FDIC Changes In Coverage

By: Gardiner Thomsen CPAsemail

Last fall the FDIC, due to the volatility in the markets, approved changes to insured limits and instituted temporary programs to ease depositors’ concerns about their accounts. Effective October 3, 2008, the basic limit on the FDIC amount was increased from $100,000 to $250,000 per depositor through December 31st, 2009. On May 20, 2009, the FDIC extended the coverage date through December 31, 2013. (However, the extension does not apply to the Transaction Account Guarantee Program. The unlimited coverage under the Transaction Account Guarantee Program is only in effect for depositors at participating institutions through December 31, 2009.) On January 1st, 2014, coverage will revert to $100,000, except for certain retirement accounts. On October 14th, 2008, FDIC officials announced the Temporary Transaction Account Guarantee Program. This program covers all personal and business checking deposit accounts that are non-interest-bearing and deposited with an institution participating in this program. A “non-interest-bearing transaction account” is one on which interest is neither accrued nor paid and on which the insured bank does not require advance notice of a withdrawal. However, for purposes of the Program, the FDIC is including in the definition of a non-interest-bearing transaction account: traditional demand deposit checking accounts that allow for an unlimited number of deposits and withdrawals at any time; low-interest negotiable order of withdrawal accounts (NOW accounts) that can earn no more than 0.5% interest; other interest-bearing checking accounts; Money Market Deposit Accounts (MMDAs); savings accounts; Certificates of Deposit (CDs); accounts commonly known as Interest on Lawyers Trust Accounts (IOLTAs), and functionally equivalent accounts. Coverage for eligible accounts under this temporary program is unlimited. This program is scheduled to end December 31st, 2009. It is important for you to consider these new coverage limits and dates and include them as part of your company’s cash management policies.

FDIC Deposit Insurance Coverage Limits  (Through December 31, 2013)

Single Accounts (owned by one person) $250,000 per owner
Joint Accounts (two or more persons) $250,000 per co-owner
Certain Retirement Accounts (includes IRAs) $250,000 per owner
Revocable Trust Accounts $250,000 per owner per beneficiary up to 5 beneficiaries (more coverage is available with 6 or more beneficiaries subject to specific limitations and requirements)
Corporation, Partnership and Unincorporated Association Accounts $250,000 per corporation, partnership or unincorporated association
Irrevocable Trust Accounts $250,000 for the non-contingent, ascertainable interest of each beneficiary
Employee Benefit Plan Accounts $250,000 for the non-contingent, ascertainable interest of each plan participant
Government Accounts $250,000 per official custodian