FDIC Coverage Has Been Increased

\With banks and the economy in the news so much lately, most people are thinking about the safety of their money. The FDIC has, therefore, significantly increased their deposit coverage to address these concerns.
The basic limit on federal deposit insurance coverage has been temporarily increased from $100,000 to at least $250,000 per depositor.

That’s the result of a new law passed by Congress in October 2008. It means that if you (or your family) have $250,000 or less in all of your deposit accounts at the same insured bank, you don’t need to worry about your insurance coverage—your deposits are fully insured.

You may also qualify for more than the basic insurance coverage at one insured bank because the FDIC provides separate insurance coverage for deposits held in different “ownership categories.”

For example, under current rules, your deposits in Single accounts (in one name only) are insured up to $250,000:
• Joint accounts (for two or more people) are protected up to $250,000 per owner;
• Certain retirement accounts including IRAs, are covered up to $250,000; and
• Revocable trust accounts (deposits intended to pass along to named beneficiaries when the account owner dies) can be protected up to $250,000 for each named beneficiary subject to specific limitations and requirements.

The standard insurance amount of $250,000 per depositor is in effect through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all account categories except IRAs and other certain retirement accounts, which will remain at $250,000 per depositor.

Through year-end 2009, certain checking accounts at participating institutions will be fully insured by the FDIC, no matter how much money is in them. This special coverage applies to no-interest checking accounts and certain other low-interest transaction accounts such as NOW Accounts. So that our customers may be protected to the full extent of the law First Bank & Trust is a participating institution in the Deposit Guarantee Program.

The FDIC has also eased the rule governing the insurance coverage of revocable trust accounts.

The most common example of a revocable trust account is a payable-on-death (POD) account that can be set up at a bank with a simple, written declaration from the depositor (usually on the “signature card” in the bank's records) that the funds in a savings or checking account will belong to one or more named beneficiaries upon this person’s death.

What’s new is that the FDIC no longer considers only the account owner’s spouse, child, grandchild, parent or sibling as “qualifying beneficiaries” for additional insurance coverage. Under the new rule, effective September 26, 2008, an account owner can name almost any beneficiary, and the owner will qualify for deposit insurance coverage for each beneficiary ($250,000 if there is one beneficiary, $500,000 if there are two, and so on).

For more information about the rule changes, visit:www.fdic.gov/deposit/deposits/changes.html

And if you have questions or concerns about your deposit insurance coverage in general, you can always go to the FDIC website.