Understanding FDIC Insurance: Maximizing Your Coverage with a Single Bank

​In today’s uncertain economic environment, many clients are worried about protecting their hard-earned savings against bank failures. While we generally do not recommend holding significant assets in banks because of the low rate of return, it is still important to understand how to protect the cash you do keep there, especially if your balances exceed the FDIC insurance limit of $250,000.

​Many people assume that to protect amounts above the limit they must spread their money across multiple banks. This can create an administrative burden and make it harder to manage their finances. The good news is that this is not the case at all.

FDIC insurance is calculated per depositor and per account ownership category, not just by bank. That means you can often get full coverage at a single institution if you structure your accounts thoughtfully.

Common FDIC Coverage Categories
For most individuals and couples, the main account categories that receive separate coverage include:

• Individual accounts
• Joint accounts
• Retirement accounts (like IRAs)
• Trusts (including accounts with Transfer on Death, or TOD, instructions)

Example: If you have: - An individual account in your name, and - A joint account with your spouse at the same bank

You are covered for up to $750,000: - $250,000 for your individual account - $250,000 for your portion of the joint account - $250,000 for your spouse’s portion of the joint account

Expand Coverage with TOD / Beneficiary Designations
​
Accounts with Transfer on Death (TOD) instructions are treated as informal trusts, separate from individual or joint accounts.

FDIC coverage for TOD accounts is calculated as:
                      Number of Owners × Number of Beneficiaries × $250,000

Example: A joint account with two owners and two beneficiaries could be insured for up to $1,000,000 at a single bank.

Promotes Effective Estate Planning as Well

Adding beneficiaries not only increases FDIC coverage, but it also offers important estate planning advantages. Accounts with designated beneficiaries can pass directly to heirs without going through probate, which simplifies the transfer of assets. In addition, by keeping your accounts at a single bank, you simplify the process for your heirs, making it easier for them to manage and access the assets when the time comes.

Next Steps

If you are unsure about your coverage, the FDIC provides helpful resources:

• Deposit Insurance FAQ: https://www.fdic.gov/resources/deposit-insurance/faq
• EDIE Calculator: https://edie.fdic.gov/calculator.html

There is also a tutorial on the EDIE site explaining how to use the tool to calculate your actual coverage.
If you would like help reviewing your accounts, optimizing FDIC coverage, or addressing other financial needs, contact us to schedule time with a StraightLine Advisor.

Author
Rob Rickey, CFP®
​StraightLine's Chief Growth Officer and Financial Advisor

PROFESSIONAL DESIGNATION:
Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.  Those certification requirements include education, exam, experience and ethics components--more information is available at Professional Designations. 
​
DISCLOSURE:
​Information presented is for informational purposes only. StraightLine Group, LLC (“StraightLine”) is a registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training. Past performance is not indicative of future results. Investing involves risk, including the possibility of loss of principal. The ideas and opinions expressed herein do not constitute legal, tax, or investment advice or a recommendation of any particular security or strategy. Before making any investment decision, you should seek expert, professional advice and obtain information regarding the legal, fiscal, regulatory and foreign currency requirements for any investment according to the laws of your home country and place of residence. Any forward-looking statements or forecasts are based on assumptions and actual results may vary. Information presented from third parties is believed to be reliable, but no warranty is provided. StraightLine is not required to update information presented, unless otherwise required by applicable law.  For more information about StraightLine, including our Form ADV Part 2A Brochure, please visit https://adviserinfo.sec.gov/firm/summary/127401 or contact us at 248-269-8366.