the basics of FDIC protection with banks vs. SIPC
coverage with investment accounts.
failures or the potential for them have gotten
a lot of coverage in the press lately. Understanding
the basics of how much cash protection you have
may alleviate some concerns.
is a government created entity that protects depositors
against the loss of their deposits if an FDIC
insured bank or savings association fails.
the protection is not unlimited: All single accounts
owned by the same person at the same insured bank
are added together and the total is insured up
to $100,000. (think: checking + savings + CD)
husband and wife would each get the $100,000 individual
protection as long as the accounts were divided
doe & jane doe joint acct: $100,000
doe account: $50,000
doe account: $50,000
do I do if there is more than the insured amount?
are a couple of work arounds for higher deposits:
the accounts "POD" or payable on death
and list beneficiaries. Each beneficiary listed
is entitled to $100,000 in FDIC insurance.
with your banker about a sweep account, where
they take all excess monies each night and sweep
them into a overnight repo backed by treasuries.
into the CDARS program with allows you to deposit
all of your money into one institution and they
divide your funds up with multiple banks and
CD's so that you just deal with one bank instead
what about my investment accounts and IRA's?
companies are not FDIC insured entities, so a
different form of insurance comes into play: SIPC.
With SIPC coverage, the participating brokerage
companies customers are protected up to $500,000
per client if the securities are stolen or the
brokerage company fails. ($500,000 total per client
with up to $100,000 cash coverage per client)
about larger retirement accounts? Many investment
companies purchase their own "excess"
policies in addition to the SIPC coverage.
Ameritrade, that custodians all The Advisory Firm
client accounts offers each client an additional
$250 Million in coverage with up to $900,000 in
cash coverage per client.
hope this clarified a bit more the differences,
If you have questions don't hesitate to email