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Insuring Your Deposits

FDIC Insuring Your Deposits

What Is the FDIC?

The FDIC – short for the Federal Deposit Insurance Corporation – is an independent agency of the United States government. The FDIC protects you against the loss of your deposits if an FDIC-insured bank or savings association fails. FDIC insurance is backed by the full faith and credit of the United States government.

To check whether your bank or savings association is insured by FDIC, call toll-free 1-877-275-3342, use "Bank Find" at www.fdic.gov/deposit/index.html, or look for the official FDIC sign where deposits are received.

Why Is FDIC Insurance Important to You?

All FDIC-insured banks must meet high standards for financial strength and stability. The FDIC, with other federal and state regulatory agencies, regularly reviews the operations of insured banks to ensure these standards are met. Even with these safeguards, some insured banks fail. If your insured bank fails, FDIC insurance will cover your deposits, dollar for dollar, including principal and any accrued interest, up to the insurance limit.

Historically, insured deposits are available to customers of a failed bank within just a few days. Since the start of the FDIC in 1933, no depositor has ever lost a penny of insured deposits.

What Does the FDIC Insure?

The FDIC insures all deposits at insured banks, including checking, NOW and savings accounts, money market deposit accounts, and certificates of deposit (CDs), up to the insurance limit.

The FDIC does not insure the money you invest in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if you purchased these products from an insured bank.

Basic FDIC Insurance Coverage Permanently Increased to $250,000 Per Depositor

On July 21, 2010, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which, in part, permanently raises the current standard maximum deposit insurance amount to $250,000. The standard maximum insurance amount of $100,000 had been temporarily raised to $250,000 until December 31, 2013. The FDIC insurance coverage limit applies per depositor, per insured depository institution for each account ownership category.

The FDIC provides separate insurance coverage for deposit accounts held in different categories of ownership.  You may qualify for more than $250,000 in coverage at one insured bank if you own deposit accounts in different ownership categories.

If you and your family have $250,000 or less in all of your deposit accounts at the same insured bank, you do not need to worry about your insurance coverage – your deposits are fully insured.

Temporary Unlimited Coverage on Non-Interest Bearing Accounts

Effective October 14, 2008 and extended on August 26, 2009, all non-interest bearing transaction accounts, and those paying less than 0.50 percent interest, at participating institutions are fully guaranteed by the FDIC for the entire amount in the account through June 30, 2010.

HNB Bank is participating in the FDIC’s Transaction Account Guarantee Program.  Under this program, through June 30, 2010, all non-interest bearing transaction accounts are fully guaranteed by the FDIC for the entire amount in the account. 

Coverage under the Transaction Account Guarantee Program is in addition to and separate from the coverage available under the FDIC’s general deposit insurance rules.

Coverage Over $250,000

The FDIC provides separate insurance coverage for deposit accounts held in different categories of ownership.

You may qualify for more than $250,000 in coverage at one insured bank if you own deposit accounts in different ownership categories.

Common Ownership Categories

The most common ownership categories are:

Single Accounts

These are deposit accounts owned by one person and titled in that person’s name only. All of your single accounts at the same insured bank are added together and the total is insured up to $250,000. For example, if you have a checking account and a CD at the same insured bank, and both accounts are in your name only, the two accounts are added together and the total is insured up to $250,000.

Note: Retirement accounts and qualifying trust accounts are not included in this ownership category.

Certain Retirement Accounts

These are deposit accounts owned by one person and titled in the name of that person’s retirement plan. Only the following types of retirement plans are insured in this ownership category:

  • Individual Retirement Accounts (IRAs) including traditional IRAs, Roth IRAs, Simplified Employee Pension (SEP) IRAs, and Savings Incentive Match Plans for Employees (SIMPLE) IRAs

  • Section 457 deferred compensation plan accounts (whether self-directed or not)

  • Self-directed defined contribution plan accounts

  • Self-directed Keogh plan (or H.R. 10 plan) accounts

All deposits that an individual has in any of the types of retirement plans listed above at the same insured bank are added together and the total is insured up to $250,000. For example, if an individual has an IRA and a self-directed Keogh account at the same bank, the deposits in both accounts would be added together and insured up to $250,000.

Naming beneficiaries on a retirement account does not increase deposit insurance coverage.

Note: For information about FDIC insurance coverage for a type of retirement plan not listed above, refer to the FDIC resources below.

Joint Accounts

These are deposit accounts owned by two or more people. If both owners have equal rights to withdraw money from a joint account, each person’s shares of all joint accounts at the same insured bank are added together and the total is insured up to $250,000.

If a couple has a joint checking account and a joint savings account at the same insured bank, each co-owner's shares of the two accounts are added together and insured up to $250,000, providing up to $500,000 in coverage for the couple's joint accounts.

Example: John and Mary have a $520,000 CD at an insured bank. Under FDIC rules, each person's share of each joint account is considered equal unless otherwise stated in the bank’s records. John and Mary each own $260,000 in the joint account category, putting a total of $20,000 ($10,000 for each) over the insurance limit.

Account Holders

Ownership Share

Amount Insured

Amount Uninsured

John

$ 260,000

$ 250,000

$ 10,000

Mary

$ 260,000

$ 250,000

$ 10,000

Total

$ 520,000

$ 500,000

$ 20,000

Note: Jointly owned qualifying trust accounts are not included in this ownership category.

Revocable Trust Accounts

These are deposits held in either payable-on-death (POD) accounts or living trust accounts.

Payable-on-death (POD) accounts – also known as testamentary or Totten Trust accounts – are the most common form of revocable trust deposits. These informal revocable trusts are created when the account owner signs an agreement – usually part of the bank's signature card – stating that the deposits will be payable to one or more named beneficiaries upon the owner's death.

Living trusts – or family trusts – are formal revocable trusts created for estate planning purposes. The owner of a living trust controls the deposits in the trust during his or her lifetime.

Note:Determining coverage for living trust accounts can be complicated and may require more detailed information about the FDIC's insurance rules. If you have questions regarding a living trust account, you can contact the FDIC at 1-877-275-3342 for more information.

The FDIC has adopted new rules that simplify how revocable trust deposits are insured. The new rules, which became effective on September 26, 2008, ensure that a revocable trust owner has at least as much coverage as he or she had under the former revocable trust account rules. The new rules change the calculation of coverage for revocable trust deposits in two significant ways:

First, the new rules provide that the owner of a revocable trust deposit is eligible to receive per-beneficiary coverage for any beneficiary named in the revocable trust, as long as the beneficiary is an individual, a charity or another nonprofit organization (recognized as such in the Internal Revenue Code).

Second, the new rules provide for a streamlined method of calculating insurance coverage depending on the number of beneficiaries who are entitled to receive the deposits when the trust owner (or owners) dies. Specifically, the rules provide that:

  • For Revocable Trusts with Five or Fewer Beneficiaries: All revocable trust deposits belonging to one trust owner are insured up to $250,000 times the number of beneficiaries. For example, if a revocable trust owner has one beneficiary, his or her maximum coverage is $250,000 for all trust deposits at the same insured bank. If a revocable trust owner has five beneficiaries, his or her maximum coverage is $1,250,000 for all trust deposits at the same insured bank.

  • For Revocable Trusts with Six or More Beneficiaries: All revocable trust deposits belonging to one trust owner are insured to the greater of either $1,250,000 or the aggregate amount of all the beneficiaries’ actual proportional interests in the revocable trust(s), up to a maximum of $250,000 per beneficiary.

Note: The following example applies to POD accounts only. Coverage may be different for some living trusts.

Example:Bill has a $250,000 POD account with his wife Sue as beneficiary. Sue has a $250,000 POD account with Bill as beneficiary. In addition, Bill and Sue jointly have a $1,500,000 POD account with their three children as equal beneficiaries.

Account Title

Account Balance

Amount Insured

Amount Uninsured

Bill POD to Sue

$ 250,000

$ 250,000

$ 0

Sue POD to Bill

$ 250,000

$ 250,000

$ 0

Bill & Sue POD to 3 children

$ 1,500,000

$ 1,500,000

$ 0

Total

$ 2,000,000

$ 2,000,000

$ 0

These three accounts totaling $2,000,000 are fully insured because each owner is entitled to $250,000 of coverage for the interests of each beneficiary in the accounts. Bill has $1,000,000 of insurance coverage ($250,000 for the interests of each qualifying beneficiary – his wife in the first account and his three children in the third account). Sue also has $1,000,000 of insurance coverage ($250,000 for the interests of each qualifying beneficiary – her husband in the second account and her three children in the third account).

When calculating coverage for revocable trust accounts, be careful to avoid these common mistakes:

  • Do not assume that coverage is calculated as $250,000 times the number of people –owner(s) and beneficiary(ies) – named on a trust account. Coverage is provided for the interest of each beneficiary named by each owner. Additional coverage is not provided to the owners for naming themselves as owners. For example, a father's POD account naming two sons as equal beneficiaries is insured to $500,000 only -- $250,000 for the interest of each qualifying beneficiary.

  • Do not assume that the FDIC insures POD and living trust accounts separately. In applying the $250,000 per-beneficiary insurance limit, the FDIC combines an owner's POD accounts with the living trust accounts that name the same beneficiaries at the same bank.

For More Information from the FDIC

Call toll-free at:
1-877-ASK-FDIC (1-877-275-3342)
from 8 am until 8 pm (Eastern Time)
Monday through Friday

Hearing Impaired Line:
1-800-925-4618

Calculate your insurance coverage using the FDIC's online Electronic Deposit Insurance Estimator at: www2.fdic.gov/edie

Read more about FDIC insurance online at: http://www.myfdicinsurance.gov/

Send your questions by e-mail using the FDIC's online Customer Assistance Form at: www2.fdic.gov/starsmail

Mail your questions to:
Federal Deposit Insurance Corporation
Attn: Deposit Insurance Outreach
550 17th Street, NW
Washington, DC 20429-9990

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