Are Your Retirement Funds Protected with Insurance?

SDI Productions / iStock.com

SDI Productions / iStock.com

The recent failings of Silicon Valley Bank and Signature Bank have dominated the news over the past few days, leaving savers of all ages wondering what insurance measures their financial institutions have in place in the event of a bank failure, a bankruptcy or the mismanagement of accounts.

See: Will More Banks Fail Like Silicon Valley Bank and Signature Bank?
Explore: How Much of Your Money is FDIC Insured?

According to a joint statement issued by the U.S. Secretary of the Treasury Janet Yellen, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) on March 12, depositors of Signature Bank and Silicon Valley Bank will be made whole and no losses will be borne by the taxpayer.

That’s great news for those who had money stashed with these two failed institutions. However, the FDIC primarily insures deposits only. If you’re worrying about losing your retirement accounts and investments, there are other protection controls available to keep your assets safe.

What Losses Does the FDIC Cover?

In the event of an FDIC-insured bank failure — when a bank becomes insolvent or doesn’t have enough liquid and can’t cover its customers’ deposits and obligations to creditors — the FDIC protects and reimburses your deposits up to the legal limit of $250,000 per account holder.

Insurance covers different types of accounts, including single accounts, joint accounts and certificates of deposit. To hold in excess of $250,000, you can get the same FDIC protection, but you’ll have to set up additional accounts at different institutions. Opening a joint account with someone else will potentially bump up coverage to $500,000, per The New York Times.

In general, 401(k) retirement plans are not covered by the FDIC because they often include riskier investments like exchange-traded funds (EFTs)

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