Deposit Insurance

njs
njs   |     |   5 posts since 2019

Anyone have thoughts on exceeding the 250 limit per institution? I opened an add on 5 year cd at GTE this spring and will have cds maturing during the next two years. Assuming rates are going to down. I had three institutions fail during the last recession.



Answers
Ken Tumin
Ken Tumin   |     |   6,057 posts since 2009
For details about increasing deposit insurance coverage with beneficiaries, please see this blog post.
Ally6770
Ally6770   |     |   2,792 posts since 2010
Add beneficiaries to increase your insurance. If married add your spouse and 2 beneficiaries and you have 1 million insured.
me1004
me1004   |     |   874 posts since 2010
Ally, yes, adding beneficiaries or co-owner can increase insurance coverage. However, I don't think your scenarios of two owners and two beneficiaries gets you $1 million. I would have to check that, it would be either $500,000 or $750,000.

I know that when a single owner, adding a single beneficiary gets you nothing extra, you need two beneficiaries for a single owner to get more. I'm not sure if the second owner nixes the benefit of a second beneficiary.
Ally6770
Ally6770   |     |   2,792 posts since 2010
I have a letter somewhere in my files for the kids from the NCUA that at the time I wrote I asked if I had to have POD or ITF on my joint credit union account with 2 beneficiaries to be insured to 1 million. She said no that banks require the POD or ITF but credit unions do not and the account would be insured to 1 million. The letter said the beneficiaries are not insured for $250,000 each but each beneficiary is insured by $250,000 by each of the joint owners. Maybe I need to get another letter. Since my husband has passed I have two beneficiaries and I am insured up to $500,000 in that account I was told. Banks have to be titled POD, or ITF but at that time credit unions were not required. I guess another letter would perhaps be needed. The NCUA insurance is on the 2 beneficiaries not on the owner I was told. 
Ally6770
Ally6770   |     |   2,792 posts since 2010
I just used the NCUA estimator. A joint account with 2 beneficiaries (when you name beneficiaries in a credit union it is a POD or ITF account) and is insured for $1,000,000. At least in all the credit unions that I am a member naming beneficiaries makes it a POD or ITF account. Each of them have written in their letterhead paper putting the account numbers and naming each of my beneficiaries on each account and that my accounts totaled are insured to $500,000 now as I am a widow.
me1004
me1004   |     |   874 posts since 2010
Ally, I read your posts. This is interesting. Just last week I was checking FDIC rules -- and calculator to confirm -- for a friend who refused to believe me when I told her her one beneficiary will not get her extra insurance, needs two for that. She insisted the bank manager had insisted it did. And she asked them again after talking with me, and they said it did.

But FDIC says no it does not. AND FDIC lawyers -- ought to be taken out and thrashed, language so twisted up you can fight over it for eternity -- but overwhelming impression is that it says something about it making a difference, that FDIC considers it to be a trust. And no explanation of that, but leaving you no way to deny it is not saying you get extra. (I think it means the trust is a single entity, not you, AND the beneficiary within it. That's the key, "within the trust.") You are owner, similar to executor, but more flexibility, as it is your's. But you're dealing with a full entity. AND when I put that scenario into the calculator at FDIC, it says you do not get any extra with one beneficiary, it says you get only $250,000 covered, anything over that will be marked as not covered.

But that looks like a difference between NCUA and FDIC on this issue. Interesting. (But that bank manager told my friend the wrong info on that.)
Ally6770
Ally6770   |     |   2,792 posts since 2010
I just received a phone call from NCUA. 1 owner with 2 beneficiaries has $500,000 in insurance and a joint account with 2 beneficiaries at a credit union has 1 million in insurance. Banks still require the ITF or POD etc on the account title for the additional insurance according to their rules.
njs
njs   |     |   5 posts since 2019
Thanks for the responses. I knew about the various ownership. Didn't know that adding POD qualified for more.
OAG
OAG   |     |   23 posts since 2010
Check this out: https://www.ncua.gov/files/press-releases-news/NCUAHowYourAcctInsured.pdf
Dandy
Dandy   |     |   6 posts since 2019
Can one add additional owner and/or beneficiaries AFTER CD opened for a month or so? Thanks.
Ricochet
Ricochet   |     |   528 posts since 2010
It's not gospel, but I have been told by some FIs that they couldn't because it will be a change of title, and they must close acct to re-title. So I took my chances and left it alone.
111
111   |     |   75 posts since 2019
Clearly, it depends on the particular FI. I've has some tell me that it can be changed, and others tell me it cannot. It males sense to ask that question (i.e., can I change this later?), up-front.
ORInvestor
ORInvestor   |     |   27 posts since 2014
see https://www.fdic.gov/deposit/deposits/brochures/your-insured-deposits-english.html
which indicates that
REVOCABLE TRUST INSURANCE COVERAGE – FIVE OR FEWER UNIQUE BENEFICIARIES
When a revocable trust owner names fve or fewer benefciaries, the owner’s trust deposits are insured up to $250,000 for each unique benefciary. This rule applies to the combined interests of all beneficiaries the owner has named in all formal and informal revocable trust accounts at the same bank. When there are five or fewer beneficiaries, maximum deposit insurance coverage for each trust owner is determined by multiplying $250,000 times
the number of unique beneficiaries, regardless of the dollar amount or percentage allotted to each unique beneficiary. Therefore, a revocable trust with five unique beneficiaries is insured up to $1,250,000.

******* warning this DOES NOT apply to IRAs. From the URL listed above

The number of beneficaries does not increase the FDIC or NCUA insurance.. "The FDIC adds together all retirement accounts listed above owned by the same person at the same insured bank and insures the total amount up to $250,000."
Ally6770
Ally6770   |     |   2,792 posts since 2010
A revocable trust is just having POD or ITF on your account title. It is not a formal trust.


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