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Are Your Bank Accounts Still FDIC Insured?


Posted on January 21, 2013

The New Year marked the expiration of a two-year temporary provision granting unlimited federal insurance coverage on deposits held in noninterest-bearing transaction accounts.  These typically include certain business, non-profit and municipality checking accounts as well as lawyer trust accounts and that require quick access to large amounts of money. 

 Effective Jan. 1, 2013, the Federal Deposit Insurance Corp. (FDIC) reduced its coverage of these accounts to $250,000, the same limit it imposes on all interest-bearing accounts.  With this change, the FDIC no longer considers noninterest-bearing transaction accounts separate ownership categories with their own distinct coverage limits.  Rather, they are now aggregated with all similarly titled accounts held at the same institution and protected only up to the legal maximum of $250,000.  Account balances above that amount are not insured and therefore not recoverable should the bank fail.

 The government instituted unlimited insurance coverage of noninterest-bearing accounts at the height of the financial crisis in order to instill confidence in the country’s financial institutions and discourage depositors from withdrawing funds en masse from the nation’s community banks.  With coverage limits reverting to pre-2010 levels, now is the time to meet with your accountant to evaluate your exposure to risk and review tactics that thoroughly protect you and your funds, including: