Are Simple IRAs FDIC Insured?
A Simple IRA (Savings Incentive Match Plan for Employees Individual Retirement Account) is designed primarily for small businesses and self-employed individuals to provide retirement savings options. However, one common question arises concerning the insurance status of funds within these accounts, specifically regarding FDIC insurance.
In general, the funds held within a Simple IRA can be FDIC insured, but this depends on the type of investments that the account holds. The FDIC (Federal Deposit Insurance Corporation) protects deposits at insured banks and savings associations, covering up to $250,000 per depositor, per insured bank, for each account ownership category.
For funds held in cash accounts or certificates of deposit (CDs) within a Simple IRA at a bank, they will typically be FDIC insured. This means that if the bank were to fail, the account holder would be protected up to that limit. However, if the Simple IRA holds non-deposit investments, such as stocks, bonds, or mutual funds, those investments are not covered by FDIC insurance.
It's crucial for individuals to review the specific terms of their Simple IRA and understand the types of investments it holds. If you're considering a Simple IRA and wish to ensure that your funds are fully protected, consult with your financial advisor or the institution managing your IRA to clarify the coverage details.