Understanding SIPC and FDIC coverage

Federal Deposit Insurance Corporation (FDIC) insurance and Securities Investor Protection Corporation (SIPC) offer two different types of coverage that help protect your assets.

FDIC insurance and SIPC coverage protect bank and brokerage firm customers, respectively, against the risk of failing financial institutions. They do not protect customers against market losses. Individual assets may be covered under either SIPC or FDIC, but not both.

In addition to FDIC and SIPC coverage, other safeguards are in place to help protect your assets through regulatory and Ameriprise Financial oversight. View Protection and oversight for your accounts to learn more.

FDIC insurance

FDIC insurance covers deposits in FDIC-insured federal banking institutions, generally banks and savings associations. FDIC insurance was permanently increased by the Financial Services Reform Law of 2010 to $250,000 per depositor per each insured bank, for each account ownership category.

The FDIC insures deposits based on account ownership. It is possible to have more than $250,000 in deposits at the same bank and still be fully insured. Your deposits may be insured above the $250,000 maximum at a single bank if the accounts are in multiple ownership capacities (e.g. individual accounts, joint accounts) and no account exceeds $250,000.

Account ownership examples include:
  • Single account holder: If you have $250,000 deposited in your name in an FDIC-insured bank, you are fully insured if the institution fails. If you have more than $250,000 deposited in that bank, or if you have more than one account in your name at the same bank and the sum of your deposits exceeds $250,000, you are insured only up to $250,000. In other words, all accounts in the name of the same person held at one bank are added together, and the total amount of FDIC insurance is $250,000.
  • Joint accounts: A married couple can have up to $500,000 on deposit in one or more joint account(s) at the same insured bank and the deposits would be fully insured. Each spouse’s share of the joint account is insured up to $250,000. If the couple has more than $500,000 deposited in one or more joint accounts, they are covered only up to $250,000 per owner for these joint accounts.
  • Multiple ownership type accounts: If a married couple has a joint account at an FDIC-insured bank with a balance of $500,000, one spouse has an individual account at the same bank with a balance of $250,000 and the other spouse also has an individual account at that bank with a $250,000 balance, all of the deposits are covered. Each spouse is fully insured in their individual accounts, and the balance in the joint account is separately covered up to $250,000 each.
  • Retirement accounts: Sometimes called qualified accounts, these accounts are also covered by FDIC insurance when the assets are deposited at an FDIC-insured bank. All retirement accounts, such as IRAs, SIMPLEs, SEPs and Keogh accounts, owned by the same person in the same FDIC-insured institution, are added together, and the total is insured up to $250,000.  Note that this coverage is in addition to any other non-retirement accounts that person may own.
  • Multi-bank Deposit Programs: Certain types of accounts, such as the Ameriprise® Insured Money Market Account (AIMMA) multi-bank sweep program available to clients of Ameriprise Financial Services, Inc., provide clients with additional FDIC coverage because cash from their brokerage accounts is deposited in several different banks. Each AIMMA participant bank is insured by the FDIC, and each depositor’s cash account is insured up to the maximum of $250,000 at each bank. Once a client has $250,000 swept to a participant bank, additional cash in their brokerage account is deposited through AIMMA at another participant bank. Clients are responsible for monitoring the participant banks in which their cash is deposited through AIMMA to avoid exceeding FDIC coverage limits due to other deposit relationships they may have with those banks.

Because there are currently ten participant banks in the AIMMA program, we are able to provide clients with up to $2.5 million in FDIC coverage in single-owner accounts. Joint accounts have up to $5 million in FDIC-insured cash, and retirement account holders can have up to $2.5 million in FDIC-insured cash.1

SIPC coverage

SIPC coverage provides protection to customers who hold cash and securities such as stocks, bonds or mutual funds in an account at SIPC-member brokerage firms in the event the brokerage firm fails. SIPC does not cover losses due to a decline in value of securities or cash. SIPC coverage applies if the brokerage firm fails and customer assets are lost or misappropriated by the firm (e.g., if your assets can’t be transferred to another brokerage firm because they were used in the operation of the failed firm).

Generally, SIPC covers up to $500,000 per account per brokerage firm, up to $250,000 of which can be in cash.

SIPC coverage is extended to each 'legal customer.' For instance, if you have three accounts at a firm—an individual account in your name only, a joint account with your spouse, and an IRA in your name—each account is considered a separate 'legal customer,' and each account will be eligible for $500,000 in SIPC coverage.

American Enterprise Investment Services, Inc. (AEIS), an affiliated broker-dealer of Ameriprise Financial that holds customer funds and securities, has obtained supplemental SIPC insurance to cover claims in excess of the base SIPC coverage. The supplemental insurance provides additional $24.5 million in securities coverage per client, with a policy maximum of $100 million for the firm.

Neither FDIC nor SIPC coverage is provided for customers who have:

  • Mutual funds held directly with the mutual fund company (i.e., not in a brokerage account at Ameriprise Financial)
  • Other “direct” investments, such as REITs, Limited Partnerships, or other securities for which AEIS does not provide custody services
  • Any assets held with non-FDIC or non-SIPC member institutions

Please refer to the SIPC and FDIC websites for more detailed information on their coverage.