Are your deposits safe?

If you or your family has less than $100,000 in all your deposit accounts at the same insured institution, you don't need to worry about your insurance coverage.

But if you have funds at one institution totaling $100,000 or more, here's a sensible approach for protecting yourself with Federal Deposit Insurance Corp. coverage.

Account for Your Accounts

If you expect to conduct a thorough, accurate review of your deposit insurance, you need to be aware of all the accounts your family owns at an institution, the types of accounts, and the names of the beneficiaries. Beneficiaries especially matter with payable-on-death (POD) accounts because a spouse, child, grandchild, parent or sibling qualify the account for extra insurance, but other relatives don't.

Do Your Research

Read the FDIC pamphlet "Your Insured Deposit." This brochure, the FDIC's primary consumer publication devoted to deposit insurance, explains the rules in a simple, question-and-answer format.

Ask EDIE

EDIE, the FDIC's Electronic Deposit Insurance Estimator, can help. This interactive Web site estimates your coverage based on your answers to a series of questions about your accounts. EDIE is simple to use and can be accessed at www2.fdic.gov/edie/.

Check with an FDIC expert

Helping depositors and bankers with deposit insurance questions is a big part of the FDIC's work. So, for peace of mind, it's smart to get an independent confirmation of your understanding of the insurance rules and your insurance status from the FDIC. See this FDIC Web page for phone numbers and addresses.

Make Adjustments

Make adjustments to your accounts, if necessary, to bring them within the insurance limit. In general, there are two options for fully insuring deposits over $100,000.

First option: You can divide the funds among various types of accounts at the same institution, because different categories are separately insured to $100,000. However, this is an option you need to think about carefully. It means you are changing the legal ownership of the funds, either now or upon your death, just to increase your insurance coverage.

Before you do that, you should understand how a change in account category affects your rights and the rights of any beneficiaries to your funds. Example: You can shift some funds from a payable-on-death account to a joint account, but be aware that co-owners of your joint account will be able to access the money while you are alive.

Second option: You can move funds in excess of $100,000 to accounts at other insured institutions and keep no more than $100,000 at each institution. This option works well for people who don't want, or don't qualify for, another type of account at their existing bank. Moving some funds to another bank also is a good choice for people who just aren't sure how the insurance rules allow them to keep more than $100,000 at one bank and still be fully protected.

Periodically Review Your Coverage

A one-time checkup on your deposit insurance coverage isn't enough for individuals or families with close to or more than $100,000 at one institution. Here are suggestions for when to take another look:

* Before you open a new account. Follow the steps described previously to find out what effect the new account would have on your insurance coverage. The FDIC suggests that you keep a list of the accounts that you and other family members hold at one institution, so you can easily remember which accounts to figure into your insurance calculations.

* After the death of a loved one. The rules allow a six-month grace period after a depositor's death to give survivors or estate planners a chance to restructure accounts. If you fail to act within six months, you run the risk of, say, joint accounts becoming part of the survivor's individual accounts, and that could put the funds over the $100,000 limit.

* If a large windfall comes your way. If you sell your house or receive a large payment from a trust, a pension, a lawsuit or an insurance claim, make sure any deposits, especially those made on your behalf by third parties, won't put you over the $100,000 limit.

* If you own accounts at two institutions that merge. Accounts at the two institutions before the merger would continue to be separately insured for six months after the merger, and longer for some certificates of deposit, but you have to remember to review the accounts within the grace period to avoid a potential problem with excess funds.

Zall is a retired federal employee who since 1987 has written the Bureaucratus column for Federal Computer Week. He can be reached at milt.zall@verizon.net.

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