Deposit Insurance Is $250,000 Per Depositor, Per Bank, Per Ownership Category. The Last Phrase Is the One That Matters.

Deposit insurance is usually described as a $250,000 limit. The full phrase in the FDIC's own brochure is longer and changes the meaning: $250,000 per depositor, per insured bank, for each account ownership category. The categories are defined in federal regulation, and a depositor with accounts in more than one of them at the same bank is insured separately in each.

What the regulation says

The rules sit in Title 12, Part 330 of the Code of Federal Regulations. Section 330.1(o) defines the standard maximum deposit insurance amount, or SMDIA, as $250,000, adjusted under the inflation provision of the Federal Deposit Insurance Act. The sections that follow set out how the amount applies to each kind of account.

• Single accounts (§ 330.6): insured up to the SMDIA in the aggregate. Sole proprietorship and decedent accounts are treated the same way.
• Joint accounts (§ 330.9): each co-owner's interest across all qualifying joint accounts at the bank is added together and insured up to the SMDIA.
• Trust accounts (§ 330.10 for revocable trusts): coverage is the SMDIA multiplied by the number of beneficiaries named by each grantor, up to a maximum of five beneficiaries.
• Irrevocable trusts (§ 330.12): insured up to the SMDIA for each owner or beneficiary represented, separately from other deposits.
• Certain retirement accounts (§ 330.14): $250,000 per participant, with qualifying accounts such as IRAs aggregated together.
• Employee benefit plans (§ 330.14): coverage passes through to each participant's non-contingent interest, up to the SMDIA.
• Business entities (§ 330.11): corporations, partnerships and unincorporated associations engaged in an independent activity are insured up to the SMDIA in the aggregate.
• Government accounts (§ 330.15): official custodians receive separate coverage for time and savings deposits and for demand deposits.

The five-beneficiary cap on trusts

Trust coverage used to scale with the number of beneficiaries. Since April 1, 2024, the FDIC's brochure states, a trust owner naming five or more beneficiaries is covered to a maximum of $1,250,000 per owner at a bank, rather than an additional $250,000 for every beneficiary beyond the fifth. Naming more beneficiaries past that point does not add coverage.

Per bank, not per branch

The FDIC is explicit that funds deposited in separate branches of the same insured bank are not separately insured. Two accounts at two branches of one bank, in the same ownership category, share one $250,000 limit. Two accounts at two separately chartered banks do not, even where the banks share a brand.

What is covered, and what is not

• Covered: checking accounts, NOW accounts, savings accounts, money market deposit accounts, time deposits such as certificates of deposit, and official items issued by the bank such as cashier's cheques and money orders.
• Not covered: stocks, bonds, mutual funds, crypto assets, life insurance policies, annuities, municipal securities, the contents of a safe deposit box, and US Treasury bills, bonds and notes.

The presence of Treasury securities on the uninsured list surprises people. The reason is categorical rather than a judgement about risk: a Treasury security is a direct obligation of the United States government and is not a bank deposit, so it is outside the deposit insurance system entirely. Products a bank sells but does not hold as a deposit, including mutual funds and annuities sold on bank premises, sit outside it for the same structural reason.

This article explains published federal regulation and FDIC guidance and is for informational purposes only. It is not legal, tax or financial advice and not a recommendation about any bank or deposit product. Confirm coverage for your own accounts with the FDIC or a qualified professional.