fi nancialforum Fund Protection T
Are You Covered? To determine whether your accounts are in- sured, use the FDIC’s Electronic Deposit Insur- ance Estimator at www
.fdic.gov/edie.
Are the FDIC and SIPC the same? Lt. Col. Shane Ostrom, USAF (Ret), CFP®, gives an overview of these two types of depositor insurance and how they protect your assets.
The FDIC is the Federal Deposit In- surance Corp., an agency of the federal government. The SIPC is the Securities Investor Protection Corp., a nonprofi t, nongovernment corporation funded by the securities fi rms who belong to the SIPC organization. Both provide insurance pro- tection over a depositor’s money, but that protection is not all-inclusive. With an FDIC-insured bank or savings
institution, a customer’s money is insured safe. Through the FDIC, the U.S. govern- ment protects depositors’ money in banks by insuring your deposits with the bank. FDIC insurance covers your checking ac- counts, savings accounts, money market de- posit accounts, certifi cates of deposit, and a few other accounts. Without the FDIC, your money would be at risk if your bank fails. FDIC insurance does not cover other
fi nancial products and services that banks or savings associations might off er, such as stocks, bonds, mutual funds, life insurance policies, annuities, or other securities. These products and services typically are not held at the bank or sav- ings institution. These investments and products tend to reside outside the bank or savings association. The standard insurance amount is
$250,000 per depositor, per insured bank. All accounts at one bank for the same owner typically are added together. There are a few exceptions, as always. The SIPC protects customers of SIPC- insured brokerage fi rms facing fi nancial
online: Learn more at
www.fdic.gov or
www.sipc.org. 54 MILITARY OFFICER JANUARY 2015
diffi culties. SIPC coverage insures your cash and securities being held by your broker. It’s important to understand the coverage details. The coverage amount for securities is up to a maximum of $500,000, which includes a coverage limit on the amount of cash at $250,000. The coverage limits are eff ective when the SIPC trustee is ap- pointed to oversee the liquidation of the brokerage and process customer claims. This might be months after the brokerage becomes insolvent. The market value of your securities is
not covered, but the amount of securities you own is. Say you own 100 shares of “ACME Coyote” stock. The SIPC trustee will see that your 100 shares are returned to you. However, if the 100 shares of stock are not available, then you will be insured for the value of the 100 shares at the time the SIPC trustee was appointed — up or down. SIPC covers most forms of securities
like stocks, bonds, and mutual funds — gen- erally any registered securities. It does not cover unregistered securities or limited partnerships, annuity contracts, futures, or precious metals, to name a few.
MO
— Lt. Col. Shane Ostrom, USAF (Ret), is a CFP® and benefi ts information expert at MOAA. To speak with a fi nancial planner, contact USAA at (877) 913-6622 or
www.usaa.com/moaa. Visit
www.moaa.org/fi nancialcenter for other resourc- es. Email specifi c benefi t and fi nance inquiries to
beninfo@moaa.org.
PHOTO: SEAN SHANAHAN
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