FDIC’s Video - Overview on Deposit Insurance Coverage

1. FDIC’s Video - Overview on Deposit Insurance Coverage

3. Part I – Deposit Insurance Basics

4. How Does Deposit Insurance Work? • FDIC preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and savings associations • Insurance covers deposit accounts dollar for dollar, including principal and accrued interest up to the insurance limit

5. FDIC Created in 1933

6. FDIC Insures Bank Deposits • Checking Accounts • NOW Accounts • Savings Accounts • Money Market Deposit Accounts (MMDA) • Certificates of Deposit (CDs)

7. FDIC Insurance Covers • Total of all deposit accounts at an insured bank, including branch offices, up to the insurance limit.

8. Basic Insurance Limit: $250,000 • The basic limit on federal deposit insurance coverage was temporarily increased from $100,000 to $250,000 per depositor through December 31, 2013. • On January 1, 2014, FDIC deposit insurance for all deposit accounts—except for certain retirement accounts—will return to at least $100,000 per depositor. • Insurance coverage for certain retirement accounts, which include all IRA deposit accounts, was increased permanently to $250,000 per depositor in 2006.

9. Basic Insurance Limit: $250,000 • Per depositor • Per insured depository institution (bank or savings association) • Per separately chartered bank • Not per branch

10. Important Point • If you or your family has less than the basic insurance limit in all your deposit accounts at the same insured institution, you do not need to worry about your insurance coverage. • Your funds are fully protected

11. Important Point FDIC insurance covers only bank deposits

12. FDIC Does Not Insure • Stocks • Mutual Funds • Life Insurance Policies • Annuities • Municipal Bonds or Securities • U.S. Treasury Bills, Bonds, or Notes • Safe Deposit Boxes

13. What Happens When a Bank Fails? • Insured depositors’ accounts are transferred to another FDIC-insured bank or • Insured depositors are given a check equal to their account balance, including the principal and interest accrued through the date of the bank's closing, up to the insurance limit

14. Insurance Payments • Federal law requires FDIC to make deposit insurance payment “as soon as possible” • Historically, insured funds are available to depositors within a few days after a bank fails

15. Most Important Point No depositor has ever lost a single penny of insured funds since FDIC’s creation in 1933

16. Part II Personal Accounts

17. Most Common Ownership Categories Single Accounts Certain Retirement Accounts Joint Accounts Revocable Trust Accounts

18. Single Accounts • Deposits owned by one person • Coverage up to $250,000

19. Ashley’s Single Account Coverage __________________________________________________

20. Doug and Sheila’s Single Accounts _________________________ ________________________ _________________________ ________________________ Fully Insured

21. Certain Retirement Accounts • Deposits owned by one person • Title in the name of that person’s retirement account • Accounts that are self-directed are insured separately from your other deposit accounts at the bank

22. Self-directed Retirement Accounts • Self-directed retirement account is a retirement account for which the owner, not a plan administrator, has the right to direct how the funds are invested, including the ability to direct that the funds be deposited at a specific FDIC-insured bank.

23. Certain Retirement Accounts • IRA • Roth IRA • Self-Directed Keoghs ________________________ Total Combined Insurance $250,000

24. Certain Retirement Accounts _____________________________ __________________________ _____________________________ __________________________ Fully Insured

25. Important Point Insurance coverage for Certain Retirement Accounts is not increased by the number of beneficiaries named on the retirement account

26. Maximum Fully Insured Coverage ____________ ______________ ____________ _________________________________________________________

27. Joint Accounts • Deposits owned by two or more people

28. Not Eligible for Joint Account Coverage • Corporations • Trusts • Estates • Partnerships

29. Joint Account Requirements • Deposits owned by two or more people • All co-owners must have equal rights to withdraw funds from the account • All co-owners must sign the account signature card

30. Joint Account Coverage • Deposits owned by two or more people • Each co-owner’s shares of all joint accounts are added together • Coverage $250,000 for each co-owner

31. Important Point Rearranging the way the names are listed on a joint account (or substituting “and” for “or”) or using different social security numbers doesn’t increase insurance coverage

32. Joint Accounts • Two people with more than one joint account at the same bank • Maximum $500,000 for all accounts • Maximum $250,000 per co-owner

33. Sheila and Daughter’s Joint Account Daughter’s Share $75,000 $150,000 Sheila’s Share $75,000

34. Sheila and Doug’s Joint Account Sheila’s Share $200,000 $400,000 Doug’s Share $200,000

35. Joint Account Coverage $25,000 Uninsured Daughter’s Share $75,000 Sheila’s Share $75,000 with Daughter Insured ------Total $275,000------ Sheila’s Share $200,000 with Doug Doug’s Share $200,000 Insured

36. Maximum Fully Insured Coverage __________ ___________ __________ __________ __________ __________ __________ __________

37. Revocable Trust (Testamentary) Accounts • A deposit owned by one or more people indicating an intention that the funds will belong to one or more named beneficiaries upon the owner’s death

38. Revocable Trust (Testamentary) Accounts • Owner can • revoke the trust • Add or delete the designation of beneficiaries • Change the amount allocated to any named beneficiary at any time

39. Revocable Trust (Testamentary) Accounts Formal Informal - POD - - Living Trust -

40. Informal Revocable Trust • Commonly referred to as POD account • Account owner signs an agreement with the bank, usually on the account signature card • Owner specifies the beneficiaries who will receive the deposits when the owner dies • Owner can revoke agreement at any time Owner has full use of account while alive

41. Formal Revocable Trust • Commonly referred to as living or family trust • Formal legal document usually prepared by an attorney for estate planning • Owner (trustor, grantor, settlor) specifies the beneficiaries who will receive the trust assets when the last owner dies • Owner keeps control of the trust assets and can change the trust at any time

42. Revocable Trust Account Coverage • Revocable trust owner is insured • Coverage is based on the number of beneficiaries each owner names • Assumes all requirements are met

43. Revocable Trust Requirements Beneficiaries must be “eligible” • Living natural person • Charity (as recognized by the Internal Revenue Service) • Nonprofit organization (as recognized by the Internal Revenue Service)

44. Revocable Trust Requirements • Beneficiaries must be “eligible” • Account title must indicate the existence of a trust relationship

45. INFORMAL TRUST POD ITF ATF Account Title - Informal Trust Payable-on-Death (POD) accounts or other similar terms such as “ITF” (In-Trust-For) “ATF” (As-Trustee-For) or Totten Trusts

46. FORMAL TRUST Living Trust Family Trust Account Title – Formal Trusts

47. Beneficiary Named / Identified • POD Account - Beneficiaries must be named in the bank’s account records • Living Trusts – Beneficiaries must be identified in the trust

48. Revocable Trust Coverage If any of these requirements are not met: • The funds will not qualify for coverage under the revocable trust category, but will be insured to each owner in the single account category and added with each owner’s other single accounts at the same bank.

49. Revocable Trust Coverage If all the requirements are met: • Each owner of a POD account may be insured up to $250,000 for each eligible beneficiary • Coverage depends on number of beneficiaries, beneficiaries’ interest, and deposit amount

50. Revocable Trust Calculation Five or fewer total beneficiaries and total deposits of $1,250,000 or less # of Owners X $250,000 X Eligible Beneficiaries • $250,000 times 1 beneficiary = up to $ 250,000 • $250,000 times 2 beneficiaries = up to $ 500,000 • $250,000 times 3 beneficiaries = up to $ 750,000 • $250,000 times 4 beneficiaries = up to $1,000,000 • $250,000 times 5 beneficiaries = up to $1,250,000