New FDIC Rules and Planning Opportunities

As a result of legislation enacted on July 21, 2010, FDIC insurance for bank deposits has been permanently increased to $250,000 per depositor, per insured bank.

This is great news for investors, as this permanent change extends the increase in coverage, which was to expire December 31, 2013. This means that investors who purchase CDs with maturities beyond 2013 will know their funds are insured.

There are very specific, and very beneficial rules that can greatly broaden this coverage far beyond $250,000 per individual. For example, if an investor has an account established using a Revocable Living Trust at an FDIC bank, and has 3 beneficiaries of the trust, the account will be insured up to $1,000,000. This is determined by combining the owner of the account and each beneficiary, so would total 4 times $250,000.

The maximum number of beneficiaries that are eligible for FDIC coverage would be 5, so the maximum coverage for an account established with a Revocable Living Trust is now $1,250,000.

This is of even greater relevance right now, given current interest rate conditions, as we are finding that CDs are good, secure investments, and even for taxpayers in high tax brackets, CDs may be safer and provide nearly the after-tax return of top quality municipal bonds.

If you have questions regarding how to structure your investments to gain the security of additional FDIC insurance, please contact our office.