Share Insurance

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

Regular shares are insured up to $250,000. IRA balances are insured, separately from your other PFFCU accounts, up to $250,000.

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, and 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 $250,000 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 then belongs to the remaining owners of the account. Generally, for Share Insurance purposes, 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 $250,000.

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 $250,000 for each separate beneficiary.

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:

  • 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
  • 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.

Business Accounts

If a corporation, partnership or unincorporated association is engaged in an independent activity, the account is separately insured to a total of $250,000. 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 $250,000 limit:

Individual AccountsHusband
Wife
$250,000
$250,000
Joint AccountsHusband and Wife$250,000
Trust AccountsHusband in trust for Wife
Wife in trust for Husband
$250,000
$250,000
Total:$1,250,000

Individual AccountsHusband
Wife
Child
$250,000
$250,000
$250,000
Joint AccountsHusband and Wife
Husband and Child
Wife and Child
$250,000
$250,000
$250,000
Trust AccountsHusband in trust for Wife
Wife in trust for Husband
Husband in trust for Child
Wife in trust for Child
$250,000
$250,000
$250,000
$250,000
Total:$2,500,000

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.

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.

 

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