FDIC – Insuring Your Deposits

As our valued customer, you can feel comfortable and secure in knowing that your deposits at Frontenac Bank are insured by the Federal Deposit Insurance Corporation (FDIC). Download the article by FDIC  Insuring Your Deposits.

Find out more about deposit insurance by visiting the FDIC's website and reading:  Your Insured Deposits, FDIC's Guide to Deposit Insurance Coverage.

FDIC Increases Deposit Insurance

FDIC Increases Insurance 

Basic Insurance Amount is $250,000

The FDIC insures deposit accounts such as checking, NOW and savings accounts, money market deposit accounts, and certificates of deposit (CDs). The basic insurance amount is $250,000 per depositor per insured bank.

If you or your family has $250,000 or less in all of your deposit accounts at the same insured bank, you do not need to worry about your insurance coverage. Your funds are fully insured.

The FDIC does not insure the money you invest in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if you purchased these products from an insured bank.

The FDIC also does not insure U.S. Treasury bills, bonds, or notes. These are backed by the full faith and credit of the United States government.

Coverage Over $250,000

If you or your family has deposits at one insured bank totaling more than $250,000, you should know that different ownership categories of accounts are separately insured.

You may qualify for more than $250,000 in coverage at one insured bank if you own deposit accounts in different ownership categories.

In addition, federal law provides up to $250,000 in deposit insurance coverage for self-directed retirement accounts, such as Individual Retirement Accounts (IRAs).

Common Ownership Categories

The most common ownership categories are:

  • Single Accounts
  • Self-Directed Retirement Accounts
  • Joint Accounts
  • Revocable Trust Accounts
Single Accounts:

These are deposit accounts owned by one person and titled in that person’s name only. This account category does not include deposits held in individual retirement accounts because they are protected in a separate category.

All of your single accounts at the same insured bank are added together and the total is insured up to $250,000. If you have a checking account and a CD at the same insured bank, and both accounts are in your name only, the two accounts are added together and the total is insured up to $250,000.

Self-Directed Retirement Accounts:

These are deposits you have in retirement accounts for which you have the right to direct how the money is invested, including the ability to direct that the funds be deposited at an FDIC-insured bank. Types of self-directed retirement accounts include traditional and Roth Individual Retirement Accounts (IRAs), Simplified Employee Pension (SEPs) accounts, “Section 457” deferred compensation plan accounts, self-directed Keogh plan accounts, and self-directed defined contribution plan accounts.

All of your self-directed retirement accounts at the same insured bank are added together and the total is insured up to $250,000.

Naming beneficiaries on a self-directed retirement account does not increase insurance coverage.

Joint Accounts:

These are deposit accounts owned by two or more people. If both owners have equal rights to withdraw money from a joint account, each person’s share of all joint accounts at the same insured bank are added together and the total is insured up to $250,000.

If a couple has a joint checking account and a joint savings account at the same insured bank, each co-owner's shares of the two accounts are added together and insured up to $250,000, providing up to $500,000 in coverage for the couple's joint accounts.

Revocable Trust Accounts:

These are deposits held in either a payable-on-death account or a living trust account.

Payable-on-death (POD) accounts – also known as testamentary or totten trust accounts – are the most common form of revocable trust deposits. These informal revocable trusts are created when the account owner signs an agreement – usually part of the bank’s signature card – stating that the funds will be payable to a beneficiary upon the owner’s death.

Living trusts – also known as family trusts – are formal revocable trusts created for estate planning purposes. The owner controls the funds in the trust during his or her lifetime. Upon the owner’s death, the trust generally becomes irrevocable.

If certain conditions are met, revocable trust accounts are insured up to $250,000 per owner for each “qualifying” beneficiary.

Qualifying beneficiaries are the owner’s spouse, child, grandchild, parent, or siblings. Adopted and step children, grandchildren, parents, and siblings also qualify. Others including in-laws, cousins, nieces and nephews, friends, organizations (including charities) and trusts do not qualify.

Note that living trust coverage is based on the interests of qualifying beneficiaries who would become entitled to receive trust assets when the trust owner dies (or if the trust is jointly owned, when the last owner dies). This means that, when determining coverage, the FDIC will ignore any trust beneficiary who would have an interest in the trust assets only after another living beneficiary dies.

The account title for a revocable trust account must include a term such as “payable on death,” “in trust for,” “living trust,” “family trust,” or similar language or an acronym (such as “POD” or “ITF”) to indicated the existence of a trust relationship. In addition, for POD accounts, the beneficiaries must be identified by name in the bank’s account records.

The example below applies only to POD accounts. Deposit insurance coverage may be different for some living trusts. For more information on living trust accounts you may contact the FDIC at 1-877-275-3342 or read more about it online at www.fdic.gov/deposit.

Example: Bill has a $250,000 POD account with his wife Sue as beneficiary. Sue has a $250,000 POD account with Bill as beneficiary. In addition, Bill and Sue jointly have a $1,500,000 POD account with their three children as equal beneficiaries.

These three accounts totaling $2,000,000 are fully insured because each owner is entitled to $250,000 of deposit insurance coverage per qualifying beneficiary. Bill has $1,000,000 of insurance coverage ($250,000 for each qualifying beneficiary – his wife and three children). Sue also has $1,000,000 of insurance coverage ($250,000 for each qualifying beneficiary – her husband and three children).

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