Share Insurance

The National Credit Union Administration (NCUA) through the National Credit Union Share Insurance Fund (NCUSIF) provides share insurance on members’ funds deposited in PFFCU. The NCUA is an independent agency of the United States Government, responsible for the oversight of federal credit unions. As a member, you do not pay for share insurance coverage, it is provided by PFFCU.

Regular shares are insured up to $100,000. IRA balances are insured, separately from your other PFFCU accounts, up to $350,000 at no cost to you. IRA insurance is a combination of $250,000 from the National Credit Union Association (NCUA) and up to $100,000 from Excess Share Insurance Corporation (ESI)*.

For those members needing more coverage, separate and/or multiple ownership of accounts provides a means to accomplish this. Ownership means the way an account is titled and how the funds in the account are held. For example, an individual account is one form of ownership, while a joint account and a trust account are others. When accounts are held in separate and/or multiple ownerships, each can be insured separately, increasing the amount of NCUA share insurance.

Here are a few of the most common forms of account ownership:

Individual Account: The funds are owned by one individual, and the account is in that person’s name only. A person can have a combined total of $100,000 in one or more individual accounts at PFFCU.

Example: John Member

Joint Account: This type of account is in the names of two or more persons and all owners have equal rights of withdrawal. At PFFCU, all joint accounts are held with right of survivorship, which means that if one of the joint owners dies, his/her share is then divided between the remaining owners of the account. Generally, each joint owner is attributed an equal share in each joint account in which he/she is named. The interest in all of the joint accounts is added up and each joint owner is insured up to $100,000.

Example: John Member and Sarah Member

Totten or Simple Trusts:  These are payable-upon-death accounts. In this type of account the owner of the account designates a beneficiary to receive the funds when the owner dies. The owner of the account retains complete control over the account while they are alive. The funds in the account are insured up to $100,000 for each qualifying beneficiary. A qualifying beneficiary is a spouse, child, grandchild, parent or sibling of the owner (including steps). If the beneficiary is not a qualifying beneficiary, the funds in the account are added together with any funds held in individual accounts, and insured up to $100,000.

Example: John Member in trust for Sarah Member

Revocable Living Trusts: This is a trust account created pursuant to a Living Trust. A Living Trust is a formal document that, like a Totten or Simple Trust , will transfer assets to beneficiaries on the death of the creator of the revocable living trust. The living trust agreement will generally:

1. Allow the creator to retain control of the assets and the trust during his/her lifetime, including the right to change or end the trust itself; and
2. Create a beneficial interest that take effect only in the future, if the assets have not been disposed of before then and the trust has not been revoked. These accounts are insured in the same manner as Totten or Simple Trusts.

Example: The John Member revocable Living Trust dated January 1, 2006.

Traditional or Roth IRAs: To be separately insured, the accounts must qualify as an IRA under the Internal Revenue Code.  A member’s funds in traditional or Roth IRAs (including IRA certificates) are added together and insured up to a maximum of $250,000.

PFFCU also provides an additional $100,000 of private share insurance through Excess Share Insurance Corporation (ESI). Thus, all PFFCU IRAs are insured up to $350,000.

Business Accounts: If a corporation, partnership or unincorporated association is engaged in an independent activity, the account is separately insured to a total of $100,000. Independent activity means an activity other than one directed at solely increasing share insurance.

The following are some examples of how members can increase share insurance coverage above the $100,000 limit:

If you add IRA accounts to the examples above, each account owner can increase their share insurance by an additional $250,000. PFFCU also provides an additional $100,000 of private share insurance through Excess Share Insurance Corporation (ESI). Thus, all PFFCU IRAs are insured up to $350,000.

Using accounts with different account and/or multiple ownerships can increase the amount of NCUA share insurance dramatically. The above examples exhibit the way in which joint and trust accounts can be used to accomplish this. If you increase the family size to four, NCUA share insurance increases to $1,400,000! (excluding IRAs)

These examples are meant for illustration purposes only. The way you structure your accounts will depend on your individual needs. Please contact PFFCU if you have any questions about share insurance, or visit the NCUA website for additional information.

*IRA insurance is a combination of $250,000 from National Credit Union Administration (NCUA) and up to $100,000 from Excess Share Insurance Corporation (ESI). Insurance provided by PFFCU through ESI is only available on PFFCU IRA shares and IRA certificates, and does not affect National Credit Union Administration (NCUA) share insurance. ESI is not affiliated with the NCUA or any other Federal Government Agency.