Does FDIC Insure Retirement & Certificates of Deposit Separately If in the Same Bank?

The FDIC provides up to $250,000 of insurance to each depositor at each FDIC-insured bank in each "account category." Say you have $300,000 in an individual savings account and $200,000 in a covered retirement account at the same bank. (Just play along. The numbers have to be big to make the point.) Now say the bank goes belly up because it left the vault open all night or something. You have $250,000 worth of insurance for each of the accounts, so all but $50,000 of your savings is protected. You also have $250,000 worth of insurance for retirement accounts, so your entire retirement nest egg is covered.

Deposit insurance covers eight different account categories. The ones that concern CDs and retirement are "individual accounts," "joint accounts" and "certain retirement accounts." Your certificate of deposit will be considered either an individual or joint account depending on whether name alone is on it. If it's in your name only, it's individual. If your spouse's name or someone else's name is on it, it's joint. "Certain retirement accounts" include traditional and Roth IRAs and self-directed 401(k) plans, among others.

For deposit-insurance purposes, CDs are lumped in with all your other accounts at the bank that are in the same category. If it's an individual CD -- meaning, in your name only -- it will be insured along with any other individual accounts you may have: individual CDs, checking accounts, savings accounts, NOW accounts or money market deposit accounts. The combined value of those individual accounts is insured up to $250,000. If the CD is jointly owned, it will be insured along with all your other joint accounts: checking, savings and so on.

Each depositor also gets $250,000 worth of coverage for joint accounts -- separate from coverage for individual accounts. So if your joint accounts belong to you and your spouse, you as a couple have $500,000 worth of coverage for those accounts. In fact, if you divide your accounts wisely, you and your spouse could actually insure $1 million in such accounts at the same bank: $250,000 for each of you in individual accounts, and $250,000 for each of you in joint accounts. (This is assuming that -- you know -- you have a million dollars.)

Similarly, all of your retirement accounts held at the same bank get lumped together, and you get $250,000 worth of deposit insurance for the whole ball of wax. Things get a little tricky here, though. FDIC insures only deposits, not investments. So money in a designated retirement account will be insured if it's kept in CDs, interest-bearing savings or some other deposit. But money invested in stocks, bonds, mutual funds and annuities is not FDIC-insured. When in doubt, ask at the bank whether the assets in your retirement plans are insured.

Remember that the $250,000 limits also apply to accounts at each bank. If you divide your assets between two or more different banks, you get a separate set of $250,000 limits at each one of them. "Different banks," by the way, means just that: different banks, owned by different companies, with different names on the door. All branches of a bank count as one bank under FDIC rules.