Trust, POD and Retirement Accounts: The $1.25 Million Question

Which of these are you?

• You have a payable-on-death account and one named beneficiary. The coverage is $250,000, the same as a single account, but it sits on top of your single accounts at that bank.
• You have a living trust and more than $250,000 at one bank. Count the eligible beneficiaries the grantor names. The table below shows how each added beneficiary changes the result, up to five.
• You and a spouse hold a joint trust and name each other. That one detail changes the category. Read the "naming each other" case before you rely on the trust number.
• You hold IRAs or other retirement deposits at a bank. All of one person's qualifying retirement deposits at that bank share one $250,000 limit.

What is the trust category, and what changed on April 1, 2024?

Since April 1, 2024, one ownership category covers informal revocable trusts, formal revocable trusts and irrevocable trusts that the FDIC's other sections do not cover. Informal revocable trusts are payable-on-death (POD), in-trust-for and Totten accounts. The rule is 12 CFR 330.10, adopted in the Simplification of Deposit Insurance Rules (87 FR 4455, published January 28, 2022, effective April 1, 2024).

Before that date POD accounts had their own category apart from other trusts. The current rule has one category and one formula for all three types. Coverage is $250,000 multiplied by the number of beneficiaries each grantor identifies, up to five (12 CFR 330.10(b)(1)). That caps a grantor at $1,250,000 at one bank.

Three more provisions shape every case.

• Deposits from the same grantor are added together. Money that passes from one grantor to beneficiaries is aggregated whether it sits in a POD account, a formal revocable trust or an irrevocable trust (12 CFR 330.10(b)(2)).
• Trust coverage is separate from your other deposits at the bank. A grantor's single, joint and retirement deposits are insured in their own categories (12 CFR 330.10(b)(3)).
• Multiple grantors are presumed equal. If a trust has several grantors, the deposit is presumed owned or funded in equal shares unless the bank's records say otherwise (12 CFR 330.10(b)(4)).

The rule is not the same at credit unions today. NCUA's trust simplification takes effect December 1, 2026, and until then its trust formula differs. See chapter 6 for the dated comparison.

Who counts as a beneficiary?

A beneficiary counts if it is a natural person or a charity or other non-profit recognized under the Internal Revenue Code (12 CFR 330.10(c)(1)). Two groups do not count: the grantor, and anyone who would take an interest only if one of the identified beneficiaries has died (12 CFR 330.10(c)(2)).

Two further details matter in practice.

If the trust agreement says funds will pass into one or more new trusts when the grantor dies, those future trusts are not beneficiaries. They are mechanisms, and the beneficiaries are the people or organizations who ultimately receive the funds (12 CFR 330.10(c)(3)). And if a POD account names the depositor's own formal trust as its beneficiary, the account is treated as if it were titled in the name of that trust (12 CFR 330.10(c)(4)).

The records matter as much as the intention. The beneficiaries of a POD account must be specifically named in the bank's deposit account records. A formal revocable trust account's title must include terminology that identifies it as a trust, such as "family trust" or "living trust"; if eligible beneficiaries are named in the records, the FDIC presumes the named interests are valid (12 CFR 330.10(d)).

What does titling do to a $1,250,000 balance?

Take a hypothetical $1,250,000 held by one person at one bank. Titled as a single account it is insured to $250,000. As a trust or POD account, the coverage depends only on the eligible beneficiaries named. Each added beneficiary adds $250,000 up to five.

The sixth beneficiary adds nothing. That differs from the FDIC calculator's on-screen message for a trust at the five-beneficiary cap, which says that trusts with more than five beneficiaries follow more complex rules. The current text of 12 CFR 330.10(b)(1) states the cap of five directly, so for deposits governed by that section, the cap is the rule. If you have an unusual trust, confirm with the bank or EDIE.

Because trust coverage is separate from other deposits at the bank, the categories stack. A person with $250,000 in a single account and $1,250,000 in a trust naming five eligible beneficiaries at the same bank has $1,500,000 in total, and all of it is insured.

How do two grantors and several trusts count?

When a trust has two grantors, each grantor is counted separately against that grantor's own beneficiaries, and the deposit is presumed split equally unless the records say otherwise. That makes the combined limit the grantor count times $250,000 times the beneficiaries, with each grantor capped at $1,250,000.

Here are three cases that go beyond the table.

Spouses who name only each other. If the co-owners of a revocable trust are the trust's only beneficiaries, the deposits are treated as joint ownership deposits under 12 CFR 330.9, not as trust deposits (12 CFR 330.10(f)(1)). A couple with a $1,000,000 balance who name only each other has two joint owners with $500,000 each. Coverage is $500,000 and $500,000 is uninsured. If the same couple names two children, each spouse's limit is 1 grantor times 2 beneficiaries times $250,000, or $500,000, and the whole $1,000,000 is insured. The difference is $500,000 of coverage from one titling detail.

A POD account and a trust from the same grantor. Because trust deposits from one grantor are aggregated, a $400,000 POD account and a $400,000 formal trust that name the same two beneficiaries are $800,000 against a $500,000 limit, leaving $300,000 uninsured. Opening a second trust account at the same bank does not open a second limit. The text of 330.10 says the count is of "the total number of beneficiaries identified by each grantor"; if one grantor's several trusts name different people, how those names combine is a question to put to the bank or EDIE with the actual documents. The worked figures here assume one beneficiary set.

Irrevocable trusts and bank trustees. An irrevocable trust is in this category unless the bank itself is the trustee, in which case the deposits fall under a separate section (12 CFR 330.12). Deposits of an employee benefit plan held in a trust are treated as employee benefit plan deposits under 12 CFR 330.14 (12 CFR 330.10(f)(2)), which brings us to retirement accounts.

Which retirement accounts are insured, and how are they counted?

Certain retirement deposits at one bank are added together per participant and insured up to $250,000 (12 CFR 330.14(b)(2)). Three types are aggregated: individual retirement accounts under section 408(a) of the Internal Revenue Code, eligible deferred compensation plans under section 457, and individual account plans under ERISA section 3(34) and plans described in Code section 401(d), to the extent participants have the right to direct the investment of assets in their individual accounts.

The FDIC's consumer brochure lists Roth IRAs among the certain retirement accounts and says it adds together all deposits in retirement accounts owned by the same person at the same insured bank. The text of section 330.14 does not name a Roth by that word, so rely on the brochure's wording and confirm with the bank.

Two cases show the counting. Both are hypothetical and at one bank.

Retirement coverage is its own category, so it does not reduce the single, joint or trust coverage a person has at the same bank.

Three points the numbers hide.

• Deposits only. The rule insures deposits, such as an IRA savings account or an IRA certificate of deposit at an insured bank. Stocks, bonds and funds held inside an IRA are not deposits and are not insured by the FDIC. Cash inside a brokerage IRA depends on how the broker holds it, which is the subject of chapter 5.
• Other employee benefit plans use pass-through. A plan's deposits are insured on a pass-through basis up to $250,000 for each participant's non-contingent interest, provided the recordkeeping rules in 12 CFR 330.5 are met (12 CFR 330.14(a)). Interests that cannot be valued, or amounts for future participants, are limited to the SMDIA in total (12 CFR 330.14(d)).
• The count is per bank. An IRA at a second separately chartered bank has its own limit.

How should you check your own accounts?

Work through the accounts in this order, and keep the arithmetic by bank.

1. POD and trust accounts. For each grantor, count eligible beneficiaries from the bank's records, remove the grantor and any backup-only names, and cap at five. Multiply by $250,000. If spouses name only each other, move that account to the joint column.
2. Add every trust and POD deposit from the same grantor. They share one limit.
3. Retirement deposits. Add each person's IRA, Roth IRA, 457 and participant-directed plan deposits at the bank and compare the total with $250,000.
4. Check the records. The trust or POD title, the beneficiary names and each owner must appear in the bank's account records. If you have changed a beneficiary or a trust since opening, ask the bank to update the record.
5. Use the official estimator for the final answer. The FDIC's EDIE tool works from your accounts and the FDIC's rules.

This chapter's tables are hand-computed and recomputed in a test. The FDIC coverage calculator on this site handles a trust with one grantor and up to five beneficiaries and a retirement category, so for a two-grantor trust run one grantor's share. It does not decide how beneficiaries are counted for you.

For the estate-planning side of these accounts, see our guides to payable-on-death accounts, revocable trusts versus wills and IRA CDs. They explain what the accounts do with the money after you die. This chapter explains only how much of them the FDIC insures.