FDIC And NCUA Insurance.

Ally6770 | Mar 24, 2023 | 4,293 posts since 2010

Have never gone through a bank closing.

People on this blog has mentioned that they had to wait for some of their money.

I have ready where people have over the insurance limit of $250,000 and more with beneficiaries. More and more they are saying your account is covered for $250,000. If you have more in your account and are insured because you have beneficiaries do you have to wait for the bank assets to be sold before you get what is over the $250,000 even though you are supposed to be insured for $500,000 with 2 beneficiaries.

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Answers

ocsteve | Mar 25, 2023 | 96 posts since 2010

Have been through a Bank closing with no acquiring Bank. The FDIC sees single vesting=insured at $250k, if they see joint vesting of two people=insured at $500k, etc. for more joint holders. They still look for apparent duplicate vesting accounts in applying the insurance limit. If anything else, they need to inquire, like are all beneficiaries still living? Also for trust accounts, need to see the Trust document to figure out ultimate beneficiaries-number and equal/unequal shares, status as to living or not. This FDIC review can take a couple of days to a week or a little longer, but NOT until the Banks assets are liquidated. FDIC sends out checks of insured deposits if no acquiring Bank on Monday following the closing weekend. It helps if you visit the branch after closing weekend if you have a trust or other unusual account setup, so can show the FDIC Claims rep. your paperwork for them to review quickly. Better than sending a FAX, but could still do so after calling their claims 800 phone number. If you are really insured under their rules, chill, no problem.

In one unusual case of IndyMac, Congress authorized the FDIC to retro the higher $250k insurance limits, as the limit was raised from $100k to $250k soon after the failure. This helped protect many depositors from bad losses.

If you really have uninsured funds, then you get a Receivers Certificate for uninsured balances and they pay bits/pieces as assets are liquidated, which can take 2-5 years. However, they may make an initial advanced dividend if they know good assets are enough to pay off some of the uninsured portions. Some advanced dividends have been as much as 50% of uninsured balances, sometimes less.

Ally6770 | Mar 25, 2023 | 4,293 posts since 2010

Thanks, I have 2 CD's that will be near $500,000 when are near maturity in 3/25 and 12/27. 2 beneficiaries. So I will be fine. Others are smaller. I can prove they are alive. Just was nervous because of no POD/ITF on the account but NCUA said not necessary. Also have their letterhead papers and my opening signature card that lists the beneficiaries on all of them as beneficiaries on all accounts. The Roth IRA's will be near or just over $250,000 they mature and will have to be split up. Was hoping that the insurance would be raised but Lou says no. Finally getting the traditional IRA's done with years of RMD's and converting. Hope to finish it in 5 to 7 years. Depends on the interest earned on regular CD's. I chase rates so all accounts and try to keep the money all in CD's but the rates have been high and I can't do it right now. Everything is out of the state except for the reward checking, a couple of money markets and a CD on the other side of the state. Will not be visiting any the branch. Just thought I was OK until someone started talking about getting checks years after a bank closing and I thought it would be because of the over $250,000 limit. At my age it could have made a mess for the beneficiaries.

Zemo999 | Mar 25, 2023 | 103 posts since 2017

Ally,

Not trying to alarm you - naming beneficiaries *might* be enough to get NCUA to insure your funds past 250k. But read my quoting of NCUA insurance document - a far ways down into the next forum 'post', that says the account title, or electronic records of the fcu relating to titling is a condition of the account being seen as an informal revocable trust account, and therefore eligible to have 250k insurance for each individual beneficiary.

IGR | Mar 25, 2023 | 580 posts since 2020

Very nice write down to the point.
Assets Liquidation is only relevant to Uninsured Deposits!
As far as the wait time, you MUST be prepared to handle wait time, it is going to be some.
How long... Bank Closure is a messy affair, website times out, phone lines are overloaded...usually not long, but even mailed check will take few days to arrive.
How long... fair to say a week or so...depends on type of Closure, titles of your accounts, how badly closed Bank was messed up and the day of the week of Closure announcement.
SVB debacle teaches the lesson why FDIC waited till Friday and made emphasis on having up to $250K available to All accounts on Monday.

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