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  • Writer's pictureVitaly Novok

How To Exceed the FDIC $250K Limit & Stay Insured

Updated: Mar 30

About 3-4 weeks ago, when New York Community Bank, a fairly large regional bank, reported a significant loss linked to commercial real estate and had to scramble to raise additional capital, many people started asking if this financial crisis could spread to other banks and if their own cash was safe.

For sure you’ve heard about FDIC insurance for times like this. It’s supposed to protect your deposits in the bank up to $250,000. But is this the maximum amount that you can keep in one bank and still sleep well at night? The quick answer is no, you can keep way more and in this post I’m going to explain how FDIC insurance works and provide an update on some new changes coming to FDIC coverage on April 1, 2024.

Check That Your Bank Is Member-FDIC

Firstly, you need to ensure that your bank is a member of the FDIC. You can verify that on the FDIC’s website. Once you’ve confirmed that your bank is the member of FDIC, you need to understand that FDIC insurance applies only to deposit accounts which include:

  • Checking,

  • Savings,

  • CDs, and

  • Money market.

Stocks, annuities, insurance products and other investments are not protected by FDIC.

How FDIC Insurance Works

The next crucial detail you need to know is that FDIC provide insurance coverage up to $250,000 per depositor, per legal account ownership, per financial institution. Legal account ownership falls into five specific categories for non-business account owners, which include:

  • Individual

  • Joint

  • Revocable Testamentary, such as Pay on Death or Revocable Trust

  • Irrevocable Trust, and

  • Retirement Accounts

New FDIC Trust Account Rule

Starting April 1, 2024, trust accounts will be combined into one type. Under the new FDIC rules, each trust owner will be insured for up to $250,000 if the bank fails per eligible primary beneficiary, with a cap of five beneficiaries.

How Much Can Be FDIC Insured?

Since the FDIC provides coverage for both per depositor and per account, it is possible for a person or couple to secure FDIC coverage for a substantial amount of money, potentially reaching millions of dollars in a single bank!

For example, if you and your spouse fully fund up to the FDIC limit individual checking accounts, maintain one joint account, hold two individual IRA accounts, and have a revocable trust with three eligible beneficiaries, your total insured amount could reach $3,000,000. Any excess amount would be uninsured and can be transferred to a different bank that is a member of FDIC.

a table that shows total FDIC insured account balances held in one bank

When you hear about a bank having trouble, don’t panic and stay calm. Check your account balances to ensure they’re under the FDIC limit. You can also use the Electronic Deposit Insurance Estimator tool on the FDIC’s website to help you figure it out. If you notice that certain account balances exceed the $250,000 FDIC limit, consider transferring those funds to another bank.

If you have any questions for us, please feel free to schedule a consultation below.



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