SIPC Insurance on each $500,000 balance?

[mhk7]

Do you keep each account that you have with your broker under $500,000 so that all of your assets are insured?

For example, TD Ameritrade brokerage accounts are protected by the SIPC for both securities (up to $500,000) and cash deposits (up to $250,000).

Does it work this way? Thanks!

[4legsgood]

Quote:

Originally Posted by mhk7 Do you keep each account that you have with your broker under $500,000 so that all of your assets are insured? For example, TD Ameritrade brokerage accounts are protected by the SIPC for both securities (up to $500,000) and cash deposits (up to $250,000). Does it work this way? Thanks!

I'm hoping people will weigh in on this. With all the cyber crime happening (and my fav conspiracy theory is that a lot more is happening than reported), I'm leaning toward opening another brokerage account or two to keep covered.

[braumeister]

Fidelity says this:

Quote:

In addition to SIPC protection, Fidelity provides its brokerage customers with additional "excess of SIPC" coverage. The excess coverage would only be used when SIPC coverage is exhausted. ... Total aggregate excess of SIPC coverage available through Fidelity's excess of SIPC policy is $1 billion. Within Fidelity's excess of SIPC coverage, there is no per customer dollar limit on coverage of securities, but there is a per customer limit of $1.9 million on coverage of cash awaiting investment. This is the maximum excess of SIPC protection currently available in the brokerage industry.

Safeguarding Your Accounts

[RetiredHappy]

All large brokerages are SIPC protected. The $500K coverage is for each separate capacity - individual, joint, retirement etc... We don't keep at separate brokerages because we like everything to be consolidated so that it is easier for the estate when we pass away. Link here: https://www.sipc.org/for-investors/i...tiple-accounts.

Investors with Multiple Accounts
SIPC protection of customers with multiple accounts is determined by "separate capacity." Each separate capacity is protected up to $500,000 for securities and cash (including a $250,000 limit for cash only). Accounts held in the same capacity are combined for purposes of the SIPC protection limits.

Examples of separate capacities are:

individual account;
joint account;
an account for a corporation;
an account for a trust created under state law;
an individual retirement account;
a Roth individual retirement account;
an account held by an executor for an estate; and
an account held by a guardian for a ward or minor.
Additional information on separate accounts may be found in SIPC's Series 100 Rules.

The following are examples of separate accounts:

Mary has an account in her name at her brokerage firm. Mary is protected by SIPC up to $500,000.
Joe has two brokerage accounts, each in his own name. For purposes of SIPC protection, Joe’s accounts are combined, and Joe is protected by SIPC only up to a total of $500,000.
Joe and Mary are married and they have a joint brokerage account which is separate from the individual accounts that they each have at the firm. An additional maximum of $500,000 of SIPC protection is available for the joint account.
Joe has a Roth account and an IRA account, at the same brokerage. Joe is protected up to $500,000 for the Roth account and up to $500,000 for his IRA account.

[njhowie]

TD provides significant supplemental coverage in excess of SIPC limits. Other major brokerages carry similar.

https://www.tdameritrade.com/retail-...df/TDA1209.pdf

Quote:

SIPC protection TD Ameritrade is a member of the Securities Investor Protection Corporation (“SIPC”), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure is available on request at www.sipc.org. Additionally, TD Ameritrade provides each client $149.5 million worth of protection for securities and $2 million of protection for cash through supplemental coverage provided by London insurers. In the event of a brokerage insolvency, a client may receive amounts due from the trustee in bankruptcy and then SIPC. Supplemental coverage is paid out after the trustee and SIPC payouts and under such coverage each client is limited to a combined return of $152 million from a trustee, SIPC, and London insurers. The TD Ameritrade supplemental coverage has an aggregate limit of $500 million over all customers. This policy provides coverage following brokerage insolvency and does not protect against loss in market value of the securities.

[4legsgood]

With the above info on SIPC coverage, I did do a quick transfer to an existing account to get full coverage on all. Good info!

[mrfeh]

We're at Fido, way over $500K and do not worry about it.

[braumeister]

Seriously, how can anyone worry about the big guys (Fidelity, Schwab, Vanguard) going defunct and taking your accounts down?

[joesxm3]

Does SIPC cover your account being hacked?

[RetiredHappy]

Quote:

Originally Posted by joesxm3 Does SIPC cover your account being hacked?

From what I read off the SIPC site, it does not cover money lost when account got hacked. It only covers in the event that the brokerage goes belly up or when the brokerage stole from clients.

[jazz4cash]

Quote:

Originally Posted by RetiredHappy From what I read off the SIPC site, it does not cover money lost when account got hacked. It only covers in the event that the brokerage goes belly up or when the brokerage stole from clients.

That’s my read as well. Post #2 mentioned protection from cyber crime but this insurance isn’t it.