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FDIC: Interim Rule Increasing Deposit Insurance for Certain Retirement Accounts

ABA Contact: Cris Naser
Published: 70 Federal Register 14629
Comments Due: May 22, 2006
Disposition: Filed

On March 23, 2006, FDIC published an interim rule implementing certain provisions of the Federal Deposit Insurance Reform Act of 2005. In accordance with FDIRA, the deposit insurance coverage for certain retirement accounts was raised from $100,000 to $250,000 effective upon publication. In addition, FDIRA de-linked deposit insurance coverage of employee benefit plan deposits and bank capital requirements, eliminating the capital disclosure when such funds are deposited. ABA strongly supported the proposal but asked that the statutory references to the types of retirement accounts eligible for the increased coverage be matched to the names typically used for those accounts by the retirement services industry.

ABA suggested the following examples:

  • Any individual retirement account under IRC section 408(a) is eligible for up to deposit insurance coverage of $250,000. Accounts covered under this provision include traditional IRAs, Roth IRAs, SIMPLE IRAs and SEP IRAs. SIMPLE and SEP IRAs are similar to traditional IRAs except that the employer makes contributions into its employees' accounts.
  • Deferred compensation plans under IRC section 457 are also eligible for up to $250,000 in coverage. These plans generally include state and local government retirement plans.
  • All individual account/defined contribution plans under ERISA section 3(34) are eligible for up to $250,000 in coverage so long as the individual plan participant may choose the vehicle in which his/her funds are invested. These ERISA plans include 401(k) and SIMPLE 401(k) plans, money purchase plans and profit sharing plans. SIMPLE 401(k) plans are 401(k) plans with fewer employer qualification requirements.
  • Keogh or H.R. 10 plans described in IRC section 401(d) are eligible for up to $250,000 in coverage so long as the individual plan participant may choose the vehicle in which his/her funds are invested. Keogh or H.R 10 plans are designed for self-employed persons.

ABA also sought clarification of the term "self-directed" as used in the deposit insurance rules.

2006 Regulatory Chart
Comment Letter
Final Rule (Federal Register)