 Dear
Dr. Don,
I understand that certificates of deposit are insured by the Federal Deposit Insurance Corp. up to $100,000. Would multiple CDs (each less than $100,000 face value) issued to the same person be insured to the full amount? If not, could a husband and wife be fully insured for a $100,000 CD in each of their names, plus a $100,000 CD in both names?
-- Gary Guarantee
 Dear
Gary,
The FDIC deposit insurance rules have changed
over the past few years. The biggest change is
that eligible retirement accounts now have a separate
$250,000 insurance limit per depositor. The $100,000
insurance limit per depositor per insured bank
for nonretirement accounts is still in place,
but there are some ways to finesse the issue so
you have more coverage.
Joint accounts are a separate type of account ownership and, as such, have separate insurance limits. A husband and wife, by using a qualified joint account along with individual accounts, can gain additional insurance coverage. Coverage limits are up to a total of $400,000 in insured deposits for the two types of accounts.
If the FDIC requirements for a joint
account are met, each co-owner's share of every
account that is jointly held at the same insured
bank is added together with the co-owner's other
shares, and the total is insured up to $100,000.
The FDIC publication "Your
Insured Deposit" has the details on its requirements
for joint accounts.
Payable on death, or POD, accounts
and living trust accounts increase the level of
insured deposits by considering the beneficiaries
of the accounts as qualifying for up to $100,000
in deposit insurance. The rules are a little more
complex here, so you should consult your banker
or refer to the applicable section of "Your
Insured Deposit" for more details.
To eliminate any guesswork, use
the Electronic Deposit Insurance Estimator, or
EDIE,
a user-friendly interactive online work sheet that
will help you figure out if any of your deposits
are uninsured.
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