FDIC coverage example

The following scenario was reviewed by an FDIC spokesman and tested with the FDIC’s online tool.

Let's suppose in one bank you have:

$187,500 certificate of deposit in your name

$125,000 savings account in your name

$250,000 individual retirement account in your name

$250,000 CD POD to your granddaughter

$250,000 joint savings account with your godchild

$562,500 joint savings account with your spouse

$250,000 annuity in your own name

The tool confirms that $187,500 CD and $125,000 savings account are combined and insured to a maximum of $250,000 (not $312,500, leaving $62,500 uninsured).

The IRA itself has full coverage up to $250,000, since IRAs are viewed as a separate category.

The POD account with your granddaughter gets full insurance coverage up to $250,000 because she is a qualifying beneficiary.

To qualify as an eligible beneficiary, the beneficiary must be a living person, a charity or a non-profit organization. If a charity or non-profit organization is named as beneficiary, it must qualify as such under Internal Revenue Service (IRS) regulations.

The beneficiary must be identified by name in the bank's deposit account records.

Joint accounts also are a separate category. According to an FDIC spokesman, to be covered, each co-owner (they need not be related) must personally execute the account signature card and each must possess equal withdrawal rights.

Since 2010, joint accounts are insured up to $250,000 per owner, which means that a joint account between spouses would be insured up to $500,000.

"We take the joint account and divide it equally among the fund owners," said an FDIC spokesman. But there is a catch. "We have to make sure that no one owner exceeds $250,000 in coverage for all their joint accounts at the same bank, no matter who the joint owner is listed on the account.”

In this case, add together your shares of the two joint bank accounts: $125,000 for the account with your godchild and $281,250 for the account with your spouse, totaling $406,250. This gives you insurance of $250,000, but $156,250 is uninsured.

Your godchild has $125,000 of insured money from the $250,000 joint account. Your spouse has $31,250 of uninsured money because his share of the $562,500 in your joint account is insured up to only $250,000.

Should your spouse die, after six months, this account will be deemed to be your individual account. It would then lose its insurance protection in that ownership category, since your individual accounts total $875,000, but only $250,000 will be insured. All individual accounts would be added together. An account holder could then consider using another FDIC-insured bank to get additional deposit insurance coverage.

Finally, the annuity. No amount is covered, even though the annuity was purchased in the bank lobby.

Call the FDIC call center at 877-ASK-FDIC for help or use the online tool to estimate coverage at https://www5.fdic.gov/edie/. Read more about FDIC coverage at https://www.fdic.gov/deposit/deposits/index.html .