In October of 2008, the Federal Deposit Insurance Corporation (FDIC) raised the deposit insurance coverage provided by at qualifying banks from $100,000.00 to $250,000.00 per depositor. This increase in coverage is temporary and will expire in December 29, 2009 at which time the limit will return to the $100,000 amount. However, the increase will be permanent as to some retirement accounts.
FDIC is the insurance that protects your deposits in any given bank, up to the coverage amount in the event your bank fails.
The $250,000 limit applies separately to certain types of accounts held at the same institution.
- The sums of all accounts an individual owns at a bank that are in that individual’s name alone are insured up to the $250,000 limit.
- Joint owners of accounts are insured up to $250,000 for each joint owner.
- The aggregate of certain types of retirement accounts and IRAs are insured up to $250,000.
- The $250,000 coverage for revocable living trusts (RLT) is applied to each beneficiary.
|An account or accounts in Husband’s name alone
|An account or accounts in Wife’s name alone
|An account or accounts Husband and Wife own jointly
|An account or accounts owned by Husband and Wife’s RLT
As you can see, coverage is increased and exposure to loss is diminished when deposits are spread over the different categories of coverage and the above example does not take into consideration IRA or retirement account insurance coverage.
Calculating the Revocable Living Trust FDIC Coverage*
FDIC coverage for Revocable Living Trusts is $250,000 per beneficiary. To determine the amount of coverage as to the Revocable Living Trust account, you will take the number of grantors multiplied by the number of beneficiaries and multiply that amount by the $250,000 coverage limit.