FDIC

The Federal Deposit Insurance Corporation (FDIC) was established in 1934 as a result of the bank failures in the 1920s and early 1930s. Many people lost their entire savings with these failures. Since its inception, no depositor has lost a single cent of insured money due to a bank failure.

Raised Limits

The previous deposit limit for FDIC coverage was $100,000; however, many retirement accounts exceeded that limit, so in 2006, Congress raised the limit to $250,000 for deposit IRAs.

Types

The higher limit applies to traditional and Roth IRAs as well as SEP and SIMPLE IRAs and other self-directed plans. This insurance applies only to deposit accounts, not investment accounts. If your IRA is invested in stocks, bonds, mutual funds and other investment accounts, you are not protected by FDIC insurance even if you purchased the account from an FDIC-insured institution.

Limitations

The $250,000 limit applies to all insured IRA accounts you have at any single institution. Your IRA accounts are insured separately from other accounts you may have at the same bank. Regular accounts, like checking, savings or CDs, are covered to $100,000.

Example

For example, if you have checking and savings accounts worth $75,000 and an insured IRA worth $200,000 (at the same institution), all of your money is covered. If you have various insured IRAs at the same institution whose combined value is $300,000, you are only covered for $250,000.

Source:

FDIC: Consumer News

FDIC: Who is the FDIC?