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Starting April 1, 2024 Even IRA's If They Have Enough Beneficiares

Ally6770
  |     |   4,309 posts since 2010

can be insured to with 5 beneficiaries $1.250,000. I read all of it twice a few weeks ago and found time to call them today. The new rule will include IRA's also. No longer will we have to have a limit IRA's in each institution to $250,000. We can count our beneficiaries. Reg accounts with Joint ownership and with 5 beneficiaries will be insured to $2,500,000.

https://www.fdic.gov/resources/deposit-insurance/banker-webinar/documents/fdic-new-trust-account-rule-seminar-banker-slides-2022.pdf

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ORInvestor
  |     |   44 posts since 2014
is there a similar change for credit unions? I have looked at the ncua site but I could find no information on an increase in coverage.
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Ally6770
  |     |   4,309 posts since 2010
I asked and she said both will be the same for easier understanding. I called FDIC but you can call NCUA. I chose the button to speak to a person. It was not a long wait. Maybe one minute. I am waiting for 2 phone calls so did not call the NCUA. Should have called them first. She knew all about the law though.
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lou
  |     |   1,004 posts since 2010
Are you sure about this? I didn't see anything in the link that said you could increase coverage for IRA accounts over $250K. Show me where it says that.
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Ally6770
  |     |   4,309 posts since 2010
Read page 19-20 etc.
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lou
  |     |   1,004 posts since 2010
It doesn't say that.
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Ally6770
  |     |   4,309 posts since 2010
FDIC’s toll free number 1-877-ASK-FDIC or 1-877-275-3342. I think I pushed 2 to talk to a real person. It might have said if you have a question or have a complaint about a bank etc.
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lou
  |     |   1,004 posts since 2010
The FDIC reps don't know. Never rely upon them if it is not in writing somewhere. IRA insurance coverage has not changed.
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Ally6770
  |     |   4,309 posts since 2010
I posted the site for the training of the bank employees and here is the site for the rules and letters. I believe it passed in 2022.
When I called I spoke to a person maybe the 2nd or 3rd choice. She knew all about it. Don't speak to customer service. They are not trained for what is or may happen until they are trained. Talk to someone higher up. Here is another site with the blue links to rules and letters. https://www.fdic.gov/news/financial-institution-letters/2022/fil22007.html

I received my 2 phone calls and called NCUA. Can only speak to customer service so I went the officers and emailed them. Will see if I get it back. The guy I spoke to at NCUA said that they won't know until they are trained. But he said if it is on the FDIC site he is sure they will get have it also. A year away.
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Ally6770
  |     |   4,309 posts since 2010
Lou, My fed rep is on the banking committee. We will see how responsive he is with emailing me the info and confirmation.
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lou
  |     |   1,004 posts since 2010
If you don't have it in writing then it doesn't exist.
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Ally6770
  |     |   4,309 posts since 2010
New Trust Rules – Change to only Deposit Insurance Ownership Categories on page 20 and specifically names retirement accts, IRA's--
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lou
  |     |   1,004 posts since 2010
Read it again. It says just the opposite. All other ownership categories will not change as a result of the rules changes for trust accounts.
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Ally6770
  |     |   4,309 posts since 2010
But it lists in the box the deposit accounts it does cover in the box stating Change to only Deposit Insurance ownership Categories and names at the top in the box and the ones it applies to.

Below it gives example of accounts it would not increase on.
This is how the FDIC person explained those pages to me.

I know some guys that I trained and a few of them started their own bank. Most are also retired now but some are still on the board. I will see if they are in town and have a number that I reach them with. Probably all have cells though. I will go to their website and see if there is a way to reach an individual director.
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Ally6770
  |     |   4,309 posts since 2010
I spoke to one of the guys we trained in the 80's and one of the guys that started their own bank. He was the head of commercial lending and is now on the board of his bank. Steve said they have not and do not expect to get the pamphlets for the lobbies of the branches and the booklets for employees for this change until after summer vacations for training the branch employees if things do not change rules because of the bank closings. But as it stands now they expect it to go into affect on April 1 2024 as far as they know. Will see what my federal rep in DC says or his office emails me as I asked if he gets back to me. The old one did all the time but he retired. He had a great staff in town. Nivea his office manager, I visited after stopping at the SS office on a Friday afternoon with my 2 sister in laws and recorded the conversation. I played it for her, she copied it and sent it to the Chicago lawyers, he was fired and I had the check delivered in a red, white and blue cardboard envelope on Monday. The check was to cover a pile of old uncashed checks in my in-laws house when I and their daughters were cleaning it out after they died.
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lou
  |     |   1,004 posts since 2010
The rules that are going in effect in 2024 are only for revocable and irrevocable trust accounts with 5 or more beneficiaries. It doesn't affect any other ownership categories, including IRA's.
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Ally6770
  |     |   4,309 posts since 2010
I only know what the lady told me when I called the FDIC number. She told me and that it would include IRA's. I emailed the NCUA person for our area to get it answered by email. And so emailed FDIC for an email to be sent back. Takes up to 14 days. So the FDIC read it wrong by said that as soon as a beneficiary is added it is a Totten trust and would include IRA's. Should have gotten a name. Will see if my new federal rep on the banking committee knows anything. His staff person certainly did not know anything and knew of no one to even ask. No office manager there to even to ask. Might try another person on the banking committee that is not new tomorrow.
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lou
  |     |   1,004 posts since 2010
The first problem is you misinterpreted the link you attached. It explicitly says these changes do not affect other ownership categories, including IRA's. Your are talking to clueless people based on something you invented out of thin air. Sorry to be harsh but it's not responsible to post something like this which is not based on anything factual.
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Ally6770
  |     |   4,309 posts since 2010
She pointed the IRA's out to me and the part of naming a beneficiary makes it a totten trust. I called for the one ownership account total. I have a friend with trusts and he will be all messed up with the insurance insurance limits. He did financial planning before he retired and a lot of trusts may be messed up. I think I read in this blog recently that one of the banking institutions allowed 10 beneficiaries. I wonder what will happen when there will be only 5 beneficiaries with insurance. With a joint account they would be covered.
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lou
  |     |   1,004 posts since 2010
I give up. Think what you want.
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Ally6770
  |     |   4,309 posts since 2010
Sorry I think you misunderstand. It is not what I think, It is what I was told from FDIC and I am conflicted and not wanting to let go. It is not that you are wrong. She also could be wrong. I thought because it was not a customer service person that I was speaking with, that what she said was correct. She is the one who explained it to me when I called. I will be over the limit for insurance on 3 Roth Cd's when the interest is added just before maturity 2 this year and one in Jan. and I am also at the limit for IRMAA and had wanted to do one more jumbo CD's, thanks to this site and Ken's hard work. So I bonds and more for charity giving and thanks to one of the posters on this blog who suggested getting 10 $1,000 bonds instead of 2 $5,000 bonds because I am doing it for the kids to use if they wanted or needed in their retirement and if they are near IRMAA and I don't get the taxes pd on them after the conversions they will not have to pay a lot of tax. I was elated when I was told it included IRA's. More work for everyone now and I was trying to make things easier for the kids and not more complicated. It is what it is.
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Zemo999
  |     |   103 posts since 2017
Ally - I can't comment on whether IRAs will be allowed to exceed the current 250K insurance no matter how many beneficiaries are named. But from what I've read, the rule changes for April 1, 2024 were passed in January of this year, and the main reason for the heads-up notice was that the FDIC will not *allow* more than 5 beneficiaries to add additional insurance as of 4/1/2024. Currently, you may have (some people say 10, some say unlimited) beneficiaries that bring additional insurance to the account (250k each), as long as *each beneficiary receives an equal share upon the death of the owner.* The FDIC is warning people *now* that come 4/1/24 only 5 beneficiaries, and no more, will bring 250k in insurance to an account, effectively capping insurance at $1.25 million max. Because, let's say you take out a 5 year CD with 1.5 million, name 6 beneficiaries, and think you've got it covered by insurance. When April 1, 2024 rolls around, that account has 1.25 million in insurance max, so the FDIC is advertising this now so people can do appropriate planning and not get 'caught short' when the rule changes. That is my understanding of the main change in rules come April 2024.
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CuriousDave
  |     |   233 posts since 2018
Does that mean that the IRA owner’s PERSONAL coverage will increase to a maximum of 5 x $250K (based on 5 beneficiaries) for a total of $1,250,00, or that the personal coverage remains at $250K but that each beneficiary, with a maximum of 5 beneficiaries, will, upon death of the IRA owner, have individual coverage of $250K?
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Ltssharon
  |     |   472 posts since 2020
IF I recall correctly, from what I saw on the FDIC EDIE website your information and mine are in agreement, lou.
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bobert456
  |     |   187 posts since 2022
LOU - I'm afraid I agree with you. This is TOO BIG of an issue to a KINDA/SORTA reading. If it applied to ALL accounts including IRAs, then I think it would be absolutely clear.

It is not.

ALSO - FDIC combine ROTH and IRA together for the 250K limit. No JOINT status either. So I think those major things would be addressed, but I think the rule change is only speaking to POD over 5.

Maybe the recent banking issues (runs on banks) will cause the GOV to make FDIC unlimited, or much higher limits, AND maybe also speak to the IRA issue. More and more households have RETIREMENT funds well over the FDIC limits of today.

But I agree with you. Even if we are wrong, better to error on the safe side until all this gets much more clear.
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ORInvestor
  |     |   44 posts since 2014
has there been any documentation about the insurance for IRAs with beneficaries?
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Ally6770
  |     |   4,309 posts since 2010
I called both NCUA and FDIC and they said it does not include IRA's.
IRA's will stay the same. I have heard no more about the April 1, 2024 date. Many of the bankers have not heard about it or had the training when I last spoke to them a couple of months ago. One of the guys I trained years ago is now on the board of a bank he helped start and had not even heard of it.
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