Question

A couple has $720,000 in total savings. They want to ensure that all their funds are insured by the Federal Deposit Insurance Corporation (FDIC). Which strategy would accomplish this?

1. Open individual accounts at four different FDIC-insured banks, each with deposits of $180,000.
2. Establish joint accounts at four different FDIC-insured banks, each with deposits of $180,000.
3. Create a revocable trust and deposit $720,000 in an FDIC-insured bank.
4. Divide it equally into two joint deposit accounts at different federally insured banks.

Answer 1

To fully insure $720,000, individual accounts at four different FDIC-insured banks with $180,000 in each would ensure that each deposit falls under the FDIC coverage limit of $250,000 per depositor, per bank.

Step-by-step explanation:

To ensure that a couple's total savings of $720,000 are fully insured by the Federal Deposit Insurance Corporation (FDIC), the couple should distribute their funds in a manner consistent with FDIC coverage limits. The FDIC insures deposits up to $250,000 per depositor, per insured bank, for each account ownership category. Considering this, the most appropriate strategy from the ones listed would be to open individual accounts at different FDIC-insured banks.

Option 1 would achieve full FDIC coverage. By opening individual accounts at four different FDIC-insured banks, each with $180,000, each individual's deposits at each bank would be insured up to the $250,000 limit, securing the entire $720,000. Options 2, 3, and 4, while they include measures intended to provide insurance coverage, would either not provide complete coverage for the total amount or are less clear in ensuring full coverage under the FDIC's insurance limits.