Deposit Security

Jimmy Carter was president the last time Congress increased limits on accounts that are covered by the Federal Deposit Insurance Corp., from $40,000 to $100,000. Now lawmakers have authorized a new ceiling of $250,000 for savings held in retirement accounts, such as IRAs and self-directed Keoghs. The expanded coverage takes effect when the FDIC issues new regulations, which could take up to a year.

Under the law, maximum coverage on regular savings accounts will remain $100,000, although inflation adjustments will be possible starting in 2010. Initially, inflation must grow at least 10% over five years for coverage to increase, after which the ceiling rises in $10,000 increments.

But you don't have to wait till the new limits take effect to make sure your savings are insured for more than the current $100,000. The FDIC calculates insurance coverage based on whose name is on the account and how the account is set up. Say you and your spouse have a joint account and each of you has an individual account. You're covered up to $400,000. Retirement accounts and trust accounts for your kids qualify for even more coverage.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

To verify that your bank is a member of the FDIC, go to www.fdic.gov. To confirm that all your money is covered, use the site's Electronic Deposit Insurance Estimator.

-- Joan Goldwasser