FDIC to Cover up to $250K in Retirement Accounts

March 14, 2006 (PLANSPONSOR.com) - A new law taking effect April 1 will raise the deposit insurance coverage on retirement accounts held at banks or savings institutions from the current $100,000 to $250,000.

An FDIC news release on the agency’s Web site said that under the new rules the agency will insure up to $250,000 for the money a consumer has in a variety of retirement accounts – primarily traditional and Roth IRAs – at one insured institution. Also included in the new insurance schedule are self-directed Keogh accounts, 457 Plans for state government employees, and defined contribution plans.

In addition, the IRAs and other retirement accounts that will be protected under the new $250,000 increase are insured separately from other accounts at the same institution that will continue to be insured up to at least $100,000.   The changes represent the first such insurance boost in more than 25 years, the agency said.

“The increase in deposit insurance coverage on certain retirement accounts is a significant change,” said Martin Gruenberg, acting chairman of the FDIC. “The FDIC is committed to helping depositors understand clearly the change that has been made and how it will affect the deposit insurance coverage for which they are eligible.”

The text of the rules is here .