8/18/24, 11:09 AM Schwab MoneyWise | Understanding FDIC and SIPC Insurance

Understanding FDIC and SIPC Insurance

Protecting your assets.

FDIC insurance protects your assets in a bank account (checking or savings) at an insured
bank. SIPC insurance, on the other hand, protects your assets in a brokerage account. These
types of insurance operate very differently—but their purpose is the same: keeping your money
safe. Let's take a look at how they protect you.

FDIC Insurance

The FDIC—short for the Federal Deposit Insurance Corporation—is an independent agency of
the U.S. government that protects you against the loss of your deposits in an FDIC-insured
bank or savings association that fails. Any person or entity can have FDIC insurance coverage
in an insured bank, even if you're not a U.S. citizen or resident. FDIC insurance is backed by
the full faith and credit of the United States government.

Here are answers to the most common questions about all the ways the FDIC works to keep
your money safe.

What is FDIC Deposit Insurance?

FDIC insurance covers depositors' accounts at each insured bank, dollar-for-dollar, including
principal and any accrued interest through the date of the insured bank's closing, up to the
insurance limit.

FDIC insurance covers all types of deposits received at an insured bank, such as:

Checking accounts
Savings accounts
Negotiable Order of Withdrawal (NOW) accounts
Money market deposit accounts (MMDA)
Time deposits such as Certificates of Deposit (CDs)
Cashier's checks, money orders, and other official items issued by a bank

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What Financial Products Are Not Insured by the FDIC?

FDIC Insurance does not cover non-deposit investments or investment products, even if they
were purchased at an insured bank. These include:

Stock investments
Bond investments
Municipal securities
Mutual funds
Life insurance policies
Safe deposit boxes or their contents
U.S. Treasury bills, bonds or notes
Exchange traded funds
Annuities
Cash held in Schwab One® Interest Feature

How is FDIC insurance coverage determined?

The standard deposit insurance amount is $250,000 per depositor, per insured bank, for each
account ownership category at a bank. All deposits a depositor has in the same ownership
category at each insured bank are added together and insured up to $250,000. Funds
deposited in separate branches of the same insured bank are not separately insured.

The FDIC provides separate insurance coverage for deposits held in different "ownership
categories." This means you may qualify for more than $250,000 in insurance coverage if you
have funds deposited in different ownership categories and all FDIC requirements are met. The
different account ownership categories include:

Single accounts owned by one person

Joint accounts owned by two or more people
Certain retirement accounts such as IRAs and self-directed contribution plans
Revocable trust accounts
Irrevocable trust accounts (this category will be combined with revocable trust accounts
in March 2024).
Employee benefit plan accounts
Corporation/partnership/unincorporated association accounts
Government accounts

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So, for example, you can be eligible for $250,000 of coverage for funds held at a specific FDIC-
insured bank in a single account, plus $250,000 held at that same bank in a joint account, plus
$250,000 held at that same bank in a retirement account such an IRA, for a total of $750,000
of coverage.

Visit FDIC for a full list of FDIC Ownership categories  and Deposit Insurance videos .

How can I calculate my FDIC insurance coverage?

Because the deposit insurance rules are complex, you may want to use the FDIC's Electronic
Deposit Insurance Estimator (EDIE)  to calculate your FDIC coverage for FDIC-insured banks
where you have deposit accounts.

You can also use the FDIC's estimator for hypothetical situations. For instance, if you would
like to see how much of some assets would be covered by FDIC insurance, you can enter bank
and account information and get an estimate on how much would be insured.

Examples of FDIC insurance coverage

Example 1: If you have a single deposit account and a revocable trust account with one
beneficiary at the same FDIC-insured bank, both accounts would be separately insured up to
$250,000 each for a total of $500,000.

Example 2: If you and partner or spouse have a joint deposit account with $500,000 at an
FDIC-insured bank and you each also have a single account with $250,000, you would each be
insured up to $250,000 per account for a total of up to $1 million in FDIC deposit coverage at
that institution.

It's important to understand that the $250,000 limit applies to each FDIC-insured bank. This
means an account holder could have deposit accounts at two or more FDIC-insured banks and
be covered at each institution by a separate $250,000 limit.

What is SIPC insurance?

The Securities Investor Protection Corporation (SIPC) is a nonprofit membership corporation

that was created by federal statute in 1970. More than 3,500 brokerage firms (which is most of
them) are SIPC members.

Unlike the FDIC, SIPC does not provide blanket coverage. Instead, SIPC protects customers of
SIPC-member broker-dealers if the firm fails financially. SIPC insurance covers investors for up
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8/18/24, 11:09 AM Schwab MoneyWise | Understanding FDIC and SIPC Insurance

to $500,000 in securities and up to $250,000 in cash.

However, there are instances where investors are SIPC-insured for more than $500,000
depending on how the accounts are held , according to what SIPC calls "separate
capacities."

Examples of separate capacities include:

Individual accounts
Joint accounts
Traditional retirement accounts
Roth retirement accounts
Trust accounts
Corporate accounts
Accounts held by a guardian for a minor

This means if you own a traditional IRA and a Roth IRA, SIPC insures those separately and you
will be insured for up to $1 million for the two accounts at a SIPC-member broker-dealer. Or a
married couple with a joint account could gain an additional $500,000 in SIPC protection on
top of their individual account protections. If they hold different trust accounts, they could also
potentially gain additional SIPC insurance coverage for each.

SIPC does not protect investors if the value of their investments falls. When you think about it,
this makes sense. After all, market losses are a normal part of the risk of investing.

For more information, go to SIPC.org .

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The information on this website is for educational purposes only. It is not intended to be a substitute for specific
individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, consult
with a qualified tax advisor, CPA, financial planner, or investment manager.
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