Some people may get stiffed by the FDIC: check your bank

With IndyMac having gone bust, bank shares tanking, and speculation rampant about who’s next, it’s time to consider what and how much the FDIC actually insures. This information is available at the FDIC website and I have added a blurb and a link below. But, the long and short of what they say is an individual is insured for a maximum of $100,000 across all of your bank and deposit accounts at one institution. This includes, checking, savings NOW accounts, and CDs. It does NOT include stocks, bonds, mutual funds, life insurance policies, or munis. Note: some IRA accounts are insured up to $250,000 per individual. For example, if you and your wife have joint accounts for $220,000 at Acme Bank, when the FDIC steps in you are able to reclaim $100,000 each. You would be out of pocket $20,000. The last thing to note is that the $100,000 for each individual covers each FDIC bank or holding company, meaning you had better check to make sure your money is spread around. The Toronto-Dominion acquisition of Commerce Bank of NJ gives one a good understanding of what this means. On Commerce’s page about the acquisition it has an explanation. I have highlighted the important parts in red.

Q. Will my FDIC coverage be affected?
A. If you have combined deposits of $100,000 at Commerce, and TD Banknorth, your deposit insurance may be impacted. Please contact one of our Customer Service Representatives in the next six months and we’ll be happy to assist you in determining how to maximize your coverage.Here’s a quick explanation:

  • If you have deposit accounts at Commerce Bank, N.A., Commerce Bank/North, and/or at TD Banknorth, N.A., and together these accounts total more than $100,000 at the time of the merger of the banks, (the official regulatory date the banks become one) it may affect your FDIC insurance coverage. (If you have a combined balance of less than $100,000, there will be no change in your FDIC coverage.) Please come in and talk to us today if you have any questions.

If your accounts fall into this category, one of our Customer Service Representatives will be happy to assist you in determining how to maximize your coverage. Visit your local store, or contact Commerce Bank at 1–888–751–9000. Under federal law, you will continue to receive the same FDIC coverage as if your accounts were still at separate banks for six months after the merger date. Certificates of Deposit (CDs) will generally continue to receive separate coverage until their first maturity date after the six–month period. After this date, if your total deposit account balances exceed $100,000, the excess amount may not be covered by FDIC insurance. Please note, federal law provides for insurance coverage of up to $250,000 for self–directed retirement accounts, including IRAs.

I hope that helps explain how you’re covered and how you’re not.

A word to the wise.

Source info below from the FDIC website

Insuring Your Deposits

What Is the FDIC?

The FDIC – short for the Federal Deposit Insurance Corporation – is an independent agency of the United States government. The FDIC protects you against the loss of your deposits if an FDIC-insured bank or savings association fails. FDIC insurance is backed by the full faith and credit of the United States government. The term “insured bank” is used in this brochure to mean any bank or savings association with FDIC insurance. To check whether your bank or savings association is insured by FDIC, call toll-free 1-877-275-3342, use "Bank Find" at, or look for the official FDIC sign where deposits are received. FDIC Official Teller Sign

Why Is FDIC Insurance Important to You?

All FDIC-insured banks must meet high standards for financial strength and stability. The FDIC, with other federal and state regulatory agencies, regularly reviews the operations of insured banks to ensure these standards are met. Even with these safeguards, some insured banks fail. If your insured bank fails, FDIC insurance will cover your deposits, dollar for dollar, including principal and any accrued interest, up to the insurance limit. Historically, insured deposits are available to customers of a failed bank within just a few days. Since the start of the FDIC in 1933, no depositor has ever lost a penny of insured deposits.

What Does the FDIC Insure?

The FDIC insures all deposits at insured banks, including checking, NOW and savings accounts, money market deposit accounts, and certificates of deposit (CDs), up to the insurance limit. The FDIC does not insure the money you invest in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if you purchased these products from an insured bank.

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
  • Certain Retirement Accounts
  • Joint Accounts
  • Revocable Trust Accounts

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.


Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.