Americans have many choices for their Individual Retirement Accounts, including stocks, bonds, mutual funds, mortgages or even real estate. IRAs in banks belonging to the Federal Deposit Insurance Corporation are a conservative option for investors concerned about safety. IRA accounts in an FDIC-insured institution have the same protection against bank failure as ordinary bank accounts. However, you must follow FDIC regulations carefully to keep your money safe.
Purchase your IRA in a bank with FDIC membership to receive the full backing of the U.S. government for your investment. Look for the FDIC logo at bank branches or websites, or use the FDIC online search tool to confirm coverage. Although the FDIC does not insure credit union accounts, the National Credit Union Administration offers comparable insurance for member credit unions. Government insurance covers IRAs invested in all types of bank deposit accounts, such as certificates of deposit, savings accounts and money market accounts. IRA investments in mutual funds, annuities, stocks or bonds do not carry federal insurance, whether invested through a bank, credit union or brokerage.
The limit of FDIC insurance is up to $250,000 for each depositor in each insured institution for accounts in the same category, such as retirement accounts. Accounts in different branches of the same bank count as the same institution for insurance purposes. You can open accounts in as many different insured institutions you like. The FDIC doesn't combine accounts in differently named banks to compute your limit.
The category of retirement accounts includes both traditional IRAs and Roth IRAs and other common retirement plans. Some of these are Simplified Employee Pension IRAs, self-directed Keogh plans and Savings Incentive Match Plans for Employees, or SIMPLE IRAs. Although the FDIC computes your insurance limit for retirement accounts separately from non-retirement accounts, it combines all your IRA and other retirement plans at the same bank for insurance purposes.
Keeping Full Coverage
FDIC insurance covers both the principal and interest in your bank IRA deposit accounts. Keep track of your total balances in any one institution to make sure your accounts stay fully insured as interest accumulates. Use the FDIC online estimator tool to calculate your insurance limit for multiple types of accounts.