Question about FDIC limit

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
User avatar
Topic Author
Gamma Ray
Posts: 487
Joined: Sun Feb 01, 2015 8:16 pm
Location: Bouncing between FL and NYC

Question about FDIC limit

Post by Gamma Ray »

I am reading contradicting information on FDIC, some people say it's per account within institution while other places say it's per account owner but adding beneficiary is not enough it also has to be co-owned. Is this true? What's the best way to stay covered until the funds are used when you have to store over $250k in a bank?
User avatar
cheese_breath
Posts: 10201
Joined: Wed Sep 14, 2011 7:08 pm

Re: Question about FDIC limit

Post by cheese_breath »

Get married. :P
The surest way to know the future is when it becomes the past.
MittensMoney
Posts: 242
Joined: Mon Dec 07, 2015 10:59 pm

Re: Question about FDIC limit

Post by MittensMoney »

Open a new account at a new bank. You can cover $1 million with FDIC coverage if you're willing to have 4 accounts at 4 different banks.
User avatar
RickBoglehead
Posts: 5608
Joined: Wed Feb 14, 2018 9:10 am
Location: In a house

Re: Question about FDIC limit

Post by RickBoglehead »

Never listen to "people"...


https://www.fdic.gov/deposit/deposits/faq.html

Coverage
Q: How much deposit insurance coverage do I qualify for?

A: The standard deposit insurance amount is $250,000 per depositor, per FDIC-insured bank, per ownership category. For a basic category-by-category overview of FDIC deposit insurance coverage, you can use the Account Categories tool.

The "Your Insured Deposits" brochure also includes more comprehensive information and examples of deposit insurance coverage for various ownership categories. You can also access the FDIC's Electronic Deposit Insurance Estimator (EDIE) to get details about your specific situation.
Last edited by RickBoglehead on Wed May 08, 2019 1:59 pm, edited 1 time in total.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.
MotoTrojan
Posts: 10779
Joined: Wed Feb 01, 2017 8:39 pm

Re: Question about FDIC limit

Post by MotoTrojan »

MittensMoney wrote: Wed May 08, 2019 1:56 pm Open a new account at a new bank. You can cover $1 million with FDIC coverage if you're willing to have 4 accounts at 4 different banks.
Or use a treasury money market fund at a larger institution. Safer than FDIC even.

T-bills work too, higher yield, and state tax exempt.
User avatar
GMCZ71
Posts: 158
Joined: Sat Oct 13, 2018 8:05 am
Location: McMinnville, Or

Re: Question about FDIC limit

Post by GMCZ71 »

Access Multi-Million-Dollar FDIC Insurance

CDARS® – the Certificate of Deposit Account Registry Service® – is the most convenient way to access FDIC insurance on multi-million-dollar CD deposits and to earn CD-level rates, which often compare favorably to Treasuries and money market mutual funds.

See if any local banks are part of the network.
FDIC insurance coverage by working directly with just one bank, a bank you may already know and trust.
John
rasta
Posts: 204
Joined: Fri Jul 27, 2018 4:29 pm

Re: Question about FDIC limit

Post by rasta »

use the EDIE calculator on the FDIC website.

there are several paths to achieve FDIC coverage greater than 250,000 at a single bank depending on how you title the accounts and also if you have named beneficiaries.

fdic.gov site should answer your questions.
Alan S.
Posts: 10316
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Question about FDIC limit

Post by Alan S. »

When you name a beneficiary on a single owner account, the 250k limit is not increased, but the next 4 beneficiaries boost the FDIC coverage by 250k each.

However, you may not wish to simply add the second beneficiary just to boost your own FDIC Protection to 500k. But it is OK to split the beneficiary allocation other than 50%-50%. For example if you purchase a CD with an amount projected to reach 500k including posted interest, you could make the preferred beneficiary share 99% of the balance and the non preferred beneficiary 1%. Therefore, that non preferred beneficiary increases the owner's protection to 500k, but that beneficiary would only inherit 5k.
retiredflyboy
Posts: 238
Joined: Sun Dec 02, 2018 10:02 pm

Re: Question about FDIC limit

Post by retiredflyboy »

Consider Vanguard treasury money market - no limit. Tie to your checking account and move dollars as needed.
Facts are stubborn things. Everything works until it doesn’t.
User avatar
Topic Author
Gamma Ray
Posts: 487
Joined: Sun Feb 01, 2015 8:16 pm
Location: Bouncing between FL and NYC

Re: Question about FDIC limit

Post by Gamma Ray »

Thanks. I thought about T-Bills, but I am not sure how soon I will need the funds, so I didn't want to complicate things. I can do part of it T-Bill but again, only state tax benefits, and combination with low return (what is it these days 2.5% or so?) I thought about just leaving it at Ally for 2.2%.

Regards to VG funds, similar to above, low return for parked funds, maybe I can do staggered CD? I am married so I think I'll just open another account and add my wife as co-owner.
JI0124
Posts: 81
Joined: Sat Aug 08, 2015 1:06 pm

Re: Question about FDIC limit

Post by JI0124 »

I wish this was easier to follow on fdic.gov with EDIE (for me!). Terminology used there is hard to map back to bank accounts to make sure that coverage is understood.

If the account is single owner with one beneficiary, coverage is $250k right?

If the account is single owner with two beneficiaries, coverage is $500k right? Each additional beneficiary adds $250k of coverage right?

If the account has two joint owners with no beneficiary, coverage is $500k right?

What is advantage/disadvantage of joint owned account vs account with multiple beneficiaries? What are the differences?

Thanks.
sport
Posts: 9962
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: Question about FDIC limit

Post by sport »

JI0124 wrote: Sat Sep 14, 2019 12:37 pm What is advantage/disadvantage of joint owned account vs account with multiple beneficiaries? What are the differences?
With a joint owned account, either owner has full access to the money with the right to withdraw whatever they wish. Beneficiaries get access to the money only if the account holder dies.
kaneohe
Posts: 6786
Joined: Mon Sep 22, 2008 12:38 pm

Re: Question about FDIC limit

Post by kaneohe »

JI0124 wrote: Sat Sep 14, 2019 12:37 pm I wish this was easier to follow on fdic.gov with EDIE (for me!). Terminology used there is hard to map back to bank accounts to make sure that coverage is understood.

If the account is single owner with one beneficiary, coverage is $250k right?

If the account is single owner with two beneficiaries, coverage is $500k right? Each additional beneficiary adds $250k of coverage right?

If the account has two joint owners with no beneficiary, coverage is $500k right?

What is advantage/disadvantage of joint owned account vs account with multiple beneficiaries? What are the differences?

Thanks.
Check w/ EDIE but I think :
1) if only owners (no beneficiaries), I think insurance is 250K/owner. If you have two owners, there is 500K coverage.
2) when you have beneficiaries, EDIE creates an "account" for each owner with the named beneficiaries . If you have 2 owners
and 1 beneficiary, coverage is based on the beneficiary so is 250K per acct, but since there are 2 owners there is 500K coverage.
Adding the beneficiary did not increase coverage in this case of just 2 owners. I believe this is true even if you have 1 jt acct.
3)If you add 2nd beneficiary to the jt acct w/ 2 owners, coverage again is based on the beneficiaries so is 500K per acct. Since there
are 2 owners, total coverage is 1M, a significant increase over just one beneficiary. Again I believe this is true even if you have just
1 jt acct. EDIE does the splitting of accts by owner for insurance purposes but I don't think the actual acct has to be split.
4) Generalizing, it appears coverage is 250K x #owners x #beneficiaries if there are beneficiaries. If no beneficiaries, just use # owners
(but don't use 0 for # beneficiaries).
Post Reply