Finance Questions

Posts Tagged ‘fdic insurance’

What are the rules for receiving FDIC insurance coverage?

The types of ownership listed below are entitled to FDIC insurance of up to $100,000 each: (deposits in different institutions are insured separately)

• Single
• Joint
• Revocable trust*
• Irrevocable trust*
• Traditional IRA & Roth IRA & profit sharing/money purchase plans (balances are combined for FDIC insurance)
• Pension plans
• Totten trusts, or transfer on death (TOD) accounts*
• Corporate
• Partnership

*Subject to specific rules discussed below.
There is an "EDIE" electronic deposit insurance estimator system on the FDIC website, which will tell you whether an account or group of accounts at a FDIC insured institution is fully insured, or not.

Any person or entity can have a FDIC insured account. US citizenship or residency is not required. The FDIC insures deposits in some, but not all, banks and savings associations. The insurance protects deposits that are payable in the United States. Securities, mutual funds, and similar types of investments are not covered by federal deposit insurance, but may be covered by other types of insurance. Deposits in different institutions are insured separately.

Deposits maintained in the different categories of legal ownership shown above are separately insured so you can have more than $100,000 insurance coverage in a single institution. However, opening up another account of the same type at the same institution cannot increase the FDIC insurance coverage. The use of social security numbers or tax identification numbers does not determine insurance coverage.

Traditional IRA, Roth IRA and profit sharing/money purchase funds are separately insured from any non-retirement funds the depositor may have at an institution. However, the IRA and profit sharing/money purchase accounts are combined for insurance purposes. The general rule for employee participants in pension and profit sharing plans is that they receive insurance for their share of the plan. Each participant's ascertainable interest in the plan's deposit is insured up to $100,000.

For many people, the FDIC and FDIC insurance has always been around. So, who started the FDIC and FDIC insurance? Below is a brief history of the FDIC which answers the question 'who started the FDIC'.

History of the FDIC and what / who started the FDIC

After the Great Depression of 1929, in 1932-1933, the banking system in the United States deteriorated rapidly. The economic uncertainty of that time brought about many speculative investments with no real values. More and more people liquidated their investments, converting their investments to gold and foreign currencies. The outflux of money from the banking system shattered the already near collapse economy. The election of President Franklin D. Roosevelt in November 1932 did not aid the situation. The fear of the dollar being devalued caused more money to leave the US banking system.

Failed banks in 1933 & the introduction of the Emergency Banking Act of 1933

By March 4, 1933, about 4,000 banks had already failed within the last couple of months. The US banking system was near collapse by March 6. More bank holidays were announced. By March 9, 1933, Congress rushed into a draft plan in an effort to save the US banking system from a total meltdown. The House of Representative passed the bill soon after and the Senate approved it almost equally without any say. The Emergency Banking Act of 1933 was enacted by Congress that very day.

Who started the FDIC?

Following the Emergency Banking Act of 1933, the Banking Act was enacted in June 1933. It was this Banking Act that established the FDIC as a temporary agency to restore the public confidence in the US banking system. In particular, Section 8 of the Glass Steagall Act within the Banking Act created the FDIC through the amendment of the Federal Reserve Act. The Banking Act included many provisions of the duties of the FDIC.