What To Do When FDIC-Insured Acct Exceeds $250K?

[SoReadyToRetire]

I got a notice from Fidelity today about exceeding the amount of FDIC insurance on my brokerage account, which hadn't even occurred to me, so I'm glad they did that.

What do you do in this case? Just open another account somewhere and move some money into it? Hubby is in the same boat.

 

[Packman]

I didn't know brokerage accounts were covered by FDIC. So are you saying that once your brokerage account exceeded $250,000 Fidelity contacted you??

 

[gwraigty]

I didn't know brokerage accounts were covered by FDIC. So are you saying that once your brokerage account exceeded $250,000 Fidelity contacted you??

Brokerage accounts aren't covered by FDIC, although you can have investments that are covered by FDIC. Brokered CDs, for example, but you'd have to have more than the FDIC limit per unique bank. No, Fidelity won't contact based on exceeding $250K in a brokerage account.

Some clarification by OP would be helpful.

 

[SoReadyToRetire]

Sorry--I misspoke calling it a "brokerage account".

It's the only account I have at Fidelity--it's the IRA account I rolled all my former 401k's over into over time.

I got an email from them today in part saying this:

"Because one or more of your Fidelity accounts has a position that is eligible for FDIC insurance coverage, we want to remind you about current FDIC coverage limits so you can accurately monitor your balances.

Generally, deposits at a bank held in nonretirement and qualified retirement accounts such as traditional or Roth IRAs are eligible for up to $250,000 coverage for each account owner, at each bank or depository institution. Certain holdings at Fidelity are eligible for FDIC insurance coverage and have the same limits."

 

[brewer12345]

Buy some t bills.

 

[Packman]

Now I understand. It's nice that Fidelity gives you this warning. I have an account with Ally bank and have never received a warning as such, even though I have exceeded the insured amount by a few thousand dollars at times.

 

[gwraigty]

Sorry--I misspoke calling it a "brokerage account".

It's the only account I have at Fidelity--it's the IRA account I rolled all my former 401k's over into over time.

I got an email from them today in part saying this:

"Because one or more of your Fidelity accounts has a position that is eligible for FDIC insurance coverage, we want to remind you about current FDIC coverage limits so you can accurately monitor your balances.

Generally, deposits at a bank held in nonretirement and qualified retirement accounts such as traditional or Roth IRAs are eligible for up to $250,000 coverage for each account owner, at each bank or depository institution. Certain holdings at Fidelity are eligible for FDIC insurance coverage and have the same limits."

The part you've quoted just sounds like a standard piece of information. Is there anything in the email that specifically says that this position exceeds the $250K FDIC limit?

Here's a link from the Fidelity site:

https://www.fidelity.com/why-fidelity/safeguarding-your-accounts?ccsource=VA

Fidelity's FDIC Insured Deposit Sweep Program details
In utilizing the Program, your uninvested cash balance is swept to a program bank where the deposit is eligible for FDIC insurance. If you have more than $245,000 in uninvested cash in your account, the Program maximizes your eligibility for FDIC insurance by systematically allocating this uninvested cash across multiple program banks. At a minimum, there are generally five banks available to accept customer deposits, making customers eligible for nearly $1,250,000 of FDIC insurance.

In short, if you're truly exceeding the limit at a program bank, then you've got too much cash sitting around not doing much for you. Brokered CDs would be better, if you want FDIC insurance.

 

[ocean view]

Sorry--I misspoke calling it a "brokerage account".



It's the only account I have at Fidelity--it's the IRA account I rolled all my former 401k's over into over time.



I got an email from them today in part saying this:



"Because one or more of your Fidelity accounts has a position that is eligible for FDIC insurance coverage, we want to remind you about current FDIC coverage limits so you can accurately monitor your balances.



Generally, deposits at a bank held in nonretirement and qualified retirement accounts such as traditional or Roth IRAs are eligible for up to $250,000 coverage for each account owner, at each bank or depository institution. Certain holdings at Fidelity are eligible for FDIC insurance coverage and have the same limits."

Are you sure you are actually over or near the limit? Or simply received this notice because your account is a type that can be covered?

I received the same email because I have an HSA account...that has a balance of only $14k.

I suggest calling Fidelity to ask specifically if you are at the limit. The rep should be able to review your accounts and let you know.

 

[njhowie]

I received the email on Monday as well. It is not a notice that you have any issues regarding the $250k FDIC limit, it is simply a public service announcement to tell you to keep it in mind...

Monitor your FDIC-insured balances

Because one or more of your Fidelity accounts has a position that is eligible for FDIC insurance coverage, we want to remind you about current FDIC coverage limits so you can accurately monitor your balances.

Generally, deposits at a bank held in nonretirement and qualified retirement accounts such as traditional or Roth IRAs are eligible for up to $250,000 coverage for each account owner, at each bank or depository institution. Certain holdings at Fidelity are eligible for FDIC insurance coverage and have the same limits.

Eligible balances or positions include:
Certificates of deposit (CDs) — Brokered CDs that are issued by an FDIC-insured institution
Core balances in the Fidelity® Cash Management Account
Core balances in eligible Fidelity IRAs or Fidelity Health Savings Accounts
Any 529 Bank Deposit Portfolio investments

Please keep in mind, monitoring your FDIC coverage is your responsibility.

 

[gwraigty]

I received the email on Monday as well. It is not a notice that you have any issues regarding the $250k FDIC limit, it is simply a public service announcement to tell you to keep it in mind...

+1

I just got the email today as well. There is nothing in the wording that specifies that the recipient is in danger of exceeding, or has exceeded, the FDIC insurance limits. No cause for alarm at all. Unless someone has no firm grasp of what account positions they have.

 

[nwsteve]

I have also received the "heads-up" reminder email from Fido
The key is to review your positions to confirm you do not have any CDs more than 250K with one bank per account. You may very well have more than 250k in the brokerage account but do you have more than 250 with a single issuer? If not you should be fine would be my understanding.

 

[calmloki]

I got the same heads up from Fidelity - in our case we have a couple Fidelity credit cards and as points build up they convert to dollars and get deposited into a Fidelity account. that runs between $100 and $1500 as it builds up and we drain it down. Other accounts with Ally and Discover and EBSB are all kept under the $250k cap. Not really too tough if you look at Quicken as much as I do and have a clue what kind of money is showing up at what time.

 

[audreyh1]

I think I got this email and saw it as a reminder.

 

[foxfirev5]

Yep it looks like just a reminder. I've got quite a few CD's at Fido but no individual bank is near 250k. When I got the email I understood it to just be a general heads up , not a detailed analysis of my holdings.

 

[Bruno]

Understanding FDIC coverage is so confusing to me. I called Discover Banking this morning to find out what the FDIC limits were on our accounts. Discover read me a statement then told me i should contact FDIC to find out for sure. FCID number is 877-275-3342 and their web site is www.fdic.gov. Before you call you need to know how your accounts are titled (Single, Joint) They also need to know if you have a beneficiary and if so how many. I called FDIC and I have a better feeling but still need to call them back. Me and my wife are joint owners and have 1 Beneficiary. I believe they told me if I added 1 more beneficiary the account would be protected up to 1 million.

 

[gwraigty]

Understanding FDIC coverage is so confusing to me. I called Discover Banking this morning to find out what the FDIC limits were on our accounts. Discover read me a statement then told me i should contact FDIC to find out for sure. FCID number is 877-275-3342 and their web site is www.fdic.gov. Before you call you need to know how your accounts are titled (Single, Joint) They also need to know if you have a beneficiary and if so how many. I called FDIC and I have a better feeling but still need to call them back. Me and my wife are joint owners and have 1 Beneficiary. I believe they told me if I added 1 more beneficiary the account would be protected up to 1 million.

Basically, it's $250K per name on the account, including all joint owners and beneficiaries. 2 joint owners with one beneficiary would have protection on the account of $750K.

If coverage of that magnitude isn't sufficient, it's easy enough to buy commission-free brokered CDs, no more than $250K per unique bank.

 

[Bruno]

I might have mislead people with the post below. I called FDIC after using their FDIC calculator. It didn't agree with what the FDIC guy told me.

https://edie.fdic.gov/calculator.html

Me and my wife have several joint accounts with our daughter the beneficiary. When i ran the calculator it only showed good to only $500k. I called back in and visited with a woman. She told me if i removed the Beneficiary from a few of my other accounts they would not be POD accounts and then I would have two accounts with both good up to $500k. Sorry for any confusion this might have caused. To be SAFE it looks like people need to visit with FDIC if any questions.

Understanding FDIC coverage is so confusing to me. I called Discover Banking this morning to find out what the FDIC limits were on our accounts. Discover read me a statement then told me i should contact FDIC to find out for sure. FCID number is 877-275-3342 and their web site is www.fdic.gov. Before you call you need to know how your accounts are titled (Single, Joint) They also need to know if you have a beneficiary and if so how many. I called FDIC and I have a better feeling but still need to call them back. Me and my wife are joint owners and have 1 Beneficiary. I believe they told me if I added 1 more beneficiary the account would be protected up to 1 million.

 

[kaneohe]

I might have mislead people with the post below. I called FDIC after using their FDIC calculator. It didn't agree with what the FDIC guy told me.

https://edie.fdic.gov/calculator.html

Me and my wife have several joint accounts with our daughter the beneficiary. When i ran the calculator it only showed good to only $500k. I called back in and visited with a woman. She told me if i removed the Beneficiary from a few of my other accounts they would not be POD accounts and then I would have two accounts with both good up to $500k. Sorry for any confusion this might have caused. To be SAFE it looks like people need to visit with FDIC if any questions.

The bolded is only true if the joint accounts are w/ different banks, right?
Otherwise 2 joint accts w/ the same bank is insured to 500K total.
2 jt accts w/ 2 different banks is insured to 500K each for total of 1M.

There are workarounds if you want to stay at same bank.
Jt = 500K; single A w/POD = 250K; single B w/POD=250K for total of 1M.

 

[kaneohe]

Basically, it's $250K per name on the account, including all joint owners and beneficiaries. 2 joint owners with one beneficiary would have protection on the account of $750K.

...............................................

I believe this is incorrect. Coverage would only be 500K.
https://edie.fdic.gov/calculator.html
Use the edie calculator and be sure to click on the Calculate Coverage tab.

strange thing tho.........if I put 2 owners/1 beneficiary coverage is 500K , same as 2 owners/0 beneficiaries.
Yet if I put 2 owners/2 beneficiaries, coverage is 1M.

 

[bolt]

Just for what its worth.
For those unaware certain Money Market Funds w/some custodians are not FDIC insured to 250k either.

The (moneymarketfunds) are considered "investments".
Just sayin.......

cited: Moneymarketmutualfunds.....my oversight.
Thx for the catch kaneohe.....

 

[kaneohe]

Just for what its worth.
For those unaware certain Money Market Funds w/some custodians are not FDIC insured to 250k either.

The (moneymarketfunds) are considered "investments".
Just sayin.......

https://www.statefarm.com/simple-in...market-deposit-accounts-vs-money-market-funds

little things matter.........bank accounts are usually called money market (deposit) accounts and have the FDIC insurance. Money market (mutual) funds are the animal you're talking about and are not insured. To make things more confusing, the words in parentheses are usually not used so the names are more similar (but still different).

 

[brewer12345]

https://www.statefarm.com/simple-in...market-deposit-accounts-vs-money-market-funds

little things matter.........bank accounts are usually called money market (deposit) accounts and have the FDIC insurance. Money market (mutual) funds are the animal you're talking about and are not insured. To make things more confusing, the words in parentheses are usually not used so the names are more similar (but still different).

Correct. This is why you should always read the fine print.

FWIW, if you are over the limits or fear being so in a deposit account, you can get what amounts to the same credit profile by buying T bills or a US Treasury money market fund. Full faith and credit is full faith and credit.

 

[24601NoMore]

You can increase FDIC (or NCUA) insurance by adding beneficiaries - up to 5 per "category" (ie: each single account owner, or joint account). So it's theoretically possible to insure for up to $1.25M each individual owner (5 beneficiaries listed - even if one of them only gets 1% or $1) and $1.5M joint.

More info..https://www.depositaccounts.com/blog/2011/05/maximizing-your-fdic-coverage-with-beneficiaries.html. You can also play around with the FDIC or NCUA coverage calculators to confirm different setups.

 

[kaneohe]

................................... You can also play around with the FDIC or NCUA coverage calculators to confirm different setups.

Have you tried using the calculator for POD acct w/ 2 owners, 1 beneficiary.

For both calculators if I input 750K value, I find 250K uninsured. Not surprising in a ways since both calculators look like 1 was copied from the other. Is this correct or an error?

 

[24601NoMore]

Have you tried using the calculator for POD acct w/ 2 owners, 1 beneficiary.

For both calculators if I input 750K value, I find 250K uninsured. Not surprising in a ways since both calculators look like 1 was copied from the other. Is this correct or an error?

If I remember right, that's expected - you lose one of the owners when there's a beneficiary. So, 2 owners with 1 beneficiary s/be $500K. Try adding a 2nd bene and you should get to $750K.