FDIC Insurance Coverage for IRAs
Published in Rules
With all the chaos in the financial markets, you’re probably a little concerned as to what will happen to your Roth IRA or Traditional IRA in the event your bank goes under. Fortunately, you don’t have to be as long as you have less than $250,000 in your account at a particular bank. Effective April 1st, 2006, the coverage limits for retirement accounts, which include traditional and Roth IRAs, was increased from $100,000 (the same as deposit accounts) to the current level of $250,000.
The other retirement accounts included are self-directed Keogh accounts, 457 Plans for state governemnt employees, and employer-sponsored “defined contribution plans” like 401(k)s.
Remember, this is protection again bank failure and does not cover the value of your assets. For example, if you bought a particular stock and it loses value, FDIC does not protect you against that (that would be completely unreasonable). However, if your bank does go under and it was the administrator of a 401(k) plan, you’d be protected up to $250,000.
