Important Information Regarding FDIC Coverage
FDIC Insurance Coverage Limit Increases
On May 20, 2009 , the FDIC announced that FDIC insurance will temporarily increase from $100,000 to $250,000 per depositor through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all account categories except IRAs and certain other retirement accounts, which will remain at $250,000 per depositor.
FDIC Transaction Account Guarantee ProgramBB&T is participating in the FDIC’s temporary Transaction Account Guarantee Program through December 31, 2009. Under this program, all non-interest-bearing transaction accounts are fully guaranteed by the FDIC for the entire amount in the account. Effective January 1, 2010, BB&T will no longer participate in the Transaction Account Guarantee Program, and funds held in non-interest-bearing transaction accounts will be insured up to $250,000 under the FDIC’s general deposit insurance rules.
FDIC Insurance Coverage Overview:
What does FDIC insurance coverage include?
FDIC insurance covers funds in deposit accounts, including checking and savings accounts, money market deposit accounts and certificates of deposit (CDs). FDIC insurance does not, however, cover other financial products and services that insured banks may offer, such as stocks, bonds, mutual fund shares, life insurance policies, annuities or municipal securities.
What are the FDIC insurance coverage limits?*
Depositors should understand their deposit insurance coverage limits to ensure their funds are fully protected. The FDIC provides separate insurance coverage for deposits held in different ownership categories such as single accounts, joint accounts, Individual Retirement Accounts (IRAs) and Trust accounts. The coverage limits outlined below apply to deposit dollars held per deposit institution:
| Coverage Category | Coverage Limits (Up To) | Description |
| Single Accounts | $250,000 per owner** (formerly $100,000) |
Deposit accounts owned by one person and/or sole proprietor. All single accounts at the same insured bank are added together and the total is insured up to $250,000. |
| Joint Accounts | $250,000 per owner** |
Deposit accounts owned by two or more people. If all owners have equal rights to withdraw money from a joint account, each person’s share of all joint accounts at the same insured bank are added together and the total is insured up to $250,000. |
| IRAs/Other Retirement Accounts | $250,000 per owner | Deposit accounts owned by one person and titled in the name of that person’s retirement plan. IRAs (Traditional, Roth, SEPP, SIMPLE plans), 457 Deferred Compensation plans, Keoghs and self-directed Defined Contribution plans are insured separately from single accounts. All deposits that an individual has in any of the qualifying retirement plans are added together and the total is insured up to $250,000. |
| Revocable Trust Accounts | Account owner receives $250,000 in coverage per beneficiary** (formerly $100,000) | Deposits held in either Payable On Death (POD) accounts or living trust accounts. (Note: determining coverage for living trust accounts can be complicated and requires very detailed information about the FDIC’s insurance rules. Clients with questions about a living trust account should contact the FDIC at 1-877-275-3342 for more information). |
| Corporation, Partnership and Unincorporated Association Accounts | $250,000 per separate company or organization**
(formerly $100,000) |
Deposit accounts owned by incorporated organizations, unincorporated businesses with co-owners or non-commercial businesses such as religious, educational, charitable, or social organizations. Accounts are insured up to $250,000. Separate incorporated organizations under the same parent "holding" corporation would be insured individually up to $250,000. |
| All Non-Interest-Bearing Transaction Accounts | Unlimited through December 31, 2009 | All consumer and business non-interest bearing accounts have unlimited deposit insurance coverage through December 31, 2009. |
* These deposit insurance coverage limits refer to the total of all deposits that an accountholder (or accountholders) has at each FDIC-insured bank. The listing above shows the most common ownership categories that apply to individual and family deposits, and assumes that all FDIC requirements are met.
** Interest-bearing transaction accounts with an interest rate of .50% or less also have unlimited coverage through December 31, 2009; however interest-bearing accounts with an interest rate tied to any index, (Fed Funds, 90 day T-bill, etc.) regardless of the interest rate, will not have unlimited coverage, but will be counted in the total $250,000 FDIC coverage per deposit ownership. Additionally, IOLTA accounts regardless of the interest rate have unlimited coverage.
Information Specific to Revocable Trust Accounts:
The FDIC has recently announced new regulations regarding Revocable Trust – formal (written trust agreements) and informal trust (Payable on Death – POD) accounts, which may provide extended coverage for clients.
Important changes include:
- As of Monday, September 29, 2008 a beneficiary now can be any natural person, charitable organization or registered not-for-profit entity; the former requirement limited the beneficiary to being a "qualified person" –spouse, child, grandchild, parent and/or sibling. North Carolina has an additional restriction that requires a POD beneficiary to be a natural person.
- Beneficiaries with unequal interest receive new treatment as outlined below:
a. Revocable Trust Deposits with Five or Fewer Beneficiaries – Each owner’s share of revocable trust deposits is insured up to $250,000 for each beneficiary (i.e., $250,000 multiplied by the number of different beneficiaries provides the total owner’s coverage), regardless of the actual interest provided to each beneficiary.
b. Revocable Trust Deposits with Six or More Beneficiaries – Each owner’s share of revocable trust deposits is insured for the GREATER of either:
i. $1,250,000 OR
ii. Coverage based on each beneficiary’s actual interest in the revocable trust deposits, with no beneficiary’s interest to be insured for more than $250,000.
BB&T offers an additional program known as the Certificate of Deposit Account Registry Service (CDARS), for clients with depository insurance needs that exceed the coverage provided by the FDIC. BB&T clients can leave deposits up to the FDIC insurance coverage limits on deposit with BB&T. Then, any deposit balances over the FDIC coverage limit can be enrolled in this program.
How CDARS Works:
- Enroll any BB&T CD balances that exceed the FDIC insurance coverage limits in the CDARS program.
- Select the rate and maturity dates that match the client’s individual investment goals.
- BB&T will place any of the client’s balances that exceed the FDIC insurance coverage limit for any one bank at other FDIC-insured banks up to the $250,000 coverage limit per institution.
- Clients can receive coverage on their CD deposit balances over the $250,000 FDIC insurance limit.
- BB&T continues to manage the client’s deposit relationship. A client’s large deposit is broken down into smaller amounts and placed with other banks that are members of a special network. Then, those member banks issue CDs in amounts under $250,000, so that the entire investment is eligible for FDIC insurance.
- Clients earn one rate on their entire CDARS investment. There is no need to worry about multiple rate negotiations or consolidating multiple disbursement checks.
- Clients receive an account notification listing all CDs†, along with the issuing banks, maturity dates, interest rates and other details.
The information provided is for educational purposes only. Clients should consult a tax advisor, attorney responsible for creating trust accounts or the FDIC at (www.myFDICinsurance.gov, or toll-free at 1-877-ASK-FDIC) for further details.