Understanding SIPC and FDIC coverage
Federal Deposit Insurance Corporation (FDIC) insurance and Securities Investor Protection Corporation (SIPC) coverage are 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 consumers 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 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.
Since the FDIC insures deposits based on account ownership category, it is possible to have more than $250,000 in deposits in multiple accounts at the same bank and still be fully insured. Your deposits may be insured above the $250,000 maximum if you own accounts in multiple ownership capacities (e.g. individual accounts, joint accounts).
- 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 $300,000 deposited in that bank, or if you have more than one account in your name at the same bank where all of your deposits add up to more than $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 insured 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 $500,000, one spouse has an individual account at the same bank with $250,000 and the other spouse also has a single account at that bank with $250,000, all of the deposits are covered. Each spouse is fully insured in their single accounts, and the joint account is separately covered up to $250,000 each.
- Retirement accounts: Sometimes called qualified 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.
- 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 depositors with additional FDIC coverage because assets are deposited in several different banks. Each AIMMA participant bank is insured by the FDIC, and each depositor’s account is insured up to the maximum of $250,000 at each bank.
Because there are a 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 provides protection to customers who hold cash and securities such as stocks, bonds or mutual funds in an account at eligible 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 firm fails and customer assets are lost or misappropriated by the firm (e.g., your assets can’t be transferred to another brokerage firm).
Generally, SIPC covers up to $500,000 per individual 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 of Ameriprise Financial that holds customer funds and securities, has obtained supplemental SIPC insurance to cover claims in excess of the base SIPC levels of coverage. The excess coverage 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 (not in a brokerage account)
- Other “direct” investments, such as REITs, Limited Partnerships, or other securities that are not held at AEIS
- Annuity and insurance contracts held with the insurer
- 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.