Understanding FDIC insurance
What is the FDIC?
The Federal Deposit Insurance Corporation is an independent agency of the U.S. Government that supervises banks, insures deposits and helps maintain a stable and sound banking system. FDIC-insured deposits are safe - since the FDIC's inception in 1933, not a single dollar has ever been lost by an insured depositor.
How does FDIC insurance work?
FDIC insurance covers funds in deposit accounts, including checking and savings accounts, money market deposit accounts, certificates of deposit (CDs), and bank Individual Retirement Accounts (IRAs).
To ensure your funds are fully protected, you should understand your deposit insurance coverage limits. On May 20, 2009, new legislation was adopted to temporarily raise the FDIC insurance limit from $100,000 per depositor to $250,000 per depositor at all FDIC-insured banks, which includes Principal Bank. (This increase will be in effect until December 31, 2013. On January 1, 2014, the limit will revert back to $100,000 per depositor for regular accounts, but will remain at $250,000 per depositor for Bank IRAs.)
How can I maximize my coverage?
Keeping all deposit accounts in one bank makes it easier to manage finances. However, many people have the mistaken notion that they must divide funds among several banks to maintain FDIC coverage for more than $250,000. Actually, FDIC insurance is based on the concept of account ownership. By utilizing single, joint, payment-on-death (revocable trust) and IRA accounts, it's possible to achieve FDIC coverage for much more than $250,000 at just one bank.
Here's one example of how you could secure over a million dollars in insured deposits at Principal Bank:
| Client Example | ||
|---|---|---|
| Account Title | Ownership Type | Account Balance |
| Non-IRA Accounts | ||
| Mary Smith | Savings Account | $250,000 |
| John Smith | Money Market Savings Account | $250,000 |
| Mary & John Smith (50/50 ownership) | Certificate of Deposit | $500,000 ($250,000 each) |
| Total Non-IRA | $1,000,000 |
| IRA Accounts | ||
|---|---|---|
| Mary Smith | IRA Certificate of Deposit | $250,000 |
| John Smith | IRA Certificate of Deposit | $250,000 |
| Total IRA | $500,000 |
| Total Insured | $1,500,000 | |
If you have additional questions about FDIC coverage limits and requirements, please visit EDIE the Estimator at www.myFDICinsurance.gov, call the FDIC toll-free at 1.877.ASK.FDIC, or a Principal Bank personal banker at 1.800.672.3343.
