Basic FDIC Insurance Coverage Temporarily Increased to At Least $250,000 Per Depositor

With banks and the economy in the news so much lately, many people are thinking more about the safety of their money. The FDIC has some good news — your FDIC deposit insurance coverage has significantly increased. “Clearly, the good news for consumers, small businesses and other depositors is the increased likelihood that they can have more of their deposits — or possibly all of their deposits — fully insured at their bank,” said Kathleen Nagle, FDIC Associate Director for Consumer Protection.
Here is an overview of what you need to know about your new FDIC insurance coverage. The basic limit on federal deposit insurance coverage has been temporarily increased from at least $100,000 to at least $250,000 per depositor. That’s the result of a new law passed by Congress in October 2008.
It means that if you (or your family) have $250,000 or less in all of your deposit accounts at the same insured bank, you don’t need to worry about your insurance coverage — your deposits are fully insured. As always, you may qualify for more than the basic insurance coverage at one insured bank. That’s because the FDIC provides separate insurance coverage for deposits held in different “ownership categories.” For example, under current rules, your deposits in: Single accounts (in one name only) are insured up to $250,000; Joint accounts (for two or more people) are protected up to $250,000 per owner; Certain retirement accounts, including IRAs, are covered up to $250,000; and Revocable trust accounts (deposits intended to pass along to named 2008, an account owner can name almost any beneficiary — including a niece, nephew, cousin, in-law, friend, charity or a nonprofit organization — and the owner will qualify for deposit insurance coverage for each beneficiary ($250,000 if there is one beneficiary, $500,000 if there are two, and so on). “The new rule is, in part, intended to be fair to depositors who were unable to obtain insurance coverage under the previous rules because they had no qualifying beneficiaries,” explained FDIC attorney Joe DiNuzzo. Be aware that revocable trust accounts are subject to specific requirements that can affect the total insurance coverage, especially if an account owner names six or more beneficiaries and they all aren’t being given an equal share of the account. In addition, FDIC officials cautioned bank customers against adding beneficiaries to a trust account just to increase their insurance coverage. “A trust account is the equivalent of a contract specifying who is legally entitled to your money when you die,” said Martin Becker, a Senior Consumer