Down goes IndyMac Bank, and with it the 2nd largest bank to fail since the creation of the FDIC. Not to mention an estimated $1 billion in uninsured deposits. How is it that these deposits are uninsured? Simple, they are above the FDIC limits.
With the fall of IndyMac, all the buzz is around which bank (or banks) is next. Plenty of names are suggested, but I don't want to pull a Schumer and cause a run on any of the troubles thrifts. You know, by inciting all eight people who read this blog to go take their money out.
This seems like an appropriate time to review FDIC insurance limits. Here's the easy way to remember it, FDIC covers your for up to $100,000 per depositor, not per account. There are myriad ways to multiply the limits, and to learn ALL about it, read on...
My first bit of advice is to visit the FDIC web site. This is, after all, where all of my info comes from.
Starting with the basic, know that your deposits at an FDIC insured bank are covered up to $100,000 per depositor (you), and IRAs and certain other retirement accounts are covered up to $250,000. Why you have a quarter million of IRA money in a bank account is another matter.
A married couple does not lose their right to $100,000 of FDIC insurance each. If you and your spouse have a few accounts together, say a joint checking, joint savings and a joint CD, the deposits are added up and insured up to $200,000.
The easiest way to increase FDIC insurance is to create a bunch of Payable on Death (POD), or Totten Trust accounts. Essentially, you are continue to own and control the account, but on your death, you have named the beneficiary. For each named beneficiary, with certain relationship restrictions, you are granted another $100,000 of insurance.
Many of you currently have your bank accounts in the name of your living trust. The living trust follows similar limit rules as POD accounts. The trustee is the covered party, and an additional $100,000 of coverage is provided per qualifying beneficiary.
Be warned, however, that more FDIC insurance is a foolish reason to open additional accounts with various beneficiaries. After all, there is more than one bank in this country. Just walk across the street!
Also, if you're collecting so many $100,000 accounts all over town that you are having difficulty keeping track of everything, we need to talk.
By the way, don't take anything I said here as difinitive advice about FDIC insurance. Also, don't assume that the folks at your bank have the definite answers. Go to the FDIC website, or call them:
Call toll-free at:
1-877-ASK-FDIC (1-877-275-3342)
from 8 am until 8 pm (Eastern Time)
Monday through Friday
Hearing Impaired Line:
1-800-925-4618
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