IMPORTANT FDIC INSURANCE INFORMATION
NOTICE OF EXPIRATION OF THE TEMPORARY FULL FDIC INSURANCE COVERAGE FOR NONINTEREST BEARING TRANSACTION ACCOUNTS
By operation of federal law, beginning January 1, 2013, funds deposited in a noninterest bearing transaction account (including an Interest on Lawyer Trust Account) no longer will receive unlimited deposit insurance coverage by the Federal Deposit Insurance Corporation (FDIC). Beginning January 1, 2013, all of a depositor's accounts at an insured depository institution, including all noninterest-bearing transaction accounts, will be insured by the FDIC up to the standard maximum deposit insurance amount ($250,000), for each deposit insurance ownership category.
For more information about FDIC insurance coverage of noninterest-bearing transaction accounts, visit http://www.fdic.gov/deposit/unlimited/expiration.html
HOW WILL THE EXPIRATION OF THE TEMPORARY FULL FDIC INSURANCE COVERAGE FOR NONINTEREST BEARING TRANSACTION ACCOUNTS AFFECT DEPOSIT INSURANCE FOR INTEREST ON LAWYER TRUST ACCOUNTS (IOLTAs)?
After December 31, 2012, funds deposited in IOLTAs will no longer be insured under the Dodd-Frank Deposit Insurance Provision. However, because IOLTAs are fiduciary accounts, they generally qualify for pass-through coverage on a per-client basis. FDIC regulations provide that deposit account owned by one party but held in a fiduciary capacity by another party are eligible for pass-through deposit insurance coverage if (1) the deposit account records generally indicate the account's custodial or fiduciary nature and (2) the details of the relationship and the interests of other parties in the account are ascertainable from the deposit account records or from records maintained in good faith and in the regular course of business by the depositor or by some person or entity that maintains such records for the depositor.
If an IOLTA does qualify for pass-through coverage as a fiduciary account, then each separate client for whom a law form holds funds in an IOLTA may be insured up to $250,000 for his or her funds.
For example, if a law firm maintains an IOLTA with $250,000 attributable to Client A, $150,000 to Client B, and $75,000 to Client C, the account would be fully insured if the IOLTA meets the requirements for pass-through coverage. If the clients have other funds at the same Insured Depository Institution (IDI), those funds would be added to their respective shares of the funds in the IOLTA for insurance coverage purposes.
THE FDIC PROVIDES SEPARATE INSURANCE COVERAGE FOR DEPOSITS HELD IN DIFFERENT OWNERSHIP CATAGORIES
The coverage limits shown below refer to the total of all deposits that an accountholder has in the same ownership categories at each FDIC-insured bank. The chart below shows the most common ownership categories that apply to individual and family deposits, and assumes that all FDIC requirements are met. For more information about insurance coverage, visit http://www.fdic.gov/edie or call toll-free 1-877-ASK-FDIC (1-877-275-3342) Monday – Friday 8am - 8pm EST.
Basic FDIC Deposit Insurance Coverage Limits
|Single Accounts (owned by one person)||$250,000 per owner|
|Joint Accounts (two or more persons)||$250,000 per co-owner|
|IRAs and certain other retirement accounts||$250,000 per owner|
|Trust Accounts**||$250,000 per owner per beneficiary subject to specific limitations and requirements|
|Corporation, Partnership and Unincorporated Association Accounts||$250,000 per corporation, partnership or unincorporated association|
|Employee Benefit Plan Accounts||$250,000 for the non-contingent, ascertainable interest of each participant|
|Government Accounts||$250,000 per official custodian|
|Non-interest Bearing Transaction Accounts (see above Transaction Account Guarantee Notice)||Unlimited coverage|
|**The FDIC has eased the rule governing "revocable trust accounts" that pass to named beneficiaries when the account owner dies. Now an account owner can name any person or charity as a beneficiary and the owner will qualify for the additional deposit insurance coverage. Read more about this change at:|
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