Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question: I understand the FDIC protects deposit accounts from bank failure up to $250,000.  Are there any ways to increase the amount protected?

Answer: Yes.

Different kinds of accounts are each entitled to separate $250,000 protection.  According to the FDIC’s website, to qualify for this expanded coverage, the requirements for insurance coverage in each ownership category must be met.

Single Account Ownership Category: The FDIC combines all single accounts owned by the same person at the same bank and insures the total up to $250,000.

Certain Retirement Account Ownership Category: The FDIC adds together all certain retirement accounts owned by the same person at the same bank and insures the total up to $250,000.

Joint Account Ownership Category: Husband and Wife have one joint account at the bank. The FDIC combines each co-owner’s shares of all joint accounts at the bank and insures each co-owner’s total up to $250,000. Assume their account has $500,000 in it.  Husband’s ownership share in all joint accounts at the bank equals half of the joint account or $250,000, so his share is fully insured. Wife’s ownership share in all joint accounts at the bank equals half of the joint account or $250,000, so her share is fully insured.

Revocable Trust Account Ownership Category: When a revocable trust owner names five or fewer different beneficiaries, the trust is insured up to $250,000 for each different beneficiary.

Depositors can also expand protection by making deposits in more than one FDIC-insured bank.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.