The FDIC provides insurance on various types or categories of deposits, up to $250,000 per category. HSA deposit are NOT aggregated with IRA deposits.
For FDIC insurance purposes, an HSA will be insured under the Revocable Trust Account category or under the Single Deposit category.
Set forth below is the FDIC’s discussion as found in their brochure, “Your Insured Deposits” (Comprehensive Guide) on pages 11-12.
Coverage and Requirements for Revocable Trust Accounts In general, the owner of a revocable trust account is insured up to$250,000 for each unique beneficiary, if all of the following requirements are met:
-
The account title at the bank must indicate that
the account is held pursuant to a trust relationship. This rule can be
met by using the terms payable on death (or POD), in trust for (or
ITF), as trustee for (or ATF), living trust, family trust, or any
similar language, including simply having the word “trust” in the
account title. Account title includes information contained in the
bank’s electronic deposit account records
-
The beneficiaries must be named in either the deposit account
records of the bank (for informal revocable trusts) or identified in
the formal revocable trust document. For a formal trust agreement, it
is acceptable for the trust to use language such as “my issue” or
other commonly used legal terms to describe the designated
beneficiaries, provided the specific names and number of eligible
beneficiaries can be determined.
- To qualify as an eligible beneficiary, the beneficiary must be a living person, a charity or a non-profit organization. If a charity or non-profit organization is named as beneficiary, it must qualify as such under Internal Revenue Service (IRS) regulations.
An account must meet all of the above requirements to be insured under the revocable trust ownership category. Typically, if any of the above requirements are not met, the entire amount in the account, or the portion of the account that does not qualify, is added to the owner’s other single accounts, if any, at the same bank and insured up to $250,000. If the trust has multiple co-owners, each owner’s share of the nonqualifying amount would be treated as his or her single ownership account.
CWF Observation. There is no express discussion that an HSA maybe or will be insured under this Revocable Trust category. However, set forth is the guidance recently furnished to CWF by the FDIC.
- “If a depositor opens an HSA and names beneficiaries either in the HSA agreement or in the bank’s records, the FDIC would insure the deposit under the Revocable Trust Account ownership category. If a depositor opens an HSA and does not name any beneficiaries, the FDIC would insure the deposit under the Single Account ownership category. The identification of a deposit as an HSA, such as John Smith’s HSA, is sufficient for titling the deposit to be eligible for Single Account or Revocable Trust Account coverage, depending on whether eligible beneficiaries are named.”
Categories: Health Savings Accounts, Pension Alerts
