FDIC for IRAs?

[Tracker968]

I have been reading several posts about the safety of savings accounts and money market funds and understand the $250k individual and $500k joint FDIC insurance. But that got me thinking of my IRA which is individual of course and has a lot more than $250k in it. Are IRAs different or are they subject to the same limits? If so I would need to divide mine up into several pieces. Could I just open a couple new IRA accounts at Fidelity to get another $250k each of coverage and transfer funds from my existing account into them?

[whodidntante]

Don't worry about this [(removed) --admin LadyGeek].

SIPC will cover you in cases of brokerage fraud. It's not the same as FDIC.

[Tracker968]

Does SIPC have the $250k limit?

[DaveTH]

FDIC insurance only applies to banking products. If your IRA contains brokered CDs, those would be covered subject to the FDIC limits. Being in an IRA makes no difference.

[dukeblue219]

Does SIPC have the $250k limit?

https://www.fidelity.com/trading/faqs-about-account

It is does ($500k actually ) but if Fidelity went under suddenly your stocks wouldnt disappear in the way a banks deposits do. You'd still own all the stocks or mutual funds you did before. They also carry excess insurance beyond SIPC. Read the link above.

[PersonalFinanceJam]

Are you holding your IRA in a bank? Are you buying brokered CDs from a bank for your IRA at a brokerage? The only way FDIC insurance comes into play is if you are using banking products.

[Geologist]

Opening up new IRA accounts at Fidelity would not change your coverage situation. SIPC coverage is a single total for all accounts of one type. However, SIPC just covers what we might call bookkeeping problems at your brokerage. It doesn't cover market losses in your IRAs.

[Tracker968]

Thanks for the link. After reading that, it seems that I should keep the sum of all my accounts at Fidelity below $500k. That's even worse than I thought.

[exodusNH]

Thanks for the link. After reading that, it seems that I should keep the sum of all my accounts at Fidelity below $500k. That's even worse than I thought.

No.

SIPC isn't as useful as you think. It protects against fraud like Fidelity telling you they bought VTI for you but really went on a bender with your money.

If Fidelity failed, your funds are safe. They're held by legally different entities and custodied by yet another company.

Finally, Fidelity, Vanguard, and probably Schwab carry excess coverage.

[retired@50]

Thanks for the link. After reading that, it seems that I should keep the sum of all my accounts at Fidelity below $500k. That's even worse than I thought.

Maybe the wiki explanation will help.
https://www.bogleheads.org/wiki/SIPC_pr ... tual_funds

If I were you, I'd try to relax about the FDIC and SIPC limits.

The risks you should actually be concerned about are things like your stock / bond / cash mixture. This will have a much bigger impact on your account value.

Regards,

[Brianmcg321]

Thanks for the link. After reading that, it seems that I should keep the sum of all my accounts at Fidelity below $500k. That's even worse than I thought.

That’s not what anyone was saying.