FDIC

Ownership Categories

Single Ownership:

Single ownership accounts are insured for $250,000. This category includes sole proprietorships. Agent, trustee, guardian, executor and custodian accounts (held for an individual) are considered the owner's funds.

For example:

A minor's account (opened under the Illinois Uniform Transfers to Minors Act or ILUTMA) is considered owned by the minor. A guardian is considered the custodian of the account but not the owner of the money. An account with a power of attorney belongs to the account holder (not the person with the power of attorney).

Joint Ownership:

Each co-owner's share of every joint account at the same insured bank are added together and insured up to $250,000.00.

For example:

The co-owner's share of every joint owner account is insured up to $250,000.00.

Retirement/IRA:

A person's IRA accounts at Itasca Bank & Trust Co. are insured up to $250,000.

Businesses:

All the deposit accounts of a partnership, a corporation or an unincorporated association are added together and insured up to $250,000. Only separately incorporated divisions/units would be eligible for separate insurance.

Public Units/Government:

Insurance coverage for a public unit's accounts (accounts of state, county or municipalities) is separately insured in the amount up to $250,000 for all time and savings deposits (this includes NOW accounts, savings accounts, money market accounts, and certificates of deposit) and up to $250,000 for all checking accounts.

Irrevocable/Revocable Trusts:

As of April 1, 2024, the same rules will apply to determine FDIC coverage for both revocable and irrevocable trusts. Under the amendments, all trust deposits can receive a maximum of $1.25 million in FDIC coverage per trust account owner (or $250,000 per eligible beneficiary, up to five beneficiaries) per bank regardless of whether the trust is revocable or irrevocable, whether the beneficial interests are contingent or noncontigent, or how funds are allocated among beneficiaries.

Other Complex Rules Eliminated

The current rules include several complex rules dealing with specific, rarely occurring situations, making rule interpretation and application more difficult. The amendments have simplified or eliminated a number of these rules. For example, under the current rules for informal revocable trusts, bank records must specifically indicate that the account is a POD or an ITF account (we put it in the account title). The amended rules eliminate this requirement. The beneficiaries of informal revocable trusts must still be identified in the bank's records, however.

Sample Scenarios on FDIC Deposit Insurance Rules

Sample Scenarios on FDIC Deposit Insurance Rules

1. Jane Smith comes into our bank and wants to open three joint accounts, one with her brother and one with each of her two sisters. Each account would have $85,000. Will all of her funds be fully insured?

   • Jane and brother: $85,000
   • Jane and sister #1: $85,000
   • Jane and sister #2: $85,000

   
   Answer: Yes. In joint accounts, each owner is insured up to $250,000 in all joint accounts (assumed to own half of each of the $85,000 balances), so Jane would have a total of $127,500 all of which would be insured.

2. If Bob Johnson opened an account in his name for $250,000 and a second account "in trust for" (payable on death) for his mother for $250,000, would all of these deposits be fully insured?
   
   Answer: Yes. He would get $250,000 for funds in his single ownership account. "In trust for" accounts qualify for separate insurance for each beneficiary. Since there is one owner and one beneficiary, the funds in the second account would be insured for $250,000.
   
   
3. If Mr. Jones opened an account with $100,000 and put another $100,000 in a business account in his name (sole proprietorship), will both of these accounts be fully insured?
   
   Answer: Yes. Sole proprietorship accounts are treated the same as individually owned funds of the person who is the sole proprietor. The funds in both these accounts are insured up to $250,000.00.
   
   
4. The Watson family has established the following accounts in one bank. Are all the funds covered by FDIC insurance?

   Account Title: Account Balance:

   • Mary Watson $250,000
   • Mary and John Watson $500,000
   • Mary Watson (IRA) $250,000
   • John Watson (IRA) $250,000

   
   Answer: Yes, all funds are insured: $250,000 for single ownership accounts; $500,000 for their jointly owned account; and $250,000 for each IRA account.

5. Mr. and Mrs. Rogers have a total of $600,000 in their two joint checking accounts. Are all of these funds covered by FDIC insurance?
   
   Answer: No. $500,000 would be covered under the joint account rule. $100,000 would be uninsured.

For more information about FDIC Insurance contact:

Dolores Little
Senior VP, Compliance Officer
630-773-0350 Ext. 439

When sending an email to anyone at Itasca Bank & Trust Co., please do not include passwords, account numbers, or any other confidential financial or personal information.