Your Strategic Playbook for Extending NCUA Deposit Insurance Coverage

Deposit insurance exists to protect your funds in the event a financial institution fails. It was officially introduced in 1933 in response to the Great Depression with the creation of the Federal Deposit Insurance Corporation (FDIC). The National Credit Union Administration (NCUA) followed in 1970 to offer the same safety net for credit union funds. 

General Electric Credit Union (GECU) is a federally insured credit union, which means your funds are protected up to $250,000 per accountholder, per ownership category under the NCUA. Ownership categories include, but are not limited to, single ownership, joint, and retirement accounts. 

Not sure if all your funds fall under the NCUA umbrella? Use the Share Insurance Calculator to confirm. Or start by reviewing the ownership categories below, their individual coverage amounts, and how some strategic account structuring could extend protection over your hard-earned money. 

Ownership categories 

Single ownership accounts 

Just like the name implies, a single ownership account has one owner and no beneficiaries. The balances of all single ownership accounts at the same credit union are added together and insured up to $250,000. 

Single-owned checking, savings, Money Market, and certificate accounts all count toward this total, whereas joint accounts and revocable trust accounts are insured separately. 

Joint accounts 

You can add a joint owner to an account to extend coverage by up to $250,000, but keep in mind that each party must have equal rights to the funds. For example, if a married person adds their spouse as a joint owner on a checking account, it will then qualify for up to $500,000 in insurance coverage. 

But a spouse isn’t the only person that can be assigned as a co-owner. Anyone can be added, though some laws do have special regulations for minors that may impact their ability to withdrawal funds – and your total coverage limit in tandem. Contact your credit union to learn more. 

Revocable trust accounts

Understanding NCUA insurance coverage on revocable trust accounts can get a bit complicated. It’s important to get some basic terminology out of the way so you have a solid foundation of knowledge to build from. 

• A revocable trust account is a deposit account with one or multiple owners. It’s used to express an intent to pass on funds to named beneficiaries once the owner(s) pass.  
• The grantor, also known as the trustor, is the individual who opened the account. They can alter or cancel provisions as they wish during their lifetime. 
• The grantor can assign a trustee, who is responsible for managing and distributing the assets and property held in the trust – the latter of which only happens upon the grantor’s passing,
• The owner of a revocable trust account is the grantor until their passing. Then, the revocable trust account becomes irrevocable, and ownership transitions to the trust itself, with the funds being managed by the trustee.

Now that you have a baseline, let’s go through the intricacies of NCUA insurance coverage on revocable trust accounts. Here are the highlights:

• While there can be more than one owner on these accounts, this does not extend NCUA insurance coverage in the same way adding a joint owner to a checking account would. 
• The trustee also has no impact on insurance coverage, as they are an administrator. There are exceptions if the trustee is also A. the grantor or B. a beneficiary on the trust. 

So how can you increase coverage? Beneficiaries! If every beneficiary listed meets eligibility requirements and has equal interests, the grantor can multiply 250,000 times the number of beneficiaries to calculate their coverage. 

The calculation changes depending on the number of owners, the number of beneficiaries, the eligibility of said beneficiaries, and the interests of each beneficiary. It’s best to sit down with a financial advisor to learn the specifics. Note that unless stated otherwise in the account records, the NCUA will assume the beneficiaries’ interests are equal.

• Learn more about the importance of up-to-date beneficiary information here (they trump the information listed in your will – so it’s safe to say they’re a big deal!). 

Individual Retirement Accounts (IRA)

An IRA is a great way to build tax-advantaged earnings for retirement. Any IRA funds held at a credit union, whether in a traditional or Roth IRA, are combined and insured up to $250,000. Coverage is lost once those funds are withdrawn. Naming a beneficiary on an IRA will not increase its insurance protection. 

Not sure if all your funds fall under the NCUA umbrella? Use the Share Insurance Calculator to confirm. Or, talk over your NCUA coverage with a GECU team member by using Secure Chat in Online Banking or scheduling an in-person appointment. If we notice you need more coverage, we’ll help you understand your options to ensure you have it moving forward.