directed Keogh accounts, “457
Plan” accounts for state government employees, and employer-sponsored
“defined contribution plan” accounts that are self-directed, which
are primarily 401(k) accounts. In general, the consumer chooses how and where
the money is deposited defines self-directed.
FDIC’s new rules, which take effect on April 1, 2006, all deposits at a single
banking institution that are held in this broad category of retirement accounts
are added together and the total is insured up to $250,000, separately from any
other deposit accounts you may have at the same institution.
coverage for retirement accounts raised to $250,000, more Americans who rely on
banking institutions for safety and easy access will know that more of their
money for retirement, if their financial institution were to fail, will be
completely protected. There’s also the added convenience for people who,
previously, might have gone to more than one institution to get full coverage
of retirement deposits of more than $100,000.
deposit accounts are still insured up to at least $100,000. However, there are
ways to qualify for more than the basic coverage at one insured institution, as
example, checking and savings accounts held jointly with other people; business
accounts; and employer-sponsored pension or profit-sharing plans-each qualify
for separate insurance coverage of $100,000 (as much as $400,000 combined) are
the four distinct categories of accounts-checking and savings accounts in your
name alone that are not retirement accounts.
addition, trust accounts may qualify for separate insurance coverage of
$100,000 per beneficiary (not per depositor) if certain conditions are met. And
remember, under the new rules, your self-directed retirement accounts at the
same institution are insured by the FDIC to $250,000 separately from any other
accounts you may have there. This can be confusing, so to learn more about how
to qualify for additional insurance coverage contact the FDIC as listed below.
insurance limits have risen in the present, in the 2011, which is definite news.
The new law establishes a method for authorizing an increase in the insurance
limits on all deposit accounts (including retirement accounts) every five years
starting in 2011 and based, in part, on inflation. Otherwise, just as described,
your accounts will continue to be insured.