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Are POD beneficiaries also covered by FDIC / NUCA insurance?
Posted by: steven ray, July 23, 2015 12:58PM
Iím confused about whether POD designees automatically receive account insurance, thereby increasing the coverage on a single bank or credit union account beyond $250K.

Put another way, do POD designations automatically make an account a Ďtrustí account, thereby increasing the insurance on the account to $250K per designee (up to a maximum of 4 total)?

EXAMPLE: If an unmarried individual has POD designations for 4 family members on a credit union money market account, do each of these potential inheritance beneficiaries also have, individually, $250K of account insurance?

In other words, would an account with $1 million be fully insured ($250K x 4) in the even of a bank/credit union failure?

And if so, given the maximum of 4 beneficiaries, would the account owner and only 3 of the 4 POD beneficiaries be covered?

Thanks.

Re: Are POD beneficiaries also covered by FDIC / NUCA insurance?
Posted by: jainen, July 23, 2015 02:07PM
steven ray Wrote:
>>coverage on a single bank or credit union account beyond $250K<<
The maximum is for a single account regardless of how it is titled. That also includes another account titled the same way.

For example two accounts held jointly by A and B would have a total insurance of 250. But a third account held jointly by A and C would give an additional 250 coverage for A.

I don't think POD or other forms of beneficiary get any individual FDIC coverage at all.

Re: Are POD beneficiaries also covered by FDIC / NUCA insurance?
Posted by: steven ray, July 23, 2015 06:37PM
jainen Wrote:
-------------------------------------------------------
> For example two accounts held jointly by A and B
> would have a total insurance of 250. But a third
> account held jointly by A and C would give an
> additional 250 coverage for A.
>
> I don't think POD or other forms of beneficiary
> get any individual FDIC coverage at all.

Thanks.

So to fully protect a $1 Million account, could 'A' just break the single account into 4 separate joint accounts ($250K each) with each of the same persons (i.e., the same persons who are the POD beneficiaries) as 'C', one per joint account?

And if so could this be done in a way to allow 'A' to retain sole control of the account funds (while still alive)?

Re: Are POD beneficiaries also covered by FDIC / NUCA insurance?
Posted by: jainen, July 23, 2015 07:45PM
steven ray Wrote:
>>could this be done in a way to allow 'A' to retain sole control of the account funds (while still alive)? <<

If this question is about an actual sum of a million dollars, it should be discussed with an investment counselor at the depository. In fact, since protection seems to be the concern, it might be best to use for different banks. Either way, one of the questions the counselor will ask is whether the asset needs to remain immediately available, because it could generate some income in a time deposit. (However, accounts offering higher yield may not be insured, even in a commercial bank.)

For the question, adding a joint tenant is a gift. Legally the other owner could immediately remove the entire amount for any private purpose. Also, gifts of a million dollars will probably have implications for gift and estate taxes. Rules vary by state, so these matters should be planned with a local attorney rather than an internet forum.

Re: Are POD beneficiaries also covered by FDIC / NUCA insurance?
Posted by: wpatch, July 24, 2015 01:14AM
As for the question of whether adding a joint tenant to a property creates a gift, the federal code appears to defer to state law(or its equivalent outside a US state). Every federal tax text I have consulted tends to follow the general rules below: 1. Adding a joint tenant to a bank account does not create an immediate gift. If an added j.t. withdraws assets from the account from the holdings of the account for his own purposes, then a taxable gift occurs for those assets transferred. 2. For most other types of property, the addition of a joint tenant creates a gift.

Re: Are POD beneficiaries also covered by FDIC / NUCA insurance?
Posted by: steven ray, July 24, 2015 03:16PM
Isn't there a way of dividing a single account into several (up to four) separate 'revocable trusts,' each of those trust accounts then getting their own $250K of protection?

Re: Are POD beneficiaries also covered by FDIC / NUCA insurance?
Posted by: steven ray, July 24, 2015 06:48PM
I phoned the FDIC and apparently the extended coverage does apply -- i.e., each POD beneficiary adds $250K of additional FDIC insurance to the base $250K the account title holder has. (The title holder is the sole beneficiary of any FDIC insurance payout.)

The relevant regulations can be found on pp. 10-12 of the PDF brochure document at:

[www.fdic.gov]

Re: Are POD beneficiaries also covered by FDIC / NUCA insurance?
Posted by: Drewremedy, July 24, 2015 09:28PM
To have that much money in a bank,account is a sure super low rate of return and would,flunk most views of a prudent investor ..all this for an elusive safety net?

Re: Are POD beneficiaries also covered by FDIC / NUCA insurance?
Posted by: Alan S., July 24, 2015 10:25PM
An example of the revocable trust rules:

If A has an account with no POD (not a trust), the coverage is 250k.

If A adds B as POD, the POD drives the coverage and the limit is still 250k. A is no longer counted.

If A adds C along with B as PODs, the limit is 500k.

Added D and E PODS to A and B brings the limit to 1mm.

This can be done on a single CD, it does not require 4 separate CDs, one for each POD.

Re: Are POD beneficiaries also covered by FDIC / NUCA insurance?
Posted by: steven ray, July 27, 2015 01:32PM
Drewremedy Wrote:
-------------------------------------------------------
> To have that much money in a bank,account is a
> sure super low rate of return and would,flunk most
> views of a prudent investor ..all this for an
> elusive safety net?

Don't see why it would flunk "prudent" though some might consider it to be overly-prudent.

What's "elusive" about the safety net?

The example given was just an example. It would apply to other account types as well, if maintained through FDIC-insured banks or NCUA-insured credit unions.


Re: Are POD beneficiaries also covered by FDIC / NUCA insurance?
Posted by: steven ray, July 27, 2015 01:41PM
Alan S. Wrote:
------------------------------------------------------
> This can be done on a single CD, it does not
> require 4 separate CDs, one for each POD.

Thanks, my inquiry was really just to clarify that the extended coverage in fact exists.

By referring to creating multiple 'revocable trusts' to achieve that I didn't meant to imply that I thought the base account itself had to be broken up into separate accounts. The 'division' I referred to was just intended to refer to the trust agreements themselves, though perhaps I didn't word it in the best way.





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