BanksAct

If you’ve heard about all the bank failures — 122 this year — you’ve got to be wondering about the safety of your money.

Five banks failed Nov. 6. The largest was San Francisco’s United Commercial Bank, the main operating subsidiary of UCBH Holdings, which received $299 million in government help through the Troubled Asset Relief Program last year. Looks like taxpayers won’t be getting that money repaid.

It really does make you wonder about protecting your money. Here’s what you should know:

Know what’s protected
Money parked in bank accounts is usually protected by the Federal Deposit Insurance Corp., but that doesn’t mean all your money is safe. The FDIC insures checking accounts, savings accounts, certificates of deposit and retirement accounts placed in deposits at insured institutions.

You can ask your bank whether it’s FDIC-insured. By the way, money that is placed in a money market deposit account as part of your checking is protected, but don’t confuse that with a money market mutual fund, which is not.

Know what’s not protected
Not every dollar sent to your bank is protected, including holdings in mutual funds (stock, bond or money market mutual funds), annuities, stocks, bonds, Treasury securities and other investment products.
And what about that prized ring passed down by Grandma or other contents in a safe-deposit box at your bank? Those aren’t protected either.

Think $250,000
On those accounts that the FDIC does insure, know that the coverage isn’t unlimited. You’re safe if you have up to $250,000 per person per account, but only up until the end of 2013, when the coverage is scheduled to revert to $100,000.

Retirement accounts are covered permanently up to $250,000 per co-owner or $500,000 per couple. To check on your FDIC coverage at your bank, check out the FDIC’s insurance estimator.
When you have more than $250,000
If you have more than $250,000 at one insured bank, consider setting up different ownership categories. For instance, the FDIC will protect another $250,000 for joint accounts of two or more people.

Let’s say you and your mother had, in a joint account, a CD for $200,000. You’d be covered for $100,000 (your share) plus up to $250,000 in your individual account.

Review your coverage
It’s also important to review your coverage when you’ve had a major life event or if your bank has merged with another institution where you hold accounts. Accounts are covered separately for six months after a merger, giving you time to restructure them to meet the limits above.
Life events like the death of a spouse are another time to pay attention, especially if you had any joint accounts. The surviving person has six months to restructure the account and avoid having unprotected money.

Check your brokerage accounts
A whole other set of rules apply to brokerage accounts. Brokerages must make sure they have enough money in the bank to survive financially (called “net capital requirement”). They also have protection by a different organization than the FDIC, the Securities Investor Protection Corp.

The SIPC doesn’t protect you from a stock decision you made that’s gone bad, but it does insure securities accounts for up to $500,000 when a brokerage closes for bankruptcy or other problems. Many brokerages have purchased additional insurance, so ask or check out their Web sites.

Even if Congress creates a Consumer Financial Protection Agency to give savers a bigger regulatory advocate, you’ll still need to educate yourself and ask smart questions. Start today by making sure your bank accounts are protected.