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FDIC’s Video - Overview on

Deposit Insurance Coverage

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Part I – Deposit Insurance Basics

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How Does Deposit Insurance Work?

• FDIC preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and savings associations

• Insurance covers deposit accounts dollar for dollar, including principal and accrued interest up to the insurance limit

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FDIC Created in 1933

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FDIC Insures Bank Deposits

• Checking Accounts

• NOW Accounts

• Savings Accounts

• Money Market Deposit Accounts (MMDA)

• Certificates of Deposit (CDs)

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FDIC Insurance Covers

• Total of all deposit accounts at an insured bank, including branch offices, up to the insurance limit.

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Basic Insurance Limit: $250,000• The basic limit on federal deposit insurance

coverage was temporarily increased from $100,000 to $250,000 per depositor through December 31, 2013.

• On January 1, 2014, FDIC deposit insurance for all deposit accounts—except for certain retirement accounts—will return to at least $100,000 per depositor.

• Insurance coverage for certain retirement accounts, which include all IRA deposit accounts, was increased permanently to $250,000 per depositor in 2006.

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Basic Insurance Limit: $250,000

• Per depositor

• Per insured depository institution (bank or savings association)– Per separately chartered bank– Not per branch

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Important Point

• If you or your family has less than the basic insurance limit in all your deposit accounts at the same insured institution, you do not need to worry about your insurance coverage.

• Your funds are fully protected

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FDIC insurance covers only

bank deposits

Important Point

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FDIC Does Not Insure

• Stocks

• Mutual Funds

• Life Insurance Policies

• Annuities

• Municipal Bonds or Securities

• U.S. Treasury Bills, Bonds, or Notes

• Safe Deposit Boxes

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What Happens When a Bank Fails?

• Insured depositors’ accounts are transferred to another FDIC-insured bank

or

• Insured depositors are given a check equal to their account balance, including the principal and interest accrued through the date of the bank's closing, up to the insurance limit

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Insurance Payments

• Federal law requires FDIC to make deposit insurance payment “as soon as possible”

• Historically, insured funds are available to depositors within a few days after a bank fails

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Most Important Point

No depositor has ever lost a single penny of insured funds since FDIC’s creation in 1933

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Part II

Personal Accounts

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Most Common Ownership Categories

CertainRetirementAccounts

SingleAccounts

JointAccounts

RevocableTrust

Accounts

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Single Accounts

• Deposits owned by one person

• Coverage up to $250,000

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Ashley’s Single Account Coverage

Checking

$ 2,000

Savings 5,000

CD 10,000

Total on Deposit $ 17,000

Insurance Coverage $ 17,000

__________________________________________________

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Doug and Sheila’s Single Accounts

Doug’s Sheila’s

CD $ 130,000 CD $ 150,000

Total $ 130,000 Total $ 150,000

Insured $ 130,000 Insured $ 150,000

_________________________ ________________________

_________________________ ________________________

Fully Insured

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Certain Retirement Accounts

• Deposits owned by one person

• Title in the name of that person’s retirement account

• Accounts that are self-directed are insured separately from your other deposit accounts at the bank

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Self-directed Retirement Accounts

• Self-directed retirement account is a retirement account for which the owner, not a plan administrator, has the right to direct how the funds are invested, including the ability to direct that the funds be deposited at a specific FDIC-insured bank.

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Certain Retirement Accounts

• IRA

• Roth IRA

• Self-Directed Keoghs________________________

Total Combined Insurance $250,000

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Certain Retirement Accounts

Doug’s IRA Account Sheila’s IRA Account

Traditional IRA $180,000 Roth IRA $ 165,000

Total $180,000 Total $ 165,000

Insured $180,000 Insured $ 165,000

Fully Insured

_____________________________ __________________________

_____________________________ __________________________

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Important Point

Insurance coverage for Certain Retirement Accounts is not increased by the number of beneficiaries named on the retirement account

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Maximum Fully Insured Coverage

Single Accounts

Certain Retirement Accounts

TotalCoverage

Doug $ 250,000 $ 250,000 $ 500,000

Sheila $ 250,000 $ 250,000 $ 500,000

Total $ 500,000 $ 500,000 $ 1,000,000

____________ ______________ ____________

_________________________________________________________

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Joint Accounts

• Deposits owned by two or more people

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Not Eligible for Joint Account Coverage

• Corporations

• Trusts

• Estates

• Partnerships

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Joint Account Requirements

• Deposits owned by two or more people

• All co-owners must have equal rights to withdraw funds from the account

• All co-owners must sign the account signature card

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Joint Account Coverage

• Deposits owned by two or more people

• Each co-owner’s shares of all joint accounts are added together

• Coverage $250,000 for each co-owner

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Important Point

Rearranging the way the names are listed on a joint account (or substituting “and” for “or”) or using different social security numbers doesn’t increase insurance coverage

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Joint Accounts

• Two people with more than one joint account at the same bank

Maximum $500,000 for all accounts

Maximum $250,000 per co-owner

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Sheila and Daughter’s Joint Account

$150,000

Sheila’s Share

$75,000

Daughter’s Share

$75,000

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Sheila and Doug’s Joint Account

$400,000

Doug’s Share

$200,000

Sheila’s Share

$200,000

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Joint Account Coverage

Sheila’s Share $75,000 with Daughter

Sheila’s Share $200,000

with DougDoug’s

Share $200,000

Daughter’s Share

$75,000

------Total $275,000------

$25,000 Uninsured

Insured

Insured

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Maximum Fully Insured Coverage

Single Accounts

Certain Retirement Accounts

Joint Accounts

Total Coverage

Doug $ 250,000 $ 250,000 $ 250,000 $ 750,000

Sheila $ 250,000 $ 250,000 $ 250,000 $ 750,000

Total $ 500,000 $ 500,000 $ 500,000 $1,500,000

__________ ___________ __________ __________

__________ __________ __________ __________

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Revocable Trust (Testamentary) Accounts

• A deposit owned by one or more people indicating an intention that the funds will belong to one or more named beneficiaries upon the owner’s death

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• Owner can

– revoke the trust

– Add or delete the designation of beneficiaries

– Change the amount allocated to any named beneficiary at any time

Revocable Trust (Testamentary) Accounts

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Informal Formal

- POD - - Living Trust -

Revocable Trust (Testamentary) Accounts

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Informal Revocable Trust

• Commonly referred to as POD account

• Account owner signs an agreement with the bank, usually on the account signature card

• Owner specifies the beneficiaries who will receive the deposits when the owner dies

• Owner can revoke agreement at any time Owner has full use of account while alive

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Formal Revocable Trust

• Commonly referred to as living or family trust

• Formal legal document usually prepared by an attorney for estate planning

• Owner (trustor, grantor, settlor) specifies the beneficiaries who will receive the trust assets when the last owner dies

• Owner keeps control of the trust assets and can change the trust at any time

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Revocable Trust Account Coverage

• Revocable trust owner is insured

• Coverage is based on the number of beneficiaries each owner names

• Assumes all requirements are met

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Revocable Trust Requirements

Beneficiaries must be “eligible”

• Living natural person

• Charity (as recognized by the Internal Revenue Service)

• Nonprofit organization (as recognized by the Internal Revenue Service)

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Revocable Trust Requirements

• Beneficiaries must be “eligible”

• Account title must indicate the existence of a trust relationship

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Account Title - Informal Trust

POD ITF ATF

INFORMAL TRUST

Payable-on-Death (POD) accounts or other similar terms such as “ITF” (In-Trust-For) “ATF” (As-Trustee-For) or Totten Trusts

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Account Title – Formal Trusts

FORMAL TRUST

Living Trust Family Trust

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Beneficiary Named / Identified

• POD Account - Beneficiaries must be named in the bank’s account records

• Living Trusts – Beneficiaries must be identified in the trust

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Revocable Trust Coverage

If any of these requirements are not met:

• The funds will not qualify for coverage under the revocable trust category, but will be insured to each owner in the single account category and added with each owner’s other single accounts at the same bank.

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Revocable Trust Coverage

If all the requirements are met:

• Each owner of a POD account may be insured up to $250,000 for each eligible beneficiary

• Coverage depends on number of beneficiaries, beneficiaries’ interest, and deposit amount

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Revocable Trust Calculation Five or fewer total beneficiaries and total deposits of $1,250,000 or less

# of Owners X $250,000 X Eligible Beneficiaries

• $250,000 times 1 beneficiary = up to $ 250,000

• $250,000 times 2 beneficiaries = up to $ 500,000

• $250,000 times 3 beneficiaries = up to $ 750,000

• $250,000 times 4 beneficiaries = up to $1,000,000

• $250,000 times 5 beneficiaries = up to $1,250,000

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Revocable Trust Calculation Six or more beneficiaries and total deposits of $1,250,000 or more. Dollar and/or percentage allocation to each and every beneficiary is EQUAL

# of Owners X $250,000 X Eligible Beneficiaries

• $250,000 times 6 beneficiaries = up to $1,500,000

• $250,000 times 7 beneficiaries = up to $1,750,000

• $250,000 times 8 beneficiaries = up to $2,000,000

• $250,000 times 9 beneficiaries = up to $2,250,000

• $250,000 times 10 beneficiaries = up to $2,500,000

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Revocable Trust Calculation

Six or more beneficiaries and total deposits of more than $1,250,000. Dollar and/or percentage allocation to each and every beneficiary is UNEQUAL • Insurance calculation can be complicated

• Depositors may want to obtain assistance from their legal or financial advisor, or contact the FDIC

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Doug and Sheila’s POD Account

Doug X 3 Eligible X $250,000 = $ 750,000 Beneficiaries

___________________________________________ Sheila X 3 Eligible X $250,000 = $ 750,000

Beneficiaries ________

TOTAL $1,500,000

Fully Insured

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Important Point

A depositor is not provided additional deposit insurance coverage if he or she has a POD account and a revocable living trust account naming the same eligible beneficiaries

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Revocable Trust Accounts

Husband & Wife POD Account

with 3 eligible beneficiaries

Husband & Wife Living Trust Account

with the same 3 beneficiaries

Informal Trust Formal Trust

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Revocable Trust Accounts

Maximum Insurance up to $1,500,000

Each Owner (2) X $250,000 X Eligible Beneficiaries (3)

Husband & WifePOD Account with

3 beneficiaries+

Husband & WifeLiving Trust Account with 3 beneficiaries

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Maximum Fully Insured Coverage

Single Accounts

Certain Retirement Accounts

JointAccounts

Revocable Trust

Accounts*Total

Coverage

Doug $ 250,000 $ 250,000 $ 250,000 $ 750,000* $ 1,500,000

Sheila $ 250,000 $ 250,000 $ 250,000 $ 750,000* $ 1,500,000

Total $ 500,000 $ 500,000 $ 500,000 $1,500,000* $ 3,000,000

_________ __________ _________ _________ _________

_________ _________ ________ ________ _________

*Assumes husband and wife have named 3 eligible beneficiaries in their revocable trust

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Irrevocable Trust Accounts

• Irrevocable trust is a formal written agreement where the trust owner or grantor gives up some or all the power to cancel or change the trust

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Irrevocable Trust Accounts

• The amount of insurance coverage is based on the specific terms and conditions of the trust

• Owners may want to obtain assistance from their legal or financial advisor, or contact the FDIC for assistance

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Part III

• Business/Organization Accounts

• Employee Benefit Plan Accounts

• Government Accounts

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Sole Proprietorship Accounts

• Not eligible for business account coverage

• Funds deposited by a business wholly owned by one person, in contrast to a business that is incorporated or owned by a partnership

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Doug’s Deposit Accounts

Personal Single

Accounts

Sole Proprietorship

Accounts

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Doug’s Deposit Accounts

Maximum insurance coverage up to $250,000

Amounts added together and insured as Doug’s Single Account

Personal Single Accounts

+

Sole Proprietorship Accounts

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Corporation, Partnership, or Unincorporated Association Accounts

• Coverage is $250,000 for:

– Corporations

– Partnerships

– Unincorporated Associations

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Doug’s Deposit Accounts

Personal Single

Accounts

Corporation Accounts

Each account category is insured separately

Insured up to $250,000 Insured up to $250,000

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Unincorporated Associations

• Churches

• Religious organizations

• Community& civic organizations

• Social Clubs

• Foundations

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Corporation, Partnership, or Unincorporated Association Accounts

• Must be established as an actual legal entity for the purpose of doing business

• Not simply to increase deposit insurance coverage for the owner’s accounts

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Employee Benefit Plan Accounts

• Examples of employee benefit plans:

– Defined contribution plans, including profit sharing plans and 401(k) plans

– Defined benefit plans

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Employee Benefit Plan Accounts

• Each plan participant’s share can be separately insured up to $250,000 provided certain conditions are met by the depositor, employer, and bank

• Employee benefit plan accounts are insured separately from any other deposit held by the depositor at the same bank including their certain retirement accounts

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Government Depositors

• U.S. Agencies• States• Counties• Municipalities• District of Columbia• School districts• Irrigation districts• Power districts

• Indian tribes• Puerto Rico• Other territories• Bridge or port

authorities• Other “political

subdivisions”

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Part IV

Resources

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Contact the FDIC

• Read more about FDIC Insurance online at: www.fdic.gov

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www.fdic.gov/deposit/deposits

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www.fdic.gov/edie

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Contact the FDIC

• Call the FDIC toll-free

1- 877-275-3342

• 1-800-925-4618 - Hearing impaired

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Contact the FDIC• Send your question by email using FDIC

online Customer Assistance form at:www2.fdic.gov/starsmail

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FDIC Contact Information

• Mail your deposit insurance question to:

FDICATTN: Deposit Insurance Outreach550 17th Street NWWashington, DC 20429

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FDIC Deposit Insurance Coverage

“The More You Know

The Safer Your Money”

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