FDIC over 100k

[Gearhead Jim]

The FDIC insurance tops out at 100k for "ordinary" accounts and 250k for IRA's, no secret about that. And you can juggle names somewhat to get coverage for additional accounts.

I was under the impression that if a bank fails, anyone having an account with 100k or less gets their money immediately; if over 100k, then you get the 100k immediately and the rest comes months or years in the future as the numbers get sorted out.

But a friend recently told me that if your ordinary account is over 100k, you get NOTHING immediately; you are still covered for 100k but you get whatever is coming to you all at once in the (distant) future.

That sounds goofy, but this IS a governmental agency. What's the truth?

 

[REWahoo]

Everything you wanted to know about FDIC insurance: FDIC: Electronic Deposit Insurance Estimator (EDIE) – Online Version

 

[Gearhead Jim]

If I'm reading it correctly, the FAQ says that you get your insured 100k immediately, and whatever else at some time in the future.

It looks like my friend was wrong.
Contrary opinions still being accepted.

 

[Johnphx]

So do people just open say, 5 savings accounts and stuff 100k in each then?

 

[retire@40]

So do people just open say, 5 savings accounts and stuff 100k in each then?

If they are with the same bank, as long as you own them under different name registrations, you are covered. Like "John Smith," "John and Mary Smith," "Mary Smith," "Mary and John Smith."

 

[kaneohe]

If they are with the same bank, as long as you own them under different name registrations, you are covered. Like "John Smith," "John and Mary Smith," "Mary Smith," "Mary and John Smith."

Isn't J & M Smith the same as M & J Smith?

 

[barbarus]

Be careful. You are covered only up to $100K in any account. It is possible to open multiple accounts IF you meet the proper criteria. Read the FICA pamphlet thoroughly.

Now is not a time to treat this insurance lightly!

 

[Johnphx]

Be careful. You are covered only up to $100K in any account. It is possible to open multiple accounts IF you meet the proper criteria. Read the FICA pamphlet thoroughly.

Now is not a time to treat this insurance lightly!

lol, no worries.

I can't imagine ever having to actually worry about how to game the system in order to insure 500k in cash!

Although that would be a nice problem to have, no?

 

[Dudester]

The FDIC insurance tops out at 100k for "ordinary" accounts and 250k for IRA's, no secret about that. And you can juggle names somewhat to get coverage for additional accounts.

I was under the impression that if a bank fails, anyone having an account with 100k or less gets their money immediately; if over 100k, then you get the 100k immediately and the rest comes months or years in the future as the numbers get sorted out.

But a friend recently told me that if your ordinary account is over 100k, you get NOTHING immediately; you are still covered for 100k but you get whatever is coming to you all at once in the (distant) future.

That sounds goofy, but this IS a governmental agency. What's the truth?

I was listening to an NPR program during the saving & loan crisis that claimed that the speed with which you get your money back depends upon the specific agency that insures your financial institution. It is my impression that savings & loans are insured by a different agency than FDIC. The claim that was made during the program was that although the FDIC attempts to get your money back as soon as possible, other insurance agencies are not as fast and may take up to a year or so to get your money back.

Thus, fact that the FDIC is really fast may not mean anything if your money is at, say, a credit union or an S&L.

 

[Gearhead Jim]

My belief is that banks and S&L's are both covered by the FDIC, but credit unions are covered by the NCUA or something similar. Like you, I expect that provides a lesser level of protection.

And of course the government changes the rules whenever they see fit.

 

[OAG]

Link to NCUA: National Credit Union Administration - Share Insurance
Link to FDIC: FDIC: Federal Deposit Insurance Corporation

6 of 1 and 1/2 dozen of the other?

 

[Dudester]

My belief is that banks and S&L's are both covered by the FDIC, but credit unions are covered by the NCUA or something similar. Like you, I expect that provides a lesser level of protection.

At the time of the S&L crisis, one of the agencies insuring S&Ls was the FSLIC. As a result of the crisis, they went insolvent and led to the "taxpayer bailout." Presumably, this had a bad effect on account holders getting their money back quickly (I did a quick search, but could not find any URLs that specifically address this question).

If the FDIC were put under a lot of stress and went insolvent, I don't see how account holders could get their money back quickly.

My personal approach is to assume that I'll get my money back eventually, but it would be a good idea to have a plan B (account at another bank, big mattress, etc).

 

[ziggy29]

My mom has about $190K in a trust (now irrevocable since my dad passed) at her credit union. This frightened me at first until I read up on the NCUA rules. As I understand it, an account in trust with four beneficiaries is insured up to $400,000 ($100K for each beneficiary). As best as I can tell, this is the case. If not, we need to move about $95K of it elsewhere. It's a very solvent and well-run credit union, but still, why chance it?

 

[SecondCor521]

My mom has about $190K in a trust (now irrevocable since my dad passed) at her credit union. This frightened me at first until I read up on the NCUA rules. As I understand it, an account in trust with four beneficiaries is insured up to $400,000 ($100K for each beneficiary). As best as I can tell, this is the case. If not, we need to move about $95K of it elsewhere. It's a very solvent and well-run credit union, but still, why chance it?

That is my understanding as well. The thing you need to make sure to do is verify that the registration of the account at the credit union does in fact list all four beneficiaries. In the event of a credit union failure, the bank's records are what count.

2Cor521

 

[OAG]

Yes, DW and Me, Me and DW, Me DW and DD, DW DD and Me, Me DW and DS #1, DW Me and DS #1, DW Me DS #2, Me DW and DS #2 = $800K; single institution. Another $250K each same institution in DW IRA's and My IRA's; Total $1.3MM. If NCUA and FDIC cannot pay due to catastrophic financial collapse in USA I wonder who is going to insure those Stock Market portfolios?

 

[dandetour]

The way I read the NCUA / FDIC documents says that each PERSON, each depositor, is insured up to $100k.
No matter how many accounts, and who else is listed on the other accounts.

So John and Mary Adams can have a $200k CD fully insured, if that is their only
account at the CU. John has $100k insurance and so does Mary.

They are pretty clear about it in the FAQ.

Dan

 

[OAG]

The way I read the NCUA / FDIC documents says that each PERSON, each depositor, is insured up to $100k.
No matter how many accounts, and who else is listed on the other accounts.

So John and Mary Adams can have a $200k CD fully insured, if that is their only
account at the CU. John has $100k insurance and so does Mary.

They are pretty clear about it in the FAQ.

Dan

Use this with each account holder you may be surprised. Government Site. FDIC: Are My Deposits Insured?

May want to download and/or read this from the same site: http://www.fdic.gov/deposit/deposits/insured/yid.pdf

The pdf booklet CLEARLY shows how to title CD's beyond $100K - With 4 people you can get to $800K for a couple.

 

[OhSoClose]

I work for the National Credit Union Administration (NCUA). Here are the straight answers to some of the concerns expressed in this thread.

Both the FDIC and the NCUA are independent agencies in the federal government. Both provide the same levels of insurance coverage, with the NCUA covering deposits (we call them "shares") in credit unions, and the FDIC covering deposits in banks. All banks are insured by the FDIC, while a few credit unions are insured not by NCUA but by a private insurance company. So if you have an account at a credit union, make sure you know who provides the account insurance.

Both NCUA and the FDIC have LOTS of resources. For example, the NCUA has a multibillion dollar insurance fund, an additional multibillion dollar line of credit with the FFB (an arm of the Treasury), and the authority to make additional assessments, if necessary, against healthy credit unions. If all those resources are exhausted --heaven forbid!-- we have the full faith and credit of the United States Government behind us. In the worst case, we would expect a bailout similar to what the S&Ls got in the 1980s. Credit unions, though, are generally conservatively run and highly capitalized, so you ain't going to see that happen.

As previous posters have stated, you can get much more than $100k of insurance coverage if you structure your accounts right. All the accounts you have at a particular credit union in which you are the sole owner are lumped together and covered to $100,000. All your interests in accounts in which you are joint owner are lumped together, and you get an extra $100,000 of coverage for those joint accounts. All accounts in which you are the beneficiary of a Payable on Death (POD ) account owned by some other particular person are lumped together, and you get another $100,000 of coverage for those. All your IRA accounts are lumped together, and you get another $250,000 coverage for those. Within a multi-person family you can put together a series of accounts that will get you coverage in the millions. Our website (National Credit Union Administration - Home Page ) had examples of how to maximize coverage

When a credit union fails, we at NCUA pay insurance claims fast. Generally, we have a U.S Treasury check on its way to you in the mail within three days of the credit union closing its doors. We are trained to pay out fast -- we can't let folks lose confidence in our insurance, or there would be runs on other credit unions. The FDIC likewise moves fast when it pays depositors of a failed bank.

Hope that helps!

OhSoClose

 

[dandetour]

R Wood and OhSoClose: I thank you for the refinements of my understanding.
Each family, each situation, may need to use the Gov't calculator if they see a
need for quite large bank or CU deposits all insured.
Dan

 

[Gearhead Jim]

You can call me paranoid, but I keep my accounts diversified with money in both banks and CU's, and not more than 100k in any single institution even when it's an IRA.

If things get really ugly in the financial world some day, Uncle Sam may decide to change the rules about coverage. Not a likely secnario, but not impossible.

 

[OhSoClose]

Diversification is never a bad thing. Lots more paperwork, though. And more entries on your tax forms.

 

[grumpy]

Check out the CDARS program:

Certificate of Deposit Account Registry Service

 

[OAG]

Currently CDARS could not even approach the IR on CD's I have. Also this placement of funds with them (and potentially scattered around the country) still has to be tracked by someone - CDARS? I looked into this program (I received a unsolicited email last year) and IMHO the rate available using "one of their" institutions would have gotten me something south of 5% when I could buy them at PFCU at 6%. And who insures CDARS? This IMHO is not a service I would ever use. I think it is clear you can (with proper ownership designations) never have to use it. Additionally, the first few seconds of the video is a correct but, to be generous, misleading statement - that alone would run me off.

 

[ziggy29]

If things get really ugly in the financial world some day, Uncle Sam may decide to change the rules about coverage. Not a likely secnario, but not impossible.

Wow, that would be a great way to guarantee a run on banks that makes several of them insolvent...

 

[ChrisC]

Hmmmm, lets see, insured deposits are paid from multi-billion dollar deposit insurance funds of the FDIC or NCUA (both of which are solvent by any measure), which can be recapitalized by a credit facility from the Federal Financing Bank or the Secretary of Treasury (using public debt transactions like treasury notes and bonds). And each insured deposit is backed by the Full Faith & Credit of the United States, which is, in turn, backed by the taxing power of the Federal Government. Oh, and when the FDIC or NCUA pays an insured deposit, normally by transferring the insured deposit to a solvent insured bank or credit union, the Government then has a priority claim against the assets of the failed bank. So, the Government's claim exposure is never the total face value of the insured deposit.

Yep, there's a lot of risk to an insured deposit (excessive sarcasm intended) -- it's less of a risk than a T-bill.