Business Glossary

depositor who has checking or savings account deposits in a federally insured bank or savings institution exceeding the $100,000 deposit insurance limit per depositor ($250,000 in coverage for IRA, Roth IRA, and other self-directed retirement accounts). Depositors holding accounts with principal amounts exceeding the $100,000 limit, for example, a jumbo certificate of deposit , risk losing part of their principal and interest earned if the institution holding their account becomes insolvent and its assets are liquidated. The Federal Deposit Insurance Corporation is required by law-the Federal Deposit Insurance Corporation Improvement Act of 1991-to follow the least costly method of handling bank failures, which means that depositors with accounts above the insurance ceiling may suffer a loss.

Despite the limitation, it is still possible for an individual to have more than $100,000 in fully insured deposits-by owning a joint account with someone else, or by holding an account in trust for another and naming that person as beneficiary. Coverage for an Individual Retirement Account , roth ira , or keogh account is treated separately from ordinary savings or deposit account. Individuals with self-directed IRA, Roth IRA, and employer-sponsored 401(k) accounts can have federal insurance coverage up to $250,000 per account.