Adding it up
So how much can one individual have in a single bank and be fully insured? That depends on the individual, but let's review Jane's situation to help illustrate.
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Knowing the limits of FDIC coverage
The rules are tricky, and grasping how they work is crucial if you want to put more than $100,000 in one bank.
PERSONAL FINANCE
For The Record
Los Angeles Times Tuesday, July 22, 2008 Home Edition Main News Part A Page 2 National Desk 2 inches; 77 words Type of Material: Correction
FDIC coverage: The Personal Finance column in Business on Sunday erred in how it described insurance of individual and joint accounts. It said that each person's interest in individual and joint accounts is added together to determine that individual's insurance coverage. In fact, individual and joint accounts are insured separately. Therefore, you could have an individual account worth $100,000 and a joint interest in a $100,000 joint account and all of your deposits would be fully insured.
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She can have $100,000 in her own account; another $100,000 in an account owned by her incorporated business; $1 million in "payable-on-death" accounts, payable to her bevy of close relatives. In addition, she can have $250,000 in her IRA. The entire $1.45 million is fully insured by the federal government.
More information
Want to estimate how much you can deposit with full coverage? Use the FDIC's electronic deposit insurance calculator at http://www.fdic.gov/edie.
The FDIC also has a 33-page booklet called "Your Insured Deposit" on its website, which explains the rules in detail. If you're going to keep more than $100,000 in any one institution, make sure to read it and follow the instructions to the letter.
One caveat: In a bank failure, it can take the FDIC several days to several weeks to sort through the paperwork that documents your expanded coverage. In the meantime, it may give you access to only a portion of your account -- usually just the standard $100,000.
Make sure you keep records of each account. If your bank fails, you'll worry less and have an easier time proving your insurance coverage if you have those documents handy.
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Kathy M. Kristof welcomes your comments but regrets that she cannot respond to every question. Write to Personal Finance, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012, or e-mail kathy.kristof@latimes.com. For past Personal Finance columns, visit latimes.com/kristof.
