FDIC stands for Federal Deposit Insurance Corporation, which is a government entity that backs many types of bank accounts. The agency was created in the 1930s in an attempt to instill confidence in the commercial banking system and put an end to disastrous runs on bank deposits.

Limits

As of early 2010, the basic limit for FDIC insurance is $250,000 per person, per bank account, per account category.

Types of Coverage

FDIC insurance covers money market deposit accounts, savings accounts, checking accounts and certificates of deposit that are held in insured banks. FDIC insurance can apply to these account types even if they are held within an IRA.

Features

Seven different account categories qualify for separate $250,000 coverage limits, per depositor: single accounts, joint accounts, certain retirement accounts, revocable trust accounts, corporate accounts, irrevocable trust accounts, employee benefit plan accounts and government accounts. For example, if you had $200,000 in a certificate of deposit and $220,000 in a money market deposit account in your IRA, all of it would be covered because each account would qualify for a separate $250,000 coverage limit.

Significance

FDIC insurance protects your money in case the bank fails. The program was started in 1933 and has reimbursed every dollar it has covered in banks that have failed since its inception.

Time Frame

The $250,000 limits are set to expire at the end of 2013. Barring future legislation, the amounts will return to $100,000 per account type, except certain retirement accounts, which will stay at $250,000.

Source:

FDIC: Deposit Insurance Simplification Fact Sheet

FDIC: Insured or Not Insured?