Employee benefit plan accounts are deposits of a pension plan, profit-sharing plan or other employee benefit plan.

Employee benefit plan deposits are insured up to $100,000 for each participant’s non-contingent interest in the plan.

This coverage is known as “pass-through” insurance because the insurance coverage passes through the plan administrator to each participant’s interest or share.

Coverage for a plan’s deposits is not based on the number of participants, but rather on each participant’s share of the plan. Because plan participants normally have different interests in the plan, insurance coverage cannot be determined by simply multiplying the number of participants by $100,000.

To determine the maximum amount a plan can have on deposit in a single bank and remain fully insured, first determine which participant has the largest share of the plan assets, then divide $100,000 by that percentage. For example, if a plan has 20 participants, but one participant has an 80% share of the plan assets, the most that can be on deposit and remain fully insured is $125,000. ($100,000/.80 = $125,000)

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Corporation/Partnership/Unincorporated Association Accounts

Corporations, partnerships, and unincorporated associations, including for-profit and not-for-profit organizations, are insured under the same ownership category.

To qualify for coverage under this category, a corporation, partnership, or unincorporated association must be engaged in an “independent activity,” meaning that the entity is operated primarily for some purpose other than to increase insurance coverage.

Deposits owned by a corporation, partnership, or unincorporated association are insured up to $100,000 at a single bank, but are insured separately from the personal accounts of the entity’s stockholders, partners, or members.

Accounts owned by the same corporation, partnership, or unincorporated association but designated for different purposes are not separately insured. Instead, such accounts are added together and insured up to $100,000. For example, if a corporation has divisions or units that are not separately incorporated, the deposit accounts of those divisions or units would be added to any other deposit accounts of the corporation and the total insured up to $100,000.

The number of partners, members, or account signatories that a corporation, partnership, or unincorporated association has does not affect coverage. For example, deposits owned by a homeowners association are insured up to $100,000 in total, not $100,000 for each member of the association.

Unincorporated associations typically insured under this category include churches and other religious organizations, community and civic organizations, and social clubs.

Accounts in the names of sole proprietorships (for example, “DBA accounts”) are not insured in this category. Rather, they are added to the owner’s other single accounts, if any, at the same insured bank and the total is insured up to $100,000. (See Single Accounts section.)
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Government Accounts

Government accounts are also known as public unit accounts. This category includes deposit accounts of:

The United States

Any state, county, municipality (or a political subdivision of any state, county, or municipality), the District of Columbia, Puerto Rico and other government possessions and territories
An Indian tribe
Insurance coverage of a public unit account differs from a corporation, partnership and unincorporated association account in that the coverage extends to the official custodian of the deposits belonging to the public unit rather than the public unit itself.

Each official custodian of time and savings deposits (including interest-bearing NOW accounts) of a public unit is insured up to $100,000.

Additionally, demand deposits in an insured bank located in the same state as the public unit are separately insured up to $100,000. Thus the same official custodian may receive up to $200,000 in insurance coverage – $100,000 in time and savings deposits and $100,000 in demand deposits – provided the deposits are held in an insured bank located in the same state as the public unit.

Demand deposits maintained by an official custodian of the United States will be insured separately from any time deposits maintained by the same custodian at the same insured bank, regardless of the state in which the insured bank is located.

Public unit deposits maintained in any out-of-state bank – whether time, savings or demand deposits – are limited to a maximum of $100,000 in coverage per official custodian.
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A single account is a deposit owned by one person. The following deposit account types are included in this ownership category: Accounts held in one person’s name alone

Accounts established for one person by an agent, nominee, guardian, custodian, or conservator, including Uniform Transfers to Minors Act accounts, escrow accounts, and brokered deposit accounts

Accounts held in the name of a business that is a sole proprietorship (for example, a “DBA account”)

Accounts established for a decedent’s estate, and

Any account that fails to qualify for coverage under another ownership category.

All single accounts owned by the same person at the same insured bank are added together and the total is insured up to $100,000.

Certain Retirement Accounts

These are deposits owned by one person and titled in the name of that person’s retirement account.

The following types of retirement plan deposits qualify for coverage as “certain retirement accounts”:

All types of IRAs, including:
Traditional IRAs
Roth IRAs
Simplified Employee Pension (SEP) IRAs
Savings Incentive Match Plans for Employees (SIMPLE) IRAs

All Section 457 deferred compensation plan accounts, such as eligible deferred compensation plans provided by state and local governments regardless of whether they are self-directed

Self-directed defined contribution plan accounts, such as self-directed 401(k) plans, self-directed SIMPLE held in the form of 401(k) plans, self-directed defined contribution money purchase plans, and self-directed defined contribution profit-sharing plans

Self-directed Keogh plan accounts (or H.R. 10 plan accounts) designed for self-employed individuals
All retirement accounts listed above owned by the same person in the same FDIC-insured bank are added together and the total is insured up to $250,000.

Joint Accounts

A joint account is a deposit owned by two or more people. To qualify for insurance under this ownership category, all of the following requirements must be met:

All co-owners must be people. Legal entities such as corporations, trusts, estates, or partnerships are not eligible for joint account coverage.

All co-owners must have equal rights to withdraw deposits from the account. For example, if one co-owner can withdraw deposits on his or her signature alone but the other co-owner can withdraw deposits only with the signature of both co-owners, the co-owners do not have equal withdrawal rights.

All co-owners must sign the deposit account signature card unless the account is a CD or is established by an agent, nominee, guardian, custodian, executor or conservator.

If all of these requirements are met, each co-owner’s share of every account that is jointly held at the same insured bank is added together with the co-owner’s other shares, and the total is insured up to $100,000.

The FDIC assumes that all co-owners’ shares are equal unless the deposit account records state otherwise.

For example, a husband and wife could have up to $200,000 in one or more joint accounts at the same insured bank and the deposits would be fully insured. The husband’s ownership share is insured up to $100,000 and the wife’s ownership share is insured up to $100,000.

To be continued…

http://www.fdic.gov/index.html