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Summary of the FDIC and NCUA Deposit Insurance Coverage Changes


Update 10/06/08: The FDIC now has the new $250K limit and the POD changes in the Deposit Insurance Calculator. This can be used to calculate coverage limits for multiple owners and beneficiaries. The NCUA Share Insurance Estimator has still not been updated as of 10/06/08.

In the last week there have been more changes in the federal deposit insurance coverage than any time I can remember. I thought it would be useful to summarize the changes for both the FDIC and NCUA. Both are still updating their documentation, so we'll see more official details soon.

As I reported on Friday the basic coverage limit has increased from $100,000 to $250,000. This coverage took effect on October 3, 2008 and will stay effective through December 31, 2009.

Here are examples the FDIC provides:
  • Single Accounts (owned by one person): $250,000 per owner
  • Joint Accounts (two or more persons): $250,000 per co-owner
  • IRAs and certain other retirement accounts: $250,000 per owner (no change)
  • Trust Accounts: $250,000 per owner per beneficiary subject to specific limitations and requirements

The NCUA has announced that it has also increased share insurance protection to $250,000 for the same timeframe as the FDIC. They are currently working to update their documentation.

POD Account Changes

As I reported in this post the FDIC released new interim rules on September 26th which eliminates the concept of qualifying beneficiaries, so that coverage is based on the naming of virtually any beneficiary. This new rule is now in effect. Unlike the change that increases coverage to $250K, this rule does not have an end-date.

Last Friday, the NCUA announced the same interim rule, and it's now in effect. The NCUA describes the details of this rule in a document located at: https://www.ncua.gov/RegulationsOpinionsLaws/RecentFinalRegs/745-ShareInsurance.pdf (edit: subsequently removed).

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Previous Comments
  |     |   Comment #1

Regarding the new rules for extending extra FDIC coverage to accounts for ANY beneficiary on them, can you please explain the details of how it works.

For instance, if I have two maxed out individual accounts with one beneficiary each (different beneficiary on each account), I understand that that gets me full FDIC coverage on each account. But, let's say I has the same two accounts and have both beneficiaries on each account -- would I still get the full FDIC coverage on each account, or do I need to have the beneficiaries on different accounts to get that extra coverage?

And what of other combinations with beneficiaries?

I think you did a piece on this some time back -- perhaps a link to that is in order now.
  |     |   Comment #2
Anonymous 5:53p,

For FDIC Insurance purposes, it makes no difference if you have then on different accounts or one the same account, the FDIC coverage for the beneficiary is cumulative for all accounts the beneficiary is on. So here's an example:

A: Account 1 w/ POD Mom - $250k
Account 2 w/ POD Mom - $250k
Total FDIC Coverage = $500k ($250k per POD)

B: Account 1 w/ POD Mom & Dad - $500k
Total FDIC Coverage = $500k ($250k per POD)

But this where you need to be careful. The cumulative effect is per beneficiary, not per beneficiary your list, but per beneficiary at the bank. So take either scenario A or B above and add the following:

C: A or B +
Brother's Acct w/ POD Mom - $100k
Total FDIC Coverage = $500k, leaving $100k uninsured. That is because Mom brings a total of $250k of coverage to all accounts that she is the POD on at that bank.
  |     |   Comment #3

You wrote
"A: Account 1 w/ POD Mom - $250k
Account 2 w/ POD Mom - $250k
Total FDIC Coverage = $500k ($250k per POD)"

I am sure that you actually meant to write:
"A: Account 1 w/ POD Mom - $250k
Account 2 w/ POD Dad - $250k
Total FDIC Coverage = $500k ($250k per POD)"

Adding an additional account with the same beneficiary does not increase the coverage limit.
  |     |   Comment #4
Under the new rule where you can list up to 5 beneficiaries, which do not have to be qualifying or equally proportionate, would the total amount insured be $1,000,000 or $250,000 for each beneficiary. I am assuming that since they increased the insurance amount to $250,000, it would apply to this example.
  |     |   Comment #5
I went to the FDIC Website and it seems to indicate that the rule where you do not have to consider the proportionate interests when calculating the insurance amount for up to five beneficiaries is only true for formal or living revocable trusts. For POD accounts, the total insurance is the sum of the proportionate interests. Banking Guy or anyone else do you know if this true or am I reading their rules incorrectly.
  |     |   Comment #6
How nice of the FDIC to do all of this in time for the IndyMac depositors who lost their ****(ets)....

Fortunately, I'm not one of them, but if I was, I'd sure be ****ed by now on this new coverage limit.
  |     |   Comment #7
Quote: "How nice of the FDIC to do all of this in time for the IndyMac depositors who lost their ****(ets)...."

Anybody that had that much money on deposit in one banking institution should have been well aware of the FDIC insurance limit. They gambled and lost.

For the FDIC to raise it's insured limits now is better late than never. I just hope the higher limit becomes permanent before it expires at the end of 2009.
  |     |   Comment #8
Did any one at Indy Mac really lose any money? Thought I read that the FDIC didn't penalize anyone. That FDIC management didn't want the bad publicity.

I was a little over $100K and didn't lose anything. Still getting my money check.
  |     |   Comment #9
I opened the 23 month cd today but I am not impressed with their customer service. They cannot confirm whether my wire was received. Their phone center has limited hours. No weekend and set hours during the week.

I am leaving the country tomorrow and asked for them to send email confirmation of the wire and they said "we don't do email".

I asked to speak to a manager and he was busy. I asked to hold and they said they need the open line. I asked for the manager to call me back and they said he will on Monday. I said I'd be in Africa.

The weakest customer service I've encountered.

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