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Amid the troubles at banks of all sizes, this is a good time to review how deposit insurance works at banks, savings and loans and credit unions.

While depositors tend only to consider the standard FDIC $100,000 limit on deposit insurance, things are not always so tidy.

There are also differences for credit union deposits, called "shares." All federally charted credit unions and most state-chartered credit unions have their deposit shares insured by the National Credit Union Administration, or NCUA.

Here are summaries of deposit rules for banks, savings and loan institutions and credit unions. In most cases, the rules are the same, but there are some important differences, especially for retirement accounts, such as IRAs and Keoghs.

("Institution" means any bank or S&L, or NCUA-insured credit union. All banks and S&Ls will display the "FDIC Insured" sign, and NCUA-insured credit unions display the official NCUA Insurance sign.)

Basic Insurance Limits

Individual accounts:

For starters, deposit-insurance limits are per institution and not per branch. If your deposits in one institution total less than $100,000, they are all insured. Things get more complicated when you consider joint accounts, retirement accounts and trusts.

Joint accounts:

The $100,000 limit applies also to separate ownership interests in joint accounts. So if you have a joint account with a balance of $200,000, each account holder's ownership interest is insured up to $100,000, so the entire joint account is insured. This is separate from any individual accounts you and the other person may have. This means that if you each have individual accounts with balances of $100,000, together with the joint account with $200,000, your total insured deposits are $400,000.

Trust accounts:

If you have "pay on death" or POD trust accounts, the $100,000 limit applies to each beneficiary interest, provided the beneficiary is your spouse, child, adopted or step-child, grandchild or parent. These beneficiaries and their relationship to you must be clearly identified on the account application and signature card.

So, if you have a properly documented $300,000 POD account with three beneficiaries, the entire $300,000 is insured. For living trusts, the rules get much more complicated, and you should go to the links at the end of this article for the details. You can also call the FDIC or NCUA to discuss specific living trust scenarios.

Retirement accounts:

The basic insurance limit for retirement accounts was increased to $250,000 in 2006. Insurance on retirement accounts is one area where there are major differences between FDIC and NCUA insurance. For banks and savings and loans, the $250,000 limit applies to the total of all the retirement account deposits for an individual in the same institution.

For credit unions, Keogh retirement accounts are insured separately, so if you have a $250,000 IRA and a $250,000 Keogh account in the same NCUA-insured credit union, the total insured shares are $500,000.

Business accounts:

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An account in the name of a sole proprietorship is treated as another individual account and does not increase the deposit limitation for the individual. An account in the name of a partnership or corporation is insured separately, up to the $100,000 limit, as long as the corporation or partnership is engaged in independent activity, meaning it is not formed solely for separate insurance coverage.

Bear in mind that having multiple accounts with slight differences in your name will not increase your deposit insurance limits. For example, if your name is Edgar Allan Poe, you might have three accounts, one with your full name, another as "Eddie Poe," and a third as "E.A. Poe." Playing games with your name will not increase your deposit insurance limits, since your institution will identify you using your Social Security number and date of birth.

In the event of a failure of your institution, the FDIC or NCUA authorities will look very closely at the account identification when determining which funds are insured.


The following examples are by no means exhaustive. Please see the links below for more in-depth scenarios. In the case of FDIC-insured institutions, you can use the

Electronic Deposit Insurance Estimator for a personalized analysis of your deposit insurance.

Each example assumes that there is one individual, who has savings and checking accounts, and two retirement accounts -- an IRA and a Keogh. There is also an account in the name of a business partnership, and finally a joint savings account.

While the total on deposit is $750,000, only $650,000 is insured if these deposits are at a bank or S&L, since the combined limit for accounts in the individual name is $100,000 and the maximum insurance for the combined IRA and Keogh accounts is $250,000.

If these are shares at an NCUA-insured credit union, the insured amount is $700,000, since the IRA and Keogh accounts are treated separately, each having a $250,000 insurance limit.

As you can see, depending on your scenario, your deposit insurance picture can be a bit complicated.

The above examples are not exhaustive, and may not match your situation. If you would like to review the full FDIC and NCUA insurance publications, which contain detailed examples of insurance coverage for multiple accounts, click the following links:

FDIC Summary Insurance Guide

FDIC Full Guide - Your Insured Deposits

FDIC's Electronic Insurance Estimator

NCUA - Your Insured Funds

NCUA - Bulletin on Retirement Account Insurance Coverage

BankingMyWay offers instant comparisons of bank and credit union interest rates in your area.

Philip W. van Doorn joined Ratings Inc. in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a Bachelor of Science in business administration from Long Island University.