By Wesley Wellman

I believe it was Will Rogers who said, “I am more concerned with the return of my money than the return on my money.” Many today would agree. It might be helpful to review some of the safeguards for and risks of various investment accounts.

FDIC Insurance
Information on FDIC insurance can be obtained from the FDIC itself or on their website: www.fdic.gov.

FDIC insurance protects deposits in insured banks and or savings associations up to the insured limit. You can determine if a bank/savings association is insured by calling 1-877-265-3342 or by using “Bank Find” at www.fdic.gov/depositindex.html.

Deposits accounts owned by one person and titled in his/her name in an insured institution are insured up to $100,000. If one person has multiple accounts titled in their name at the same bank, all the accounts are totaled and no more than $100,000 of FDIC insurance is applicable to the aggregate balance.

For joint accounts, each co-owner’s share of all joint accounts in an insured institution are totaled and no more than $100,000 of FDIC insurance is applicable to the aggregate balance of each co-owner. This insurance is in addition to that available for the same individuals’ single account(s) in the same institution.

Each qualifying beneficiary of a payable-on-death (POD) account in an insured institution is insured up to $100,000 if certain requirements are met. POD accounts are informal, revocable trusts usually created by stating in the account signature card that the deposits will be payable to named beneficiaries upon the owner’s death. (The qualifying relationships and account requirements are not outlined here.) Coverage under a living trust may also be available but is beyond the scope of this article.

Some retirement accounts in an insured institution owned by one person and titled in the name of the person’s retirement plan are insured up to $250,000.

Only the following types of retirement plan accounts are insured in this category:
• IRAs, Roth IRAs. (SEP)IRAs, (SIMPLE)IRAs
• Section 457 deferred compensation plans
• Self-directed defined contribution plans
• Self-directed Keogh(or H.R. 10) plans

All deposits that a person has in the above type accounts in the same institution are aggregated and subject to the $250,000 limit. The coverage in not increased by naming the beneficiaries of these accounts.

For information about FDIC coverage for retirement accounts not covered above call the FDIC at 1-877-275-3342.

You can calculate your insurance coverage using the online Electronic Deposit Insurance Estimator at www.fdic.gov/edie.

FDIC insurance does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if purchased from an insured institution.

Individual banks and savings institutions in some cases have private insurance for certain accounts for some amounts not covered by FDIC insurance. Ask you institution whether any additional coverage is provided or available.

Credit Unions
Information regarding credit union accounts is available at www.ncua.gov. Here is a brief summary. Shares (deposits) in a credit union are insured by the National Credit Union Share Insurance Fund. This insurance is similar to that provided by the FDIC. No insured savings of a credit union member has ever been lost in a federally-insured credit union.

Broker Dealers
Information regarding securities accounts is available at www.finra.org. Here are some key points. Certain investments in securities accounts with broker-dealers may be covered within limits by the Securities Investor Protection Corporation (SIPC). Coverage is limited to $500,000, including up to $100,000 cash per customer for securities transactions. Cash deposited to earn interest, not in connection with securities transactions, is not covered. The insurance does not insure against fluctuation in the value of securities. It only applies when a member broker-dealer is insolvent or cannot return the customer’s cash or securities. Some types of investments are not covered.

Some broker-dealers may have private insurance for certain accounts, for some amounts not covered by SIPC. Ask your institution whether additional coverage is provided or available.

Hybrid Accounts
While money market accounts with securities firms are not FDIC insured, some broker-dealers offer a unique hybrid. This is a money market account, which each day sweeps any account balances into FDIC insured bank accounts with no more than $100,000 deposited into any single institution. Up to $1 million can be placed in to the money market account. These accounts contain all the favorite features of money market accounts-liquidity, favorable yield, check writing privileges, etc. while effectively providing up to $1 million of FDIC insurance. The depositor has the advantage of a single account without the necessity of dealing with multiple banks.

This information is for educational purposes only and has been obtained from sources believed to be reliable. Wellman Realty Co., AFA Financial Group, LLC, AFA Advisor Services and it’s affiliates and representatives neither guarantee the accuracy or validity of the information contained herein. Investors should perform their own investigations and consult with their own attorney, accountant or financial advisor.

Wesley Wellman is a Realtor with Wellman Realty Co. and a registered representative and investment advisor representative with AFA Financial Group, LLC, member FINRA/SIPC and AFA Advisor Services. Wellman Realty Co. is unaffiliated with AFA Financial Group, LLC and AFA Advisor Services which are affiliated.