FDIC Coverage

aaflygirl | Aug 31, 2021 | 87 posts since 2016

I'm trying to confirm that the FDIC calculator is correct.

Account 1 has 600k : Owner Fred, PODS, John and Phil

Account 2 has 50k: Owner Fred POD Susan

Owner coverage: 750k?

So, account 1 is over the coverage by 100k, but since account 2 has a different POD, the owner is still covered at this bank for 750k? Thank you.

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Answers

Reader1 | Aug 31, 2021 | 51 posts since 2018

From FDIC's brochure "Your Insured Deposits" found at this link: https://www.fdic.gov/regulations/resources/brochures/your_insured_deposits-english.html

"When a revocable trust owner names five or fewer beneficiaries, the owner's share of each trust account is added together and the owner receives up to $250,000 in insurance coverage for each unique beneficiary."

The rules for six or more beneficiaries are a little more complicated.

In your example, ASSUMING that both accounts are at the same bank and Fred has no other accounts at this bank within the same ownership category, which can affect these calculations:

Fred's share of Account 1 Plus Fred's share of Account 2 = $650K
Maximum insurance coverage for 3 unique beneficiaries = $750K

So, Fred is fully covered by FDIC insurance.

Without having Account 2, Fred will be underinsured by $100K, but he can add another beneficiary to Account 1 to get full insurance coverage.

Please do not rely on this comment for making financial decisions. Contact the FDIC or consult a financial expert to verify the coverage amount.

aaflygirl | Aug 31, 2021 | 87 posts since 2016

Thank you for responding. I saw on Bogleheads that Ally allows you to add PODs with unequal shares. That would alleviate me from having to open separate accounts. I've been trying to call the FDIC and NCUA for 3 days and no luck talking to anyone, yet.

Hooked | Aug 31, 2021 | 236 posts since 2019

@aaflygirl - You can always use the ‘edie.fdic.gov’ site to find the answer. A very easy tool.

Reader1 | Sep 1, 2021 | 51 posts since 2018

When there are FIVE OR FEWER beneficiaries, the 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.

This does not apply if there are SIX OR MORE unique beneficiaries with UNEQUAL beneficial interests, and the insurance coverage calculation in such a case becomes more complex (see FDIC brochure).

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