货币英语 07 Answers to Your Questions About FDIC Insuranc

By Elizabeth Carlassare.  

Today, I want to answer some of the listener questions I received in response to last week’s episode about FDIC insurance.

Patti M. e-mailed me with this question:
“If you have a CD for $100,000 in an FDIC-insured bank and the bank failed, would the interest accrued¹ also be insured, or would you be down to $100,000?”
Thanks for the question, Patti.
Keep Accounts at Multiple FDIC-Insured Banks
The answer is short, but less than sweet. The $100,000 FDIC-insurance limit for deposit accounts applies to savings² plus interest. If your $100,000 account were to grow, say, to $110,000 due to interest, the $10,000 that exceeds the limit would be uninsured.

One solution would be to keep accounts at multiple FDIC-insured banks, each with less than $100,000.
Cover the Different Ownership Types
Also, keep in mind that it’s possible to have more than $100,000 covered at an FDIC-insured bank if you have multiple accounts with different ownership types. The FDIC separately insures accounts with different types of ownership at the same financial institution. The FDIC recognizes eight different ownership types, including single, joint³, revocable trust, and irrevocable trust accounts to name just a few.

For trust accounts, the $100,000 of insurance protection applies for each beneficiary named on the account (not for each account owner). So if you had a trust account with three beneficiaries, it could be insured for up to $300,000.

The FDIC raised the insurance limit in 2006 for certain types of retirement⁴ accounts (including IRAs) from $100,000 up to $250,000. So by having accounts with different ownership types, it’s easy to see how it’s possible to have far more than the basic $100,000 in FDIC coverage⁵ at one financial institution if you ever were to need it.
Protect Your Roth IRA
And now for the next question; Adrianne in Delaware e-mailed me this:

“I just listened to your podcast about the FDIC. My Roth IRA account will be over the $250,000 limit for FDIC insurance in a few years, including, of course, the compound interest. What should I do? Can I take some money from my current bank, Bank X, and open a new Roth IRA at Bank Y? What do million-dollar celebrities⁶ and extremely successful business people do?”
 
First, determine how much of your IRA is actually invested in bank deposits. FDIC insurance applies to deposits, not investments. Only the portion of your retirement account in bank deposits, such as CDs and money market savings accounts, would be covered by FDIC insurance. FDIC insurance does not apply to money invested in stocks, bonds, mutual⁷ funds, life insurance, or annuities⁸, even if you buy them at an FDIC-insured bank.

Most people keep the bulk of their retirement savings in investments that have the potential to earn a higher return than CDs. But let’s say, just for the purpose of illustration, that you’re retired⁹ and you like the predictability of CDs and keep a significant portion of your IRA in them. In this case, the CD investments in your IRA would be insured up to the $250,000 coverage limit, if your IRA were held at an FDIC-insured bank.

But let’s say you have more than $250,000 invested in CDs in your IRA and you want the entire amount to be insured. You could open a second IRA at another FDIC-insured bank and move enough of your retirement savings to the new IRA to limit the amount of your CD investments at each bank to less than $250,000.  Doing a direct transfer of funds between IRA custodians¹⁰ avoids income taxes, if applicable, and the 10% IRS penalty for early withdrawal¹¹, if you’re under age 59 ½.

Again, the $250,000 coverage limit for retirement accounts applies to cash deposits only, such as CDs and money market savings accounts. And, the coverage applies to some, but not all, types of retirement accounts. It applies to all types of IRAs, Keoghs, Section 457 deferred¹² compensation plans for government employees, and employer-sponsored defined-contribution plans (such as 401(k)s).

The same deposit insurance limits used by the FDIC, also apply to credit unions insured by the National Credit Union Association.

Thanks again for the questions!

As always, everyone’s situation is different, so be sure to consult a tax or financial advisor¹³ before making important financial decisions. This podcast is for educational purposes only and is not intended to be a substitute for seeking personalized, professional advice.

Cha-ching! That’s all for now, courtesy of Money Girl, your guide to a richer life.

1 accrued   

adj.权责已发生的v.增加( accrue的过去式和过去分词 )；（通过自然增长）产生；获得；（使钱款、债务）积累

参考例句：

• The company had accrued debts of over 1000 yuan. 该公司已积欠了1000多万元的债务。 来自《简明英汉词典》
• I have accrued a set of commemoration stamps. 我已收集一套纪念邮票。 来自《简明英汉词典》

2 savings   

n.存款，储蓄

参考例句：

• I can't afford the vacation,for it would eat up my savings.我度不起假，那样会把我的积蓄用光的。
• By this time he had used up all his savings.到这时，他的存款已全部用完。

3 joint   

adj.联合的，共同的；n.关节，接合处；v.连接，贴合

参考例句：

• I had a bad fall,which put my shoulder out of joint.我重重地摔了一跤，肩膀脫臼了。
• We wrote a letter in joint names.我们联名写了封信。

4 retirement   

n.退休，退职

参考例句：

• She wanted to enjoy her retirement without being beset by financial worries.她想享受退休生活而不必为金钱担忧。
• I have to put everything away for my retirement.我必须把一切都积蓄起来以便退休后用。

5 coverage   

n.报导，保险范围，保险额，范围，覆盖

参考例句：

• There's little coverage of foreign news in the newspaper.报纸上几乎没有国外新闻报道。
• This is an insurance policy with extensive coverage.这是一项承保范围广泛的保险。

6 celebrities   

n.（尤指娱乐界的）名人( celebrity的名词复数 )；名流；名声；名誉

参考例句：

• He only invited A-list celebrities to his parties. 他只邀请头等名流参加他的聚会。
• a TV chat show full of B-list celebrities 由众多二流人物参加的电视访谈节目

7 mutual   

adj.相互的，彼此的；共同的，共有的

参考例句：

• We must pull together for mutual interest.我们必须为相互的利益而通力合作。
• Mutual interests tied us together.相互的利害关系把我们联系在一起。

8 annuities   

n.养老金；年金( annuity的名词复数 )；（每年的）养老金；年金保险；年金保险投资

参考例句：

• Many companies in this country grant their old employees annuities after they retire. 这个国家的许多公司在老年雇员退休后发给他们养老年金。 来自辞典例句
• Can I interest you in one of our Easter Annuities or IRA accounts? 您对我们的复活节年金保险或者个人退休金帐户有兴趣吗？ 来自电影对白

9 retired   

adj.隐退的，退休的，退役的

参考例句：

• The old man retired to the country for rest.这位老人下乡休息去了。
• Many retired people take up gardening as a hobby.许多退休的人都以从事园艺为嗜好。

10 custodians   

n.看守人，保管人( custodian的名词复数 )

参考例句：

• If we aren't good custodians for our planet, what right do we have to be here? 如果我们作为自己星球的管理者不称职我们还有什么理由留在这里？ 来自电影对白
• Custodians primarily responsible for the inspection of vehicles, access, custody. 保管员主要负责车辆的验收、出入、保管。 来自互联网

11 withdrawal   

n.取回，提款；撤退，撤军；收回，撤销

参考例句：

• The police were forced to make a tactical withdrawal.警方被迫进行战术撤退。
• They insisted upon a withdrawal of the statement and a public apology.他们坚持要收回那些话并公开道歉。

12 deferred   

adj.延期的，缓召的v.拖延，延缓，推迟( defer的过去式和过去分词 )；服从某人的意愿，遵从

参考例句：

• The department deferred the decision for six months. 这个部门推迟了六个月才作决定。
• a tax-deferred savings plan 延税储蓄计划

13 advisor   

n.顾问，指导老师，劝告者

参考例句：

• They employed me as an advisor.他们聘请我当顾问。
• The professor is engaged as a technical advisor.这位教授被聘请为技术顾问。