FDIC/NCUA Insurance for Retirement money

[MJ]

Unfortunately IRA money is insured to a max of $250K with no POD increases. For those of you who have over $250K in an IRA account, are you concerned about the amount going well over the insurance maximum?

 

[OldShooter]

FDIC and NCUA AFAIK do not insure IRA accounts. They may insure some assets held in IRAs, though. Look to SIPIC for IRA coverage.

I don't worry about any of it. Probability of loss is IMO incredibly low, essentially zero.

 

[MJ]

FDIC and NCUA AFAIK do not insure IRA accounts. They may insure some assets held in IRAs, though. Look to SIPIC for IRA coverage.
I don't worry about any of it. Probability of loss is IMO incredibly low, essentially zero.

Yes, IRA accounts are covered up to $250K.

 

[RetiredAndLovingIt]

You can have up to 250k in multiple banks or credit unions and still be fully covered as best as I understand. For example buy 250K at Wells Fargo and another 250K at B of A and another $250K at your credit union and more at Fidelity with a different bank. I never go as high as 250K at each because the interest would take me over the insurance limit.
I hope other will clarify my understanding.

 

[OldShooter]

You can have up to 250k in multiple banks or credit unions and still be fully covered as best as I understand. For example buy 250K at Wells Fargo and another 250K at B of A and another $250K at your credit union and more at Fidelity with a different bank. I never go as high as 250K at each because the interest would take me over the insurance limit.
I hope other will clarify my understanding.

Yes. That is FDIC/NCUA coverage of deposit accounts or CDs, not coverage of IRA accounts per se. Other assets that may be held in IRA accounts would not be covered by that kind of insurance.

For example, Schwab uses Schwab Bank for the sweep account in my IRA and the bank has FDIC insurance but that is insurance on only the sweep account, not on the whole IRA. If the sweep account was the only asset held in the IRA then I guess you could consider FDIC to be insuring the IRA but that is not really the legal situation.

At least that is my understanding.

 

[MJ]

I guess I should have made it clear that I am referring to IRA CDs within one bank or credit union which as I have stated are covered upto $250K. I don't buy brokered CD so I don't know if they fall inot a different category.
This is from the NCUA website "NCUA insures a member’s traditional IRAs and Roth IRAs up to a maximum of $250,000. 12 C.F.R. §745.9-2(c)(1). That coverage is separate from the coverage a member receives on other kinds of accounts he owns at the same credit union. For insurance purposes, a member’s traditional and Roth IRAs in the same credit union will be combined together and insured in the aggregate to $250,000. 12 C.F.R. §745.9- 2(c)(2). Share insurance for traditional and Roth IRAs “is based on the present vested ascertainable interest of a participant or designated beneficiary.” Id (emphasis added). While the participant or original owner of the IRA would have to have been a member to open the account in the first instance, §745.9-2(c)(2) provides coverage to a designated beneficiary without specifically requiring the designated beneficiary to be a member. Id."

 

[jazz4cash]

I’m not worried but its easy for me to stay under the limit because I don’t have much cash. If I did I would just use multiple banks/credit unions. There are programs that will split your deposit among multiple banks to stay under the limit but I don’t know if they work for IRAs or CDs. One is called CDARS.

 

[pb4uski]

Yes. That is FDIC/NCUA coverage of deposit accounts or CDs, not coverage of IRA accounts per se. Other assets that may be held in IRA accounts would not be covered by that kind of insurance.

For example, Schwab uses Schwab Bank for the sweep account in my IRA and the bank has FDIC insurance but that is insurance on only the sweep account, not on the whole IRA. If the sweep account was the only asset held in the IRA then I guess you could consider FDIC to be insuring the IRA but that is not really the legal situation.

At least that is my understanding.

I'm pretty sure the OP was referring to IRA accounts with deposit products like CDs at banks and credit unions and NOT IRA brokerage accounts.

If you do what you describe you need to have such accounts at multiple institutions in order to maintain full coverage.

Easier to have a brokerage IRA account and buy multiple brokered CDs.

 

[MJ]

I'm pretty sure the OP was referring to IRA accounts with deposit products like CDs at banks and credit unions and NOT IRA brokerage accounts.

Yes, I am refering to banks and CUs. In this particular instance, one of my CU's has an exceptional APY rate of either 5.34% for 3 years and 4.97% for 5 years.