Depositor who has checking or savings account deposits in a federally insured bank or savings institution exceeding the $100,000 deposit insurance ceiling per depositor. Depositors holding accounts with principal amounts exceeding the $100,000 limit, for example, a Jumbo Certificate of Deposit , risk losing part of their principal and interest earned if the institution holding their account becomes insolvent and its assets are liquidated. Recapitalization of the Bank Insurance Fund in l99l has caused cutbacks in insurance coverage for uninsured depositors. The Federal Deposit Insurance Corporation is required by law to follow the least costly method of handling bank failures, which means that depositors of accounts above $100,000 may suffer a loss.
Despite the limitation of $100,000 in deposit protection, it is still possible for an individual to have more than $100,000 in fully insured deposits-by owning a joint account with someone else, or by holding an account in trust for another and naming that person as beneficiary. Coverage for an Individual Retirement Account or Keogh account is treated separately from ordinary deposits, and retirement accounts can be insured up to $100,000 in combined tax-deferred accounts such as IRA and Keogh plans. A married couple can each have a $100,000 account, plus a joint account and an IRA account, and have $300,000 in fully insured deposits.
