InfoBytes Blog
FDIC announces final rule to simplify deposit insurance
Recently, the FDIC published a final rule that amends the deposit insurance regulations for trust accounts and mortgage servicing accounts. According to the FDIC, the final rule is intended to make the deposit insurance rules more understandable, facilitate timely insurance determinations for trust accounts in the event of a bank failure, and enhance consistency of insurance coverage for mortgage servicing account deposits. Highlights of the final rule include, among other things: (i) merging the revocable and irrevocable trust deposit insurance categories into a “trust accounts” category; (ii) establishing a consistent formula for calculating deposit insurance coverage for trust accounts; (iii) establishing that “a deposit owner’s trust deposits will be insured in an amount up to $250,000 per beneficiary, not to exceed five beneficiaries, regardless of whether a trust is revocable or irrevocable, and regardless of contingencies or the allocation of funds among the beneficiaries”; and (iv) providing a maximum amount of deposit insurance coverage of $1,250,000 per owner, per insured depository institution for trust deposits. The final rule becomes effective on April 1, 2024, which provides “depositors and insured depository institutions more than two years to prepare for the changes in coverage.” The FDIC also released a fact sheet which provides information on the final rule.