The FDIC – short for the Federal Deposit Insurance Corporation – is an independent agency of the United States government. The FDIC protects you against the loss of your deposits if an FDIC ­insured bank or savings association fails. FDIC insurance is backed by the full faith and credit of the United States government.

All FDIC -insured banks must meet high standards for financial strength and stability. The FDIC, with other federal and state regulatory agencies, regularly reviews the operations of insured banks to ensure these standards are met. Even with these safeguards, some insured banks fail. If your insured bank fails, FDIC insurance will cover your deposits, dollar for dollar, including principal and any accrued interest, up to the insurance limit. Historically, insured deposits are available to customers of a failed bank within just a few days. Since the start of the FDIC in 1933, no depositor has ever lost a penny of insured deposits.

FDIC insurance covers all types of deposits received at an insured bank, including deposits in checking, NOW, and savings accounts, money market deposit accounts, and time deposits such as certificates of deposit (CDs).

FDIC deposit insurance covers the balance of each depositor’s account, dollar-for-dollar, up to the insurance limit, including principal and any accrued interest through the date of the insured bank’s closing.

The FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if these investments were bought from an insured bank.

The FDIC does not insure U.S. Treasury bills, bonds, or notes. These are backed by the full faith and credit of the United States government.

The basic insurance amount is $100,000 per depositor, per insured bank. The $100,000 amount applies to all depositors of an insured bank except for owners of certain retirement accounts, which are insured up to $250,000 per owner, per insured bank.

Deposits in separate branches of an insured bank are not separately insured. Deposits in one insured bank are insured separately from deposits in another insured bank.

Deposits maintained in different categories of legal ownership at the same bank can be separately insured. Therefore, it is possible to have deposits of more than $100,000 at one insured bank and still be fully insured. The following sections describe the eight ownership categories recognized by FDIC regulations and the requirements that must be met to have coverage beyond the basic $100,000 insurance amount.

A single account is a deposit owned by one person. The following deposit account types are included in this ownership category:

• Accounts held in one person’s name alone
• Accounts established for one person by an agent, nominee, guardian, custodian, or conservator, including Uniform Transfers to Minors Act accounts, escrow accounts, and brokered deposit accounts
• Accounts held in the name of a business that is a sole proprietorship (for example, a “DBA account”)
• Accounts established for a decedent’s estate, and
• Any account that fails to qualify for coverage under another ownership category.

All single accounts owned by the same person at the same insured bank are added together and the total is insured up to $100,000.

A joint account is a deposit owned by two or more people. To qualify for insurance under this ownership category, all of the following requirements must be met:

1. All co-owners must be people. Legal entities such as corporations, trusts, estates, or partnerships are not eligible for joint account coverage.
2. All co-owners must have equal rights to withdraw funds from the account. For example, if one co-owner can withdraw funds on his or her signature alone but the other co-owner can withdraw deposits only with the signature of both co-owners, the co-owners do not have equal withdrawal rights.
3. All co-owners must sign the deposit account signature card unless the account is a CD or is established by an agent, nominee, guardian, custodian, executor or conservator.

If all of these requirements are met, each co-owner's share of every account that is jointly held at the same insured bank is added together with the co-owner's other shares, and the total is insured up to $100,000.

The FDIC assumes that all co-owners’ shares are equal unless the deposit account records state otherwise.

These are deposits owned by one person and titled in the name of that person’s retirement account. The following types of retirement plan deposits qualify for coverage as certain retirement accounts.

• All types of IRAs, including:
  
  
  • Traditional IRAs
  • Roth IRAs
  • Simplified Employee Pension (SEP) IRAs
  • Savings Incentive Match Plans for Employees (SIMPLE) IRAs
    
    
• All Section 457 deferred compensation plan accounts, such as eligible deferred compensation plans provided by state and local governments, regardless of whether they are self-directed
• Self-directed defined contribution plan accounts, such as self-directed 401(k) plans, self-directed SIMPLE IRAs held in the form of 401(k) plans, self-directed defined contribution money purchase plans, and self-directed defined contribution profit-sharing plans
• Self-directed Keogh plan accounts (or H.R. 10 plan accounts) designed for self-employed individuals

All retirement accounts listed above owned by the same person in the same FDIC-insured bank are added together and the total is insured to $250,000.

A revocable trust account is a deposit owned by one or more people that indicates an intention that the deposits will belong to one or more named beneficiaries upon the death of the owner(s). A revocable trust account can be revoked (or terminated) at the discretion of the owner. In this section, the term “owner” means the grantor, settlor, or trustor of the trust.

There are both informal and formal revocable trusts. Informal revocable trusts, often called “payable-on­death” (POD), “Totten trust,” or “in trust for” (ITF) accounts, are created when the account owner signs an agreement–usually part of the bank’s signature card – stating that the deposits are payable to one or more beneficiaries upon the owner's death.

Formal revocable trusts – known as “living” or “family” trusts – are written trusts created for estate planning purposes. The owner controls the deposits and other assets in the trust during his or her lifetime. Upon the owner’s death, the trust generally becomes irrevocable.

All deposits that an owner has in both informal and formal revocable trusts are added together for insurance purposes, and the insurance limit is applied to the combined total.

Irrevocable trust accounts are deposits held by a trust established by statute or a written trust agreement in which the grantor (the creator of the trust - also referred to as a trustor or settlor) contributes deposits or other property and gives up all power to cancel or change the trust.

An irrevocable trust also may come into existence upon the death of an owner of a revocable trust. The reason is that the owner no longer can revoke or change the terms of the trust. If a trust has multiple owners and one owner passes away, the trust agreement may call for the trust to split into an irrevocable trust and a revocable trust owned by the survivor. Because these two trusts are held under different ownership types, the insurance coverage may be very different, even if the beneficiaries have not changed.

Employee benefit plan accounts are deposits of a pension plan, profit-sharing plan or other employee benefit plan.

Employee benefit plan deposits are insured up to $100,000 for each participant’s non-contingent interest in the plan.

Corporations, partnerships, and unincorporated associations, including for-profit and not-for-profit organizations, are insured under the same ownership category. To qualify for coverage under this category, a corporation, partnership, or unincorporated association must be engaged in an “independent activity,” meaning that the entity is operated primarily for some purpose other than to increase insurance coverage.

Deposits owned by a corporation, partnership, or unincorporated association are insured up to $100,000 at a single bank, but are insured separately from the personal accounts of the entity’s stockholders, partners, or members.

Government accounts are also known as public unit accounts. This category includes deposit accounts of:

• The United States
• Any state, county, municipality (or a political subdivision of any state, county, or municipality), the District of Columbia, Puerto Rico and other government possessions and territories
• An Indian tribe

Insurance coverage of a public unit account differs from a corporation, partnership and unincorporated association account in that the coverage extends to the official custodian of the deposits belonging to the public unit rather than the public unit itself.

Each official custodian of time and savings deposits (including interest-bearing NOW accounts) of a public unit is insured up to $100,000.

Any person or entity can have FDIC deposit insurance in an insured bank located in the United States. A person does not have to be a U.S. citizen or resident to have deposits insured by the FDIC.

The FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if they were bought from an insured bank. The FDIC also does not insure U.S.Treasury bills, bonds, or notes, but those are backed by the full faith and credit of the United States government.

Federal law requires the FDIC to make payment as soon as possible. Historically, the FDIC pays insurance within a few days after a bank closing either by establishing an account at another insured bank or by providing a check. Deposits purchased through a broker may take longer to be paid because the FDIC may need to obtain the broker’s records to determine insurance coverage. Customers with uninsured deposits receive the insured portion of their account as described above. They will wait longer to receive payment for some or all of their uninsured deposits. The amount of uninsured deposits they may receive, if any, is based on the sale of the failed bank’s assets. Depending on the quality and value of these assets, it may take several years to sell the assets. As assets are sold, uninsured depositors receive periodic payment on their uninsured deposit claim.

If a depositor holds one or more of these items from an insured bank, and the insured bank fails before the item is cashed elsewhere, the FDIC will add the item to any other deposits held in the same ownership category at the same insured bank. For example, an outstanding interest check payable to a depositor will be added to their other single ownership accounts, if any, and the total insured up to $100,000.

The FDIC does not insure safe deposit boxes or their contents. In the event of a bank failure, the FDIC in most cases arranges for an acquiring bank to take over the failed bank’s offices, including locations with safe deposit boxes. If no acquirer is found, boxholders would be sent instructions for removing the contents of their boxes.

The FDIC presumes that deposits are owned as shown on the deposit account records of the insured bank. The deposit account records of an insured bank include account ledgers, signature cards, certificates of deposit, passbooks, and certain computer records. Account statements, deposit slips and cancelled checks are not considered deposit account records for purposes of determining deposit insurance coverage.

Deposit insurance coverage can be increased only if the accounts are held in different categories of ownership. These categories include single accounts, retirement accounts, joint accounts and revocable trust accounts. The requirements for obtaining separate insurance coverage in the ownership categories are explained elsewhere in the Ownership Categories section of this document.

The FDIC insures a deceased person’s accounts as if the person were still alive for another six months. During this grace period, the insurance coverage of the owner’s accounts will not change unless the accounts are restructured by those authorized to do so. Also, the FDIC will not apply this grace period if it would result in less coverage.