Haris Ashley
The National Credit Union Administration (NCUA) insures deposits of up to $250,000 per person at each federally-chartered credit union and most state-chartered credit unions. The NCUA does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities. However, if you have a single and joint account at the same institution, both are insured up to the $250,000 limit. Additionally, certain retirement accounts, employee benefit plans, and trusts have separate $250,000 limits, and if a revocable trust has six or more beneficiaries, each member-owner's share is insured for the greater of either coverage based on each beneficiary's interest or $1,250,000.
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What You'll Learn
Joint accounts
The NCUA provides insurance for credit union members' deposits of up to $250,000 per depositor, per institution, per ownership category. "Ownership category" refers to the type of account, typically single or joint. If you have both a single and joint account at the same institution, each is insured up to the $250,000 limit.
For joint ownership accounts, each co-owner's share of the accounts is added together and insured up to $250,000 per owner, providing up to $500,000 in coverage for the couple's joint accounts. Each co-owner's interest (or share) in a joint account is deemed equal unless otherwise stated in the credit union's records. The balance of a joint account can exceed $250,000, as long as no owner's share of joint accounts at the same credit union exceeds $250,000.
For example, if a couple has a joint money market account, a joint savings account, and a joint share certificate at the same insured credit union, each co-owner's share of the three accounts is added together and insured up to $250,000 per owner. So, if John and Mary have three joint accounts totalling $600,000, each co-owner owns $300,000 in the joint account category, putting a total of $100,000 over the insurance limit. Mary's ownership share in all joint accounts equals $300,000, so $50,000 is uninsured.
It's important to note that the use of different Social Security numbers does not determine insurance coverage, nor does rearranging the owners' names, changing the name style, or using "or" instead of "and" to join the owners' names in a joint account title.
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Retirement accounts
The National Credit Union Administration (NCUA) provides insurance for credit union members' accounts at each federally insured credit union, including retirement accounts. This insurance is automatic and covers the member's principal and posted dividends up to the insurance limit.
The NCUA's insurance limit for single ownership accounts, joint ownership accounts, and certain retirement accounts, such as IRAs and KEOGH accounts, is $250,000 per member-owner. This means that each owner's interest in all qualifying joint accounts is added together and insured up to a maximum of $250,000. The balance of a joint account can exceed $250,000 as long as no owner's share exceeds the insured amount.
For revocable trust accounts, each member-owner is insured up to $250,000 per eligible beneficiary named in the trust. If there is more than one owner or beneficiary, the insured balance can exceed $250,000 and still be fully insured. For example, if a husband and wife have a living trust leaving assets to their three children, each member-owner is entitled to $250,000 insurance coverage, resulting in a total insured amount of $500,000 for the account.
In the case of irrevocable trust accounts, each owner or beneficiary who is a member of the credit union is insured up to $250,000 for each beneficiary named in the irrevocable trust, subject to specific limitations. Coverdell Education Savings Accounts, formerly known as education IRAs, are insured as irrevocable trust accounts.
It is important to note that the NCUA does not insure all types of investments or accounts. For example, money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities is not insured, even if these products are sold at a federally insured credit union. Additionally, safe deposit boxes, digital assets like cryptocurrencies, and certain retirement accounts are not insured by the NCUA.
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Trusts
Revocable Trusts
A revocable trust account is insured up to $250,000 if there is a single beneficiary who will receive the shares when the owner dies. If a revocable trust has more than one owner (e.g., a married couple) or is held for multiple beneficiaries, the insured balance can exceed $250,000 and still be fully insured. Each owner is insured up to $250,000 for each eligible beneficiary named or identified in the revocable trust. If there are six or more beneficiaries, each member-owner's share is insured for the greater of either the coverage based on each beneficiary's actual interest, with no beneficiary's interest exceeding $250,000, or $1,250,000.
Irrevocable Trusts
Irrevocable trust accounts are insured similarly to revocable trusts. Each owner is insured up to $250,000 for each beneficiary named or identified in the irrevocable trust, provided that all owners or beneficiaries are members of the credit union.
Examples
- Example 1: A revocable trust account with a balance of $1,400,000 has six beneficiaries: the owner's son, who will receive 50% of the funds, and five grandchildren, who will each receive 10%. The maximum coverage for this depositor's funds is $1,250,000, as it is greater than the total of each beneficiary's actual interest ($700,000 for the son and $140,000 for each grandchild).
- Example 2: Account Owner A has a living trust account with a balance of $1,500,000. Upon A's death, each of A's three children will receive $125,000, A's friend will receive $15,000, and a designated charity will receive $175,000. The maximum coverage for A is $1,250,000, as it is greater than the total of each beneficiary's interest ($375,000 for the children, $15,000 for the friend, and $175,000 for the charity).
- Example 3: Account Owner A establishes a living trust account with a balance of $300,000, naming A's two children as beneficiaries. A also sets up a payable-on-death account with the same balance and beneficiaries. The maximum coverage for A is $500,000, as there are two different beneficiaries, each entitled to $250,000.
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Investment and insurance products
The National Credit Union Administration (NCUA) provides insurance for credit union members' accounts at federally insured credit unions, up to a limit of $250,000 per member-owner. This includes single ownership accounts, joint ownership accounts, IRAs, and other specific retirement accounts.
The NCUA does not, however, insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if these investment or insurance products are sold at a federally insured credit union. Credit unions often provide these services through third parties, and it is important for members to understand that these products are not insured by the Share Insurance Fund.
The National Credit Union Share Insurance Fund (NCUSIF) is the body responsible for investing any surplus cash. By law, the NCUSIF can only invest in interest-bearing securities of the United States, or in any securities guaranteed by the United States, as well as bonds or other obligations that are lawful investments for fiduciary, trust, and public funds of the United States. These investments must be purchased through the Government Account Series (GAS) program, administered by the US Treasury Bureau of Public Debt.
The Investment Committee is responsible for developing the investment strategy and can seek advice from NCUA staff and/or outside experts. The Committee must also ensure that sufficient liquid funds are available to meet operating costs and any credit union failures.
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Safe deposit boxes
The National Credit Union Administration (NCUA) is an independent federal agency that insures deposit accounts opened at credit unions up to $250,000. This limit applies per account holder and institution. The NCUA does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities.
It is important to note that the NCUA does not insure safe deposit boxes or their contents. Therefore, while safe deposit boxes can be a secure way to store important items, the NCUA does not provide insurance coverage for any losses or damages that may occur.
To lease a safe deposit box, individuals should contact their local SECU branch. This service is not offered for free by federal credit unions, and members are typically charged an annual rental fee for using these boxes.
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Frequently asked questions
The NCUA guarantees that you will receive the money you are entitled to from your deposit account if your credit union goes under. The insurance covers up to $250,000 per person, per institution, per ownership category.
The NCUA covers deposit accounts including checking, savings, money market accounts, and certificates of deposit. The NCUA also covers retirement accounts and employee benefit plans, which count as separate ownership categories.
The NCUA does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if these are sold at a federally insured credit union. The NCUA also does not insure safe deposit boxes or their contents, nor does it insure digital assets such as cryptocurrencies.
For joint accounts, each co-owner's interest or share is deemed equal, and the total is insured up to the $250,000 maximum. The balance of a joint account can exceed $250,000 as long as no owner's share of joint accounts at the same credit union exceeds $250,000.
If your deposits exceed the federal limit, you can ask your bank or credit union if it offers private deposit insurance as supplemental coverage. Some institutions provide additional private insurance at no extra charge.
