New FDIC Limit for IRAs

A provision increasing the insurance limit for Individual Retirement Accounts (IRAs) from $100,000 to $250,000 went into effect on April 1, 2006.

Although bank failures are quite rare (the most recent occurred in June of 2004), most retirees are still interested in having the safety net provided by the Federal Deposit Insurance Corporation (FDIC) who will issue a check to cover insured deposits in the event of a bank failure.

Consider the following to help clarify what the new limits cover:

The FDIC does not insure mutual funds, bonds, annuities, or stocks even if purchased through your bank. They do insure (up to $250,000) IRAs invested in bank deposits such as CDs.
The maximum coverage for non-IRA deposits did not change from the current coverage of $100,000.
In some scenarios, by utilizing joint, individual, payable-on-death, and trust accounts, a married couple could have more than $1 million insured in one bank, but a word of caution, it’s easy to "run afoul of the rules."

To get a handle on what's covered and for how much, access the FDIC's Electronic Deposit Insurance Estimator (EDIE) by visiting www.FDIC.gov and entering "online EDIE" in the search box. You may also reach the FDIC at 877-275-3342.

Source: www.DelawareOnline.com, 4-10-06

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