Sorry if I am ignorant of the FDIC rules, but I want to make sure I do the best thing possible.

I have my portfolio at TDA across several accounts. 1 is an IRA, and 4 investment trading accounts with different account values.
What are my risks and what I should I do about it? Are the FDIC limits across all my accounts or is it per account?

Scenarios:
Let's say that I have $1.5M in investments at TDA. They are all in a single account. So if TDA fails, I am insured until $500k and I could lose $1M. Correct?

But now I open 4 more accounts at TDA bring my total to 5 accounts. I move investments so that I have $300k at each. Bank fails and I lose nothing as each account is below the mark of $500k. Is that correct?

I was thinking that brokerage accounts are protected by SIPC and not the FDIC. I think brokered CDs do have FDIC protection. Not really up on SIPC coverage but suppose it is similar to FDIC in that the limit is per depositor per ownership category. Multiple accounts with the same broker will not increase your coverage if they are all in the same ownership category. At least that is my understanding.

The only thing covered at brokerages is cash. If you have $1mm in an account and it consists of $50,000 cash and $950,000 in Apple stock you're covered, you still own the stock regardless of the health of the brokerage. As an example Merrill says SIPC covers you up to $250K cash and Merrill covers unlimited cash above the $250K but that "...covers the unlimited..." may not work if Merrill goes away. They do have an FDIC cash account that spreads cash over multiple banks but you only see one amount. Lots of brokerages have similar accounts. Bottom line your investments ride with who/what they are and your cash is what may or may not be at risk.

OldArmyCT said:

---

The only thing covered at brokerages is cash.

---

This is not true. SIPC covers up to $500K in loss of securities, including up to $250K in cash.

one safe place said:

---

I was thinking that brokerage accounts are protected by SIPC and not the FDIC. I think brokered CDs do have FDIC protection. Not really up on SIPC coverage but suppose it is similar to FDIC in that the limit is per depositor per ownership category. Multiple accounts with the same broker will not increase your coverage if they are all in the same ownership category. At least that is my understanding.

---

Each uniquely-named account would have separate SIPC coverage. For instance, husband and wife could each have a single-named brokerage account and a joint brokerage account. Each of these three accounts would then be covered under SIPC - for $1.5 million total and $750K in cash.

astroaggie22 said:

---

Are you holding significant cash in these accounts?

FDIC does not apply to investments in stocks, etfs etc.. however those investments are not held on the books of TD (typically held at DTC or similar clearing firm) and not at risk should your brokerage fail.

---

No, I just have a total of $93 across all the TDA accounts. Everything else invested in ETFs and stock.

Thanks for the info.

one safe place said:

---

I was thinking that brokerage accounts are protected by SIPC and not the FDIC. I think brokered CDs do have FDIC protection. Not really up on SIPC coverage but suppose it is similar to FDIC in that the limit is per depositor per ownership category. Multiple accounts with the same broker will not increase your coverage if they are all in the same ownership category. At least that is my understanding.

---

I think you are right. I did some reading last night and saw the ownership category part.
So it seems like all your single ownership accounts are considered to be one category. And your joint accounts are another category. This is how I understood it to be.

OldArmyCT said:

---

The only thing covered at brokerages is cash. If you have $1mm in an account and it consists of $50,000 cash and $950,000 in Apple stock you're covered, you still own the stock regardless of the health of the brokerage. As an example Merrill says SIPC covers you up to $250K cash and Merrill covers unlimited cash above the $250K but that "...covers the unlimited..." may not work if Merrill goes away. They do have an FDIC cash account that spreads cash over multiple banks but you only see one amount. Lots of brokerages have similar accounts. Bottom line your investments ride with who/what they are and your cash is what may or may not be at risk.

---

OK that is good then. I thought I was going to have to open accounts at multiple places and move things around which is ridiculous. So it is just cash.
My cash is in my Chase account. It's gotten somewhat largish so I am looking into CDs and will put them in on Monday.
Are CDs at risk like cash?

This might help

https://www.fdic.gov/resources/deposit-insurance/brochures/insured-deposits/#:~:text=The%20standard%20deposit%20insurance%20amount,another%20separately%20chartered%20insured%20bank.

Monywolf said:

---

one safe place said:

---

I was thinking that brokerage accounts are protected by SIPC and not the FDIC. I think brokered CDs do have FDIC protection. Not really up on SIPC coverage but suppose it is similar to FDIC in that the limit is per depositor per ownership category. Multiple accounts with the same broker will not increase your coverage if they are all in the same ownership category. At least that is my understanding.

---

Each uniquely-named account would have separate SIPC coverage. For instance, husband and wife could each have a single-named brokerage account and a joint brokerage account. Each of these three accounts would then be covered under SIPC - for $1.5 million total and $750K in cash.

---

Yep, plus an IRA account for him, IRA account for her, Roth IRA account for him, Roth IRA account for her.

Have no idea how sound SIPC insurance is.

SIPC is a private, non-profit corporation, not a government program. The protection it offers is only as good as the assets it holds to back stop its insurance. Unlike the government, the SIPC cannot print money and thus its insurance has finite limits.

If a major financial catastrophe were to occur that threatened the SIPC, the government might step in but there is no guaranty of that.

At least that's always been my understanding.

aglaw01 said:

---

This might help

https://www.fdic.gov/resources/deposit-insurance/brochures/insured-deposits/#:~:text=The%20standard%20deposit%20insurance%20amount,another%20separately%20chartered%20insured%20bank.

---

Great link, thanks!
CDs are covered. I was looking at one from FIRST FEDERAL BANK which I had never heard and has a good rate of 5.10% so I think I will get it.