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Everybody (by now, I hope) knows that the FDIC will insure up to $250,000 of your deposits (recently increased from $100,000 in order to instill confidence in the American banking system), provided they are with an approved bank (most reputable banks are) in the event of a bank failure.
There are some questions as to how quickly you will get your money back … but, at least you know your principal is (relatively) safe, thanks to the FDIC.
But, the $250,000 limit is a real bitch – or, one day will be (!) – for our readers, but JT steps in to save the day:
I found this while looking for information on interest rates for bank accounts with multi-million dollars, and protection for those types of accounts. Like many I knew about the 100k FDIC coverage for normal bank accounts, but I was curious if I had more how could I protect it if I had it in an account. This is what I found,
There is something called CDARS which allows multi-million dollar FDIC protection. CDARS = Certificate of Deposit Account Registry Service. From what I gather it uses it’s network power kind of like a clearinghouse to place large deposits with other FDIC insured banks to give multi-million dollar accounts supposed risk free FDIC protection up to 50 million. It’s a CD, so I believe there is a 2 year min, I could be wrong. Again, I read this rather quickly, and I say I believe, and what I gathered during my explanation. So bottom line is, read it for yourself. LOL I did a search on CDARS, and multi-million dollar FDIC and it popped up with a lot of links.
I saw this question started reading, and though the info I found belonged here. I’m not a banker, or a finance person I was just curious. So for anyone who just happens to have an extra 50 mil stuffed in a mattress some place it looks like there maybe a way to protect that money! LOL
JT is right, there is at least one ‘clearing house’ that (for an appropriate fee, of course) takes care of opening accounts in you name across as many banks as necessary to break your deposits up into lots of no more than $250k each … effectively FDIC-insuring up to $50 million … legally!
But, you probably do not need to go through all of this … did you know that you can actually FDIC-Insure (and, this happens automatically, provided that you comply with the regulations) as much as $1.75 million in a single bank, without resorting to any third parties or paying any extra fees?
You simply open up different types of accounts: a deposit account for $250k in your name; another one for $250k in your name; a third one – this time a joint account (i.e. in both names) also for $250k; a fourth for your ROTH, and so on – and, it’s all legal!
But, there is a limit (about $700,000 will max out most people) …. then you just go and repeat at a second bank 😉
Now, not only does the FDIC allow this – they actually promote it in their own brochure (this brochure hasn’t yet been updated to allow for the increase from $100k to $250k per account name/type):
Basic Insurance Amount Is $100,000
The basic insurance amount is $100,000 per depositor per insured bank. Certain retirement accounts, such as Individual Retirement Accounts, are insured up to $250,000 per depositor per insured bank.
If you and your family have $100,000 or less in all of your deposit accounts at the same insured bank, you do not need to worry about your insurance coverage — your deposits are fully insured.
Coverage Over $100,000
The FDIC provides separate insurance coverage for deposit accounts held in different categories of ownership.
You may qualify for more than $100,000 in coverage at one insured bank if you own deposit accounts in different 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 $100,000. 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 $100,000.
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 on the back of this brochure.
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 $100,000.
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 $100,000, providing up to $200,000 in coverage for the couple’s joint accounts.
Example: John and Mary have a $220,000 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 $110,000 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 |
$ 110,000 |
$ 100,000 |
$ 10,000 |
| Mary |
$ 110,000 |
$ 100,000 |
$ 10,000 |
| Total |
$ 220,000 |
$ 200,000 |
$ 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 requires more detailed information about the FDIC’s insurance rules than can be provided in this publication. If you have a living trust account, contact the FDIC at 1-877-275-3342 for more information.
Deposit insurance coverage for revocable trust accounts is based on each owner’s trust relationship with each qualifying beneficiary. While the trust owner is the insured party, coverage is provided for the interests of each beneficiary in the account. The FDIC insures the interests of each beneficiary up to $100,000 for each owner if all of the following requirements are met:
- The beneficiary is the owner’s spouse, child, grandchild, parent, or sibling. Adopted and stepchildren, grandchildren, parents, and siblings also qualify. In-laws, grandparents, great-grandchildren, cousins, nieces and nephews, friends, organizations (including charities), and trusts do not qualify.
- The account title must indicate the existence of the trust relationship by including a term such as payable on death, in trust for, trust, living trust, family trust, or an acronym such as POD or ITF.
- For POD accounts, each beneficiary must be identified by name in the bank’s account records.
If any of these requirements are not met, the entire amount in the account, or any portion of the account that does not qualify, would be added to the owner’s other single accounts, if any, at the same bank and insured up to $100,000. If the revocable trust account has more than one owner, the FDIC would insure each owner’s share as his or her single account.
Note: The following example applies to POD accounts only. Coverage may be different for some living trusts.
Example: Bill has a $100,000 POD account with his wife Sue as beneficiary. Sue has a $100,000 POD account with Bill as beneficiary. In addition, Bill and Sue jointly have a $600,000 POD account with their three children as equal beneficiaries.
| Account Title |
Account Balance |
Amount Insured |
Amount Uninsured |
| Bill POD to Sue |
$ 100,000 |
$ 100,000 |
$ 0 |
| Sue POD to Bill |
$ 100,000 |
$ 100,000 |
$ 0 |
| Bill & Sue POD to 3 children |
$ 600,000 |
$ 600,000 |
$ 0 |
| Total |
$ 800,000 |
$ 800,000 |
$ 0 |
These three accounts totaling $800,000 are fully insured because each owner is entitled to $100,000 of coverage for the interests of each qualifying beneficiary in the accounts. Bill has $400,000 of insurance coverage ($100,000 for the interests of each qualifying beneficiary – his wife in the first account and his three children in the third account). Sue also has $400,000 of insurance coverage ($100,000 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 $100,000 times the number of people –owner(s) and beneficiary(ies) – named on a trust account. Coverage is provided for the interest of each qualifying 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 $200,000 only — $100,000 for the interest of each qualifying beneficiary.
Do not assume that the FDIC insures POD and living trust accounts separately. In applying the $100,000 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.
All you need to do, is be prepared to handle a few different accounts … doesn’t seem that difficult to get the peace of mind that you need when banks start failing …. apparently, there’s more to fail, yet.
You can calculate your insurance coverage using the FDIC’s online Electronic Deposit Insurance Estimator at: http://www2.fdic.gov/edie
