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Home >> Accounts >> Certificates of Deposit
FDIC Limit for Custodial Accounts
A mine operator wishes to set-up a custodial account of four CDs that are payable to the county. Each CD is from a different bank, and each is $250,000 or less in order to meet FDIC limits. Would the county withdraw funds from the custodial bank, or from the individual banks posting the CDs? Is the FDIC limit applicable to a custodial account?
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 The FDIC's coverage of deposit accounts is per depositor per capacity at each bank. As long as the deposits you have described remain in discrete accounts at separate banks, the coverage would be capped at $250,000 per account, or $1 million in the aggregate. If the funds were removed from the four individual banks and consolidated into a single deposit account at the custodial bank, their combined insurance coverage would be reduced to $250,000 overall. It should be OK to have a single custodial bank hold all of the CD documents, as long as the actual deposits reside at the four separate banks.
Under current law, the FDIC's deposit limits will return to $100,000 per depositor per capacity at each financial institution after December 31, 2013. If the CDs during their current term or any renewal term will mature after December 31, 2013, the insured amount will drop immediately on January 1, 2014.
Published on BankingQuestions.com 9/04/09
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