IRAs, FDIC Coverage, and Qualifying Beneficiaries

by Mary Beth Guard, BOL Guru

Question: I know that IRAs are insured separately from the other accounts that a customer has, but if a customer has $200,000 in an IRA and has 2 qualifying beneficiaries on there with it to be distributed 50% to each at her death, is the whole thing insured? I said yes, but then I got to thinking----am I correct?

Answer: The IRA would be insured only for a total of $100,000. The concept of "qualifying beneficiaries" does not come into play. On IRA accounts (unlike POD accounts, Totten trusts and revocable trusts), you do NOT look at who the beneficiaries are. The funds are insured as funds of the IRA's owner -- not as funds of the beneficiaries. They are, however, insured separately from any other sole ownership funds the individual has on deposit at the same institution.

The original version appeared in the May 2002 edition of the Oklahoma Bankers Association Compliance Informer.

First published on BankersOnline.com 10/28/02