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1 FDIC’s Video - Overview on Deposit Insurance Coverage
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3 Part I – Deposit Insurance Basics
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4 How Does Deposit Insurance Work? FDIC preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and savings associations Insurance covers deposit accounts dollar for dollar, including principal and accrued interest up to the insurance limit
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5 FDIC Created in 1933
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6 FDIC Insures Bank Deposits Checking Accounts NOW Accounts Savings Accounts Money Market Deposit Accounts (MMDA) Certificates of Deposit (CDs)
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7 FDIC Insurance Covers Total of all deposit accounts at an insured bank, including branch offices, up to the insurance limit.
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8 Basic Insurance Limit: $250,000 The basic limit on federal deposit insurance coverage was temporarily increased from $100,000 to $250,000 per depositor through December 31, 2013. On January 1, 2014, FDIC deposit insurance for all deposit accounts—except for certain retirement accounts—will return to at least $100,000 per depositor. Insurance coverage for certain retirement accounts, which include all IRA deposit accounts, was increased permanently to $250,000 per depositor in 2006.
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9 Basic Insurance Limit: $250,000 Per depositor Per insured depository institution (bank or savings association) –Per separately chartered bank –Not per branch
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10 Important Point If you or your family has less than the basic insurance limit in all your deposit accounts at the same insured institution, you do not need to worry about your insurance coverage. Your funds are fully protected
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11 FDIC insurance covers only bank deposits Important Point
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12 FDIC Does Not Insure Stocks Mutual Funds Life Insurance Policies Annuities Municipal Bonds or Securities U.S. Treasury Bills, Bonds, or Notes Safe Deposit Boxes
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13 W hat Happens When a Bank Fails? Insured depositors’ accounts are transferred to another FDIC-insured bank or Insured depositors are given a check equal to their account balance, including the principal and interest accrued through the date of the bank's closing, up to the insurance limit
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14 Insurance Payments Federal law requires FDIC to make deposit insurance payment “as soon as possible” Historically, insured funds are available to depositors within a few days after a bank fails
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15 Most Important Point No depositor has ever lost a single penny of insured funds since FDIC’s creation in 1933
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16 Part II Personal Accounts
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17 Most Common Ownership Categories Certain Retirement Accounts Single Accounts Joint Accounts Revocable Trust Accounts
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18 Single Accounts Deposits owned by one person Coverage up to $250,000
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19 Ashley’s Single Account Coverage Checking $ 2,000 Savings5,000 CD10,000 Total on Deposit$ 17,000 Insurance Coverage$ 17,000 __________________________________________________
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20 Doug and Sheila’s Single Accounts Doug’sSheila’s CD$ 130,000CD$ 150,000 Total$ 130,000Total$ 150,000 Insured$ 130,000Insured$ 150,000 _________________________ ________________________ Fully Insured
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21 Certain Retirement Accounts Deposits owned by one person Title in the name of that person’s retirement account Accounts that are self-directed are insured separately from your other deposit accounts at the bank
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22 Self-directed Retirement Accounts Self-directed retirement account is a retirement account for which the owner, not a plan administrator, has the right to direct how the funds are invested, including the ability to direct that the funds be deposited at a specific FDIC-insured bank.
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23 Certain Retirement Accounts IRA Roth IRA Self-Directed Keoghs ________________________ Total Combined Insurance $250,000
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24 Certain Retirement Accounts Doug’s IRA AccountSheila’s IRA Account Traditional IRA$180,000Roth IRA$ 165,000 Total$180,000Total$ 165,000 Insured$180,000Insured$ 165,000 Fully Insured _____________________________ __________________________
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25 Important Point Insurance coverage for Certain Retirement Accounts is not increased by the number of beneficiaries named on the retirement account
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26 Maximum Fully Insured Coverage Single Accounts Certain Retirement Accounts Total Coverage Doug$ 250,000 $ 500,000 Sheila$ 250,000 $ 500,000 Total$ 500,000 $ 1,000,000 ____________ ______________ ____________ _________________________________________________________
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27 Joint Accounts Deposits owned by two or more people
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28 Not Eligible for Joint Account Coverage Corporations Trusts Estates Partnerships
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29 Joint Account Requirements Deposits owned by two or more people All co-owners must have equal rights to withdraw funds from the account All co-owners must sign the account signature card
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30 Joint Account Coverage Deposits owned by two or more people Each co-owner’s shares of all joint accounts are added together Coverage $250,000 for each co-owner
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31 Important Point Rearranging the way the names are listed on a joint account (or substituting “and” for “or”) or using different social security numbers doesn’t increase insurance coverage
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32 Joint Accounts Two people with more than one joint account at the same bank Maximum $500,000 for all accounts Maximum $250,000 per co-owner
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33 Sheila and Daughter’s Joint Account $150,000 Sheila’s Share $75,000 Daughter’s Share $75,000
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34 Sheila and Doug’s Joint Account $400,000 Doug’s Share $200,000 Sheila’s Share $200,000
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35 Joint Account Coverage Sheila’s Share $75,000 with Daughter Sheila’s Share $200,000 with Doug Doug’s Share $200,000 Daughter’s Share $75,000 ------Total $275,000------ $25,000 Uninsured Insured
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36 Maximum Fully Insured Coverage Single Accounts Certain Retirement Accounts Joint Accounts Total Coverage Doug$ 250,000 $ 750,000 Sheila$ 250,000 $ 750,000 Total$ 500,000 $1,500,000 __________ ___________ __________ __________ __________ __________ __________ __________
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37 Revocable Trust (Testamentary ) Accounts A deposit owned by one or more people indicating an intention that the funds will belong to one or more named beneficiaries upon the owner’s death
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38 Owner can –revoke the trust –Add or delete the designation of beneficiaries –Change the amount allocated to any named beneficiary at any time Revocable Trust (Testamentary) Accounts
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39 Informal Formal - POD -- Living Trust - Revocable Trust (Testamentary) Accounts
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40 Informal Revocable Trust Commonly referred to as POD account Account owner signs an agreement with the bank, usually on the account signature card Owner specifies the beneficiaries who will receive the deposits when the owner dies Owner can revoke agreement at any time Owner has full use of account while alive
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41 Formal Revocable Trust Commonly referred to as living or family trust Formal legal document usually prepared by an attorney for estate planning Owner (trustor, grantor, settlor) specifies the beneficiaries who will receive the trust assets when the last owner dies Owner keeps control of the trust assets and can change the trust at any time
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42 Revocable Trust Account Coverage Revocable trust owner is insured Coverage is based on the number of beneficiaries each owner names Assumes all requirements are met
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43 Revocable Trust Requirements Beneficiaries must be “eligible” Living natural person Charity (as recognized by the Internal Revenue Service) Nonprofit organization (as recognized by the Internal Revenue Service)
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44 Revocable Trust Requirements Beneficiaries must be “eligible” Account title must indicate the existence of a trust relationship
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45 Account Title - Informal Trust PODITFATF INFORMAL TRUST Payable-on-Death (POD) accounts or other similar terms such as “ITF” (In-Trust-For) “ATF” (As-Trustee-For) or Totten Trusts
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46 Account Title – Formal Trusts FORMAL TRUST Living TrustFamily Trust
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47 Beneficiary Named / Identified POD Account - Beneficiaries must be named in the bank’s account records Living Trusts – Beneficiaries must be identified in the trust
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48 Revocable Trust Coverage If any of these requirements are not met: The funds will not qualify for coverage under the revocable trust category, but will be insured to each owner in the single account category and added with each owner’s other single accounts at the same bank.
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49 Revocable Trust Coverage If all the requirements are met: Each owner of a POD account may be insured up to $250,000 for each eligible beneficiary Coverage depends on number of beneficiaries, beneficiaries’ interest, and deposit amount
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50 Revocable Trust Calculation Five or fewer total beneficiaries and total deposits of $1,250,000 or less # of Owners X $250,000 X Eligible Beneficiaries $250,000 times 1 beneficiary = up to $ 250,000 $250,000 times 2 beneficiaries = up to $ 500,000 $250,000 times 3 beneficiaries = up to $ 750,000 $250,000 times 4 beneficiaries = up to $1,000,000 $250,000 times 5 beneficiaries = up to $1,250,000
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51 Revocable Trust Calculation Six or more beneficiaries and total deposits of $1,250,000 or more. Dollar and/or percentage allocation to each and every beneficiary is EQUAL # of Owners X $250,000 X Eligible Beneficiaries $250,000 times 6 beneficiaries = up to $1,500,000 $250,000 times 7 beneficiaries = up to $1,750,000 $250,000 times 8 beneficiaries = up to $2,000,000 $250,000 times 9 beneficiaries = up to $2,250,000 $250,000 times 10 beneficiaries = up to $2,500,000
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52 Revocable Trust Calculation Six or more beneficiaries and total deposits of more than $1,250,000. Dollar and/or percentage allocation to each and every beneficiary is UNEQUAL Insurance calculation can be complicated Depositors may want to obtain assistance from their legal or financial advisor, or contact the FDIC
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53 Doug and Sheila’s POD Account Doug X 3 Eligible X $250,000 = $ 750,000 Beneficiaries ___________________________________________ Sheila X 3 Eligible X $250,000 = $ 750,000 Beneficiaries ________ TOTAL $1,500,000 Fully Insured
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54 Important Point A depositor is not provided additional deposit insurance coverage if he or she has a POD account and a revocable living trust account naming the same eligible beneficiaries
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55 Revocable Trust Accounts Husband & Wife POD Account with 3 eligible beneficiaries Husband & Wife Living Trust Account with the same 3 beneficiaries Informal TrustFormal Trust
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56 Revocable Trust Accounts Maximum Insurance up to $1,500,000 Each Owner (2) X $250,000 X Eligible Beneficiaries (3) Husband & Wife POD Account with 3 beneficiaries + Husband & Wife Living Trust Account with 3 beneficiaries
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57 Maximum Fully Insured Coverage Single Accounts Certain Retirement Accounts Joint Accounts Revocable Trust Accounts* Total Coverage Doug$ 250,000 $ 750,000*$ 1,500,000 Sheila$ 250,000 $ 750,000*$ 1,500,000 Total$ 500,000 $1,500,000*$ 3,000,000 _________ __________ _________ _________ _________ _________ _________ ________ ________ _________ *Assumes husband and wife have named 3 eligible beneficiaries in their revocable trust
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58 Irrevocable Trust Accounts Irrevocable trust is a formal written agreement where the trust owner or grantor gives up some or all the power to cancel or change the trust
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59 Irrevocable Trust Accounts The amount of insurance coverage is based on the specific terms and conditions of the trust Owners may want to obtain assistance from their legal or financial advisor, or contact the FDIC for assistance
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60 Part III Business/Organization Accounts Employee Benefit Plan Accounts Government Accounts
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61 Sole Proprietorship Accounts Not eligible for business account coverage Funds deposited by a business wholly owned by one person, in contrast to a business that is incorporated or owned by a partnership
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62 Doug’s Deposit Accounts Personal Single Accounts Sole Proprietorship Accounts
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63 Doug’s Deposit Accounts Maximum insurance coverage up to $250,000 Amounts added together and insured as Doug’s Single Account Personal Single Accounts + Sole Proprietorship Accounts
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64 Corporation, Partnership, or Unincorporated Association Accounts Coverage is $250,000 for: –Corporations – Partnerships – Unincorporated Associations
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65 Doug’s Deposit Accounts Personal Single Accounts Corporation Accounts Each account category is insured separately Insured up to $250,000
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66 Unincorporated Associations Churches Religious organizations Community& civic organizations Social Clubs Foundations
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67 Corporation, Partnership, or Unincorporated Association Accounts Must be established as an actual legal entity for the purpose of doing business Not simply to increase deposit insurance coverage for the owner’s accounts
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68 Employee Benefit Plan Accounts Examples of employee benefit plans: –Defined contribution plans, including profit sharing plans and 401(k) plans – Defined benefit plans
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69 Employee Benefit Plan Accounts Each plan participant’s share can be separately insured up to $250,000 provided certain conditions are met by the depositor, employer, and bank Employee benefit plan accounts are insured separately from any other deposit held by the depositor at the same bank including their certain retirement accounts
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70 Government Depositors U.S. Agencies States Counties Municipalities District of Columbia School districts Irrigation districts Power districts Indian tribes Puerto Rico Other territories Bridge or port authorities Other “political subdivisions”
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71 Part IV Resources
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72 Contact the FDIC Read more about FDIC Insurance online at: www.fdic.gov
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73 www.fdic.gov/deposit/deposits
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74 www.fdic.gov/edie
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75 Contact the FDIC Call the FDIC toll-free 1- 877-275-3342 1-800-925-4618 - Hearing impaired
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76 Contact the FDIC Send your question by email using FDIC online Customer Assistance form at: www2.fdic.gov/starsmail
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77 FDIC Contact Information Mail your deposit insurance question to: FDIC ATTN: Deposit Insurance Outreach 550 17th Street NW Washington, DC 20429
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78 FDIC Deposit Insurance Coverage “The More You Know The Safer Your Money”
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79 Thank You for Participating
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