Director of New Media and Promotion
Important Information Concerning Attorney Trust Accounts and FDIC Insurance
Recent bank failures have led many of us to give greater consideration to the safety of client trust funds and to question whether any steps need to be taken to avoid or diminish any threat to these funds.
FDIC coverage limits were raised in October 2008 to $250,000 per depositor. This new limit affects your business accounts, IOLTA trust account(s), retirement accounts and fiduciary trust accounts. FDIC coverage of $250,000 per depositor applies to each client’s funds in a pooled attorney trust account. Note that Court Rule1:28A governing IOLTA trust accounts and deposits requires that trust deposits be held at interest either to the client or to IOLTA, (www.ioltanj.org).
You may qualify for more than $250,000 in coverage at one insured bank or savings association if you own deposit accounts in different ownership categories. The most common account ownership categories for individual and family deposits are single accounts, joint accounts, revocable trust accounts and certain retirement accounts.
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
$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
$250,000 per official custodian
Non-interest Bearing Transaction Accounts
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 at institutions participating in FDIC’s Temporary Liquidity Guarantee Program (TLGP). NJSBA has joined bar associations across the United States to urge the FDIC to include the balances in IOLTA trust accounts, a form of non-interest bearing transaction account, in the TLGP.
If you have questions about FDIC coverage limits and requirements, visit http://www.fdic.gov/consumers/consumer/information/fdiciorn.html and contact the NJ Supreme Court, Office of Attorney Ethics at 609- 530-4010 with additional questions.