New Jersey State Bar Association - The voluntary Bar Association of New Jersey, serving members since 1899.

CONTACT:Barbara S. Straczynski
Director of New Media and Promotion

Unlimited FDIC Deposit Insurance on IOLTA Accounts Effective November 21, 2008

NEW BRUNSWICK, NJ-The FDIC announced on November 21, 2008 that IOLTA accounts will be eligible for an unlimited guarantee until December 31, 2009 when the Temporary Liquidity Guarantee Program (TLGP) expires. This unlimited coverage, called the Transaction Account Guarantee Program, is available only at banks which participate in the TLGP. A list of banks which have decided not to participate in this program will be available online at after the December 5, 2008 deadline to opt out. Banks must also post a disclosure notice to their customers in the bank lobby and online.

The unlimited insurance cap of Temporary Liquidity Guarantee Program is intended to keep non-interest bearing transaction accounts in place at banks of every size and geographic location, contributing to the stability of the banking system. IOLTA accounts were included because they are functionally identical to non-interest bearing transaction accounts.

Cashier's checks and money orders issued by an insured depository institution are "deposits" as defined in the Federal Deposit Insurance Act. In addition, these instruments are "demand deposits" and therefore "transaction accounts" as defined in Regulation D. These funds will be protected in full, too.

Note that the Court Rule governing IOLTA trust accounts and deposits has not changed ( and it requires that trust deposits be held at interest either to the client or to IOLTA.

FDIC coverage limits were raised in October 2008 to $250,000 per depositor. Client sub-accounts that are part of a Master Escrow trust account are also subject to the $250,000 limit.

Basic FDIC Deposit Insurance Coverage Limits*

Single Accounts (owned by one person) $250,000 per owner

Joint Accounts (two or more persons) $250,000 per co-owner

IRAs and certain other retirement accounts

$250,000 per owner

Trust Accounts

$250,000 per owner per beneficiary subject to specific limitations and requirements

Corporation, Partnership and Unincorporated Association Accounts $250,000 per corporation, partnership or unincorporated association

Employee Benefit Plan Accounts

$250,000 for the non-contingent, ascertainable interest of each participant

Government Accounts

$250,000 per official custodian

Non-interest Bearing Transaction Accounts Including Accounts commonly known as Interest on Lawyers Trust Accounts (IOLTAs) and functionally equivalent accounts

Unlimited coverage – only at participating FDIC-insured banks and savings associations **

Negotiable order of withdrawal accounts (NOW accounts) with interest rates no higher than 0.50 percent for which the insured depository institution at which the account is held has committed to maintain the interest rate at or below 0.50 percent.

Unlimited coverage – only at participating FDIC-insured banks and savings associations **

* On January 1, 2010, the standard coverage limit will return to $100,000 for all deposit categories except IRAs and Certain Retirement Accounts, which will continue to be insured up to $250,000 per owner.

** Unlimited deposit insurance coverage is available through December 31, 2009, for non-interest bearing transaction accounts only at institutions participating in FDIC’s Temporary Liquidity Guarantee Program.

If you have questions about FDIC coverage limits and requirements, visit