FDIC and SIPC Protection for: Self-Directed 401k | Solo 401k | Self-Directed Solo 401k

Retirement accounts including Solo 401k are federally insured up to $250,000 per bank. This limit was increased from $100,000 to $250,000 by Congress in 2006.

Key Points of FDIC Coverage for Solo 401k | Self-Directed 401k

The $250,000 limit for federal deposit protection applies to Solo 401ks at banks and savings associations insured by the FDIC, and credit unions insured by the NCUA.

Pursuant to FDIC/NCUA regulations, all of one’s retirement accounts held at same insured bank are combined together and insure up to $250,000.

Retirement accounts including Solo 401k are separately insured from other deposits held at same bank. For example, if in addition to a $250,000 Solo 401k, the participant has a $60,000 non-Solo 401k CD in her own name at XYZ bank plus a $95,000 non-Solo 401k CD at same bank in joint name with her husband, both of those accounts would be fully-insured because they’re under the $100,000-per-depositor-per-bank limit. The insurance for the non-Solo 401k accounts would be in addition to the $250,000 of insurance for retirement accounts at XYZ Bank.

FDIC Protection is Not Extended to Investments

Keep in mind that FDIC/NCUA insurance applies only to deposits such as checking accounts, savings accounts and CDs. As such, there is no federal deposit insurance for Solo 401k investments such as stocks, bonds, real estate, notes, etc.; even if they are purchased from an FDIC or NUCA insured institution.

SIPC Coverage

However, there is some protection for investments through the Securities Investor Protection Corp. (SIPC). This is an organization to which virtually all securities brokers belong. SIPC members contribute to a reserve fund that will reimburse investors up to $500,000 in cash. These reimbursements occur in cases of broker theft or the failure of a brokerage firm.

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>

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