The $250,000 FDIC limit applies per category, not per person

At the end of 2022, Silicon Valley Bank reported that 94% of its domestic deposits were uninsured. Across the US banking system at the same point, more than 99% of deposit accounts sat under the $250,000 insurance limit. Both figures come from the same FDIC report, and the gap between them is the subject of this piece: the limit is far less of a ceiling for an ordinary household than its single round number suggests, and far more of one for a company holding payroll cash.

The reason is a phrase most people never read to the end. The limit is not $250,000 per person. It is $250,000 per depositor, per insured bank, for each account ownership category.

The rule, in the FDIC's own words

FDIC deposit insurance covers $250,000 per depositor, per FDIC-insured bank, for each account ownership category.FDIC, Understanding Deposit Insurance (page last updated April 1, 2024), retrieved October 4, 2026

Each qualifier does work. “Per depositor” means each owner is counted separately. “Per insured bank” means a separately chartered bank, not a branch. “For each ownership category” means one person can have several separate $250,000 allowances at one bank.

Four of those categories matter to most households.

• Single accounts. Deposits owned by one person with no beneficiaries. All of one person's single accounts at the same bank are added together and insured up to $250,000 in total.
• Joint accounts. Each co-owner's share of all joint accounts at the bank is insured up to $250,000. To qualify, all co-owners must be living people, must have equal rights to withdraw, and must have personally signed the signature card. The FDIC assumes the shares are equal unless the account records say otherwise.
• Certain retirement accounts. Traditional, Roth, SEP and SIMPLE IRAs and self-directed 401(k) plans. All of one person's accounts in this category at one bank share a single $250,000 limit. Naming beneficiaries does not increase it.
• Trust accounts. Payable-on-death and in-trust-for accounts, formal living trusts and irrevocable trusts, now calculated together. This is the category that changed on April 1, 2024.

The trust rule that took effect on April 1, 2024

The FDIC published the final rule in the Federal Register on January 28, 2022, with an effective date of April 1, 2024. It merged the revocable and irrevocable trust categories into one category called trust accounts, with one formula.

The FDIC's stated purpose was to make the rules easier to understand and to speed up insurance determinations when a bank fails. The rule applies to existing accounts as well as new ones.

One couple, one bank, worked through

Take a hypothetical married couple, Ana and Ben, with six deposit accounts at one insured bank, including a living trust they own together that names their three children.

The uninsured money sits only where one person's total in one category passed a cap. The trust cap moves with the beneficiary count: with a fourth eligible beneficiary, each owner's cap would be 4 × $250,000 = $1,000,000, and the $100,000 would be insured.

What the FDIC does not insure

The insurance covers deposits. The FDIC lists checking, NOW, savings and money market deposit accounts, CDs, and cashier's checks and money orders issued by a bank. It is just as specific about what falls outside.

Treasury securities are excluded because they are a different promise: the FDIC notes they are backed by the full faith and credit of the US government directly. A safe deposit box, in the FDIC's words, is “strictly a well-secured storage space rented by an institution to a customer.”

Checking the numbers yourself

The FDIC's Electronic Deposit Insurance Estimator, at edie.fdic.gov, shows on a per-bank basis what is insured and what portion, if any, exceeds the limits. It handles single, joint, payable-on-death, living trust and IRA accounts. Because it works one bank at a time, as the rule does, a household with deposits at several separately chartered banks runs it once for each.

What it means for your money

For most households the limit is not close: more than 99% of deposit accounts were under it in December 2022. The arithmetic matters for people holding large cash balances at one bank, after a home sale, an inheritance or a business payout, and for people with living trusts. For them the useful question is not “am I over $250,000?” but “in which category, for which owner, at which bank?” The uninsured portion is a precise number, and it can differ for two people in the same household. On how much cash to hold at all, see emergency funds and inflation and your savings.

Silicon Valley Bank shows the mechanism under stress. It was closed on Friday, March 10, 2023, with about $175.4 billion in total deposits as of December 31, 2022. The FDIC's closing announcement said insured depositors would have full access by Monday morning, March 13, 2023, and that uninsured depositors would receive a receivership certificate. The FDIC then transferred all deposits, insured and uninsured, to a bridge bank it operated; our market autopsy of SVB covers the episode. The FDIC states that since its founding in 1933 no depositor has lost a penny of FDIC-insured funds.