You just may be.
For the first time in over 25 years, the US Congress has raised the limits of insurance coverage that protects your money if a banking institution fails from $100,000 to $250,000 for certain kinds of retirement accounts. However, these deposits must be held at a bank or credit union and insured by the FDIC (Federal Deposit Insurance Corporation) or the NCUA (National Credit Union Administration.)
This is big news for savers, as many of us have been depositing our pennies for a rainy day retirement and have crossed the $100,000 mark. As of April 1, 2006, all of your individual retirement accounts at your local financial institution can be added together up to $250,000 and still be protected if the bank or credit union should fail. Plus, your retirement accounts are separate from any other accounts (checking, savings, CD’s) you have at that particular institution- and by the way, those are still insured up to $100,000.
Here’s a list of deposits (not investments) covered under the new FDIC/NCUA regulations:
- Traditional Individual Retirement Accounts (IRA’s)
- Roth IRAs
- Simplified Employee Pension (SEP) IRA’s
- Savings Incentive Match Plans for Employees (SIMPLE) IRA’s
- Self-directed Keogh accounts
- 457 Plan accounts for state government employees
- Employer-sponsored “defined contribution plan” accounts- (basically 401K accounts and some SIMPLE 401K accounts in which the consumer decides on how and where the funds are deposited.)
The benefits for you:
- You can have more than one retirement account at a bank, so you’ll save time running from one financial institution to another.
- You’ll be able to sleep at night knowing that your retirement money is safe- no worries about the stock market or another savings and loan scandal.
- Remember, retirement funds are held separately from other accounts. So you can have $100,000 in a savings account, and that will also be fully insured.
And one more thing- the new law has established a manner in which insurance limits for deposits may increase every 5 years beginning in 2011, if at all. This is primarily on the same path as inflation, so we’ll just have to wait and see. Until 2011, your retirement funds are safe, up to $250,000 at your friendly neighborhood bank or credit union.
For more information, visit the FDIC Website.
