What To Know About Increased Fdic Insurance For Retirement Accounts

What To Know About Increased Fdic Insurance For Retirement Accounts



What to​ Know About Increased FDIC Insurance for Retirement Accounts
For the​ first time in​ more than 25 years,​ Congress has raised the​ limit on​ federal deposit insurance coverage,​ which protects against loss if​ a​ banking institution fails .​
However,​ the​ higher insurance limit only applies to​ certain kinds of​ retirement accounts that people may have at​ banks and savings associations insured by the​ Federal Deposit Insurance Corporation (FDIC) and at​ credit unions insured by the​ National Credit Union Administration (NCUA) .​
The FDIC wants bank customers to​ know what's new and what hasn't changed .​
1 .​
Certain retirement accounts at​ federally insured banks and savings associations soon will be insured up to​ $250,​000,​ up from $100,​000 previously .​
The higher insurance coverage applies primarily to​ traditional and Roth IRAs (Individual Retirement Accounts) .​
Also included are self-directed Keogh accounts,​ 457 Plan accounts for state government employees,​ and employer-sponsored defined contribution plan accounts that are self-directed,​ which are primarily 401(k) accounts .​
In general,​ self-directed means the​ consumer chooses how and where the​ money is​ deposited .​
Under the​ FDIC's new rules,​ which take effect on​ April 1,​ 2018,​ all deposits at​ a​ single banking institution that are held in​ this broad category of​ retirement accounts are added together and the​ total is​ insured up to​ $250,​000,​ separately from any other deposit accounts you​ may have at​ the​ same institution .​
With FDIC coverage for retirement accounts raised to​ $250,​000,​ more Americans who rely on​ banking institutions for safety and easy access will know that more of​ their money for retirement will be completely protected if​ their financial institution were to​ fail .​
There's also the​ added convenience for people who,​ previously,​ might have gone to​ more than one institution to​ get full coverage of​ retirement deposits of​ more than $100,​000.
2 .​
Other deposit accounts are still insured up to​ at​ least $100,​000 .​
However,​ as​ before,​ there are ways to​ qualify for more than the​ basic coverage at​ one insured institution.
For example,​ four distinct categories of​ accounts-checking and savings accounts in​ your name alone that are not retirement accounts; checking and savings accounts held jointly with other people; business accounts; and employer-sponsored pension or​ profit-sharing plans-each qualify for separate insurance coverage of​ $100,​000 (as much as​ $400,​000 combined) .​
In addition,​ trust accounts may qualify for separate insurance coverage of​ $100,​000 per beneficiary (not per depositor) if​ certain conditions are met .​
And remember,​ under the​ new rules,​ your self-directed retirement accounts at​ the​ same institution are insured by the​ FDIC to​ $250,​000 separately from any other accounts you​ may have there .​
This can be confusing,​ so to​ learn more about how to​ qualify for additional insurance coverage contact the​ FDIC as​ listed below .​
3 .​
The insurance limits could rise in​ the​ future,​ but not until 2011,​ if​ at​ all .​
The new law establishes a​ method for authorizing an​ increase in​ the​ insurance limits on​ all deposit accounts (including retirement accounts) every five years starting in​ 2011 and based,​ in​ part,​ on​ inflation .​
Otherwise,​ your accounts will continue to​ be insured just as​ described.




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