MULTIPLE ACCOUNT OWNERSHIPS CAN DRAMATICALLY INCREASE YOUR INSURANCE COVERAGE
We all want the security of knowing our accounts are fully insured. Supplying that security is vitally important to our board of directors. Your accounts with us are federally insured by the National Credit Union Administration (NCUA). For most account owners, the NCUA limit of $100,000 is enough. For those needing more coverage, separate ownership of accounts provides a convenient answer.
Ownership simply refers to how funds are held and how the account is titled. For example, an individual account is one form of ownership and a joint account is another. Many people already have several different account ownerships with us – enjoying the benefits of convenience and security. When accounts are held in separate ownerships, each can be insured separately.
This means you can multiply the basic $100,000 amount you have in accounts with us and still be fully insured!
To help you understand how it works, here are some of the types of account ownerships:
Individual Account: In this type of account, funds are owned by one individual and
the account is in that person’s name only. A person can have a combined total of
$100,000 in one or more individual accounts with us and be fully insured.
Joint Account: This type of account is in the names of two or more persons and all
owners have equal rights of withdrawal. These accounts usually, but not necessarily,
have survivorship rights. Generally, each joint tenant is attributed an equal share in
each joint account to which that person participates and each joint tenant is insured to
$100,000.
Revocable Trust Accounts: In this type of account, the owner of the funds designates
a person (beneficiary) to receive the funds in the event the owner dies. The owner
retains complete control of the account and funds while alive and is insured for up to
$100,000 for each qualifying beneficiary (a spouse, child, grandchild, parent, or
sibling of the owner, including “step” variations of the latter four).
Individual Retirement Account: This type of retirement account is a custodial or trust
account established exclusively for the individual and his/her beneficiaries. To be
separately insured, the account must qualify as an IRA under the Internal Revenue
Code. A person’s funds in IRAs at this credit union are added together and insured
up to a maximum of $100,000.
MORE ABOUT INSURED ACCOUNTS
- All accounts with us owned by the same person(s) in the same ownership category are treated as one account for insurance purposes. Thus merely opening a number of accounts does not by itself increase account insurance. The ownerships must be different as well. For example, if the same person opens an individual share draft/checking account with $100,000 and an individual term share account/Certificate of Deposit account worth $100,000, the balances are combined and insured only up to $100,000.
- A few simple technical rules exist for each separately insured ownership. Each ownership also has a number of other possible account structures and titles that are not included in our profiles.
- The profiles we used are simple examples of what you can do, not necessarily what you should do. There are many possibilities and your situation may well require a different approach.
- In addition to the four mentioned here, other ownerships also qualify for separate deposit insurance coverage, including:
- Partnerships
- Corporations
- Irrevocable Trusts
- Deferred Compensations Plans
- Decedents’ Estates
- Keogh Plans
IF YOU HAVE QUESTIONS ABOUT HOW SEPARATE OWNERSHIPS WORK, FEEL FREE TO ASK US.
