Are brokerage accounts FDIC insured?

A brokerage account, also called a brokerage account, allows you to trade and store securities. A brokerage account is an electronic record kept by the brokerage house for the client. There are many brokerage accounts on the market, which is why you can come across many offers. Are brokerage accounts FDIC insured?

What is FDIC insurance?

The Federal Deposit Insurance Corporation – oh, here it was – was founded in 1933 as an independent US government agency. Protects funds held in bank accounts up to USD 250,000 per depositor, per bank insured in FDIC, by account category. So if your bank would suddenly lose all your money, FDIC will pay you as soon as possible via a new account in another insured bank or check in the amount of the insured’s balance. FDIC insurance is basically exactly what you would expect from a bank account.

If you have accounts at many banks insured by FDIC, you are protected up to USD 250,000 at each bank. If you and your partner have a joint account in one bank, you are insured up to $ 500,000 for this account plus $ 250,000 for an individual account. However, there are some exceptions: for example, the Wealthfront cash account offers FDIC insurance up to $ 1 million per depositor.

Are brokerage accounts FDIC insured?

How is the scope of FDIC insurance determined?

The FDIC insurance limit applies to every account holder at each bank. Here’s how FDIC defines coverage for different account holders according to some common types of “ownership”:

Individual accounts. Deposit accounts (e.g. Checks, savings accounts) owned by one person. FDIC insurance covers up to USD 250,000 per owner for all individual accounts at each bank.

Joint Accounts. Deposit accounts owned by two or more people. FDIC insurance covers up to USD 250,000 per owner for all joint accounts at each bank.

Some withdrawal accounts. Accounts such as IRAs and self-directed defined contribution programs 1. All such accounts belonging to the same person at the same bank are added to the USD 250,000 FDIC coverage limit for this type of account.

SIPC insurance rules

Bank account balances are insured by FDIC. Assets in your brokerage house are also protected, but by another entity – the non-profit Securities Investor Protection Corporation or SIPC.

The SIPC scope provides …

  • Up to $ 500,000 total protection per client for lost or missing funds and / or securities from client accounts held with the institution.
  • Up to USD 250,000 of this amount can be used to protect cash on a customer’s account that has not yet been invested in securities.
  • Protection in the event of unauthorized trade or theft from your account.

SIPC insurance does not cover …

  • Investment losses or worthless shares or other securities.
  • Losses due to account hacking, unless the company was forced to liquidate because of hacking.
  • Claims for bad or inappropriate investment advice. Complaints about companies are considered by the Financial Industry Regulatory Office (FINRA), the Securities and Exchange Commission (SEC) and the state securities supervisory authorities.



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