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The FDIC Extends Unlimited Protection on IOLTA Accounts through June 30, 2010

The FDIC extended its temporary Transaction Account Guarantee Program through June 30, 2010. Under the final Rule, published on September 1, 2009, funds in IOLTA accounts will continue to be fully guaranteed by the FDIC, without limit, for participating financial institutions. 

Institutions will have the option to opt out of the extended TAG coverage and, as in the initial Rule, are required to prominently display their status as either participating or not participating. Institutions have until November 2 to opt out of the extended TAG program, which would begin on January 1, 2010. IOLTA funds held in institutions that opt out of the extended TAG program (or that opted out of the initial TAG) will be insured up to $250,000 per owner (i.e. client) until December 31, 2013.

The FDIC maintains a list of institutions that opted out of the current TAG coverage at: http://www.fdic.gov/regulations/resources/TLGP/optout.html

Insurance Protection on IOLTA Accounts to change on January 1, 2010

The FDIC announced on May 20, 2009 that:
Deposits at FDIC-insured institutions are now insured up to at least $250,000 per depositor through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all account categories except for IRAs and other certain retirement accounts which will remain at $250,000 per depositor. (This supersedes the October 3, 2008 changes.)

It clarified that:
The extension announced on May 20, 2009, does not apply to the Transaction Account Guarantee Program. The unlimited coverage under the Transaction Account Guarantee Program is only in effect for depositors at participating institutions through December 31, 2009.

This means that as of January 1, 2010, funds held in IOLTA accounts, as well as those held in non-interest bearing transaction accounts, will be treated the same as the funds held in all other FDIC insured accounts: each depositor's total funds held in the financial institution will be insured up to $250,000.

Attached is a link to the FDIC webpage containing this information: http://www.fdic.gov/deposit/deposits/changes.html

New FDIC Rule Creates Unlimited Protection for IOLTA Accounts 

The Federal Deposit Insurance Corporation (FDIC) announced on November 21, 2008, that effective immediately client funds deposited in IOLTA accounts at participating financial intuitions are eligible for unlimited deposit insurance coverage as part of the Temporary Liquidity Guarantee Program (TLGP). All funds in an IOLTA account, regardless of size, will now be insured in full by the FDIC and backed by the full faith and credit of the United States Government, as part of the Temporary Account Guarantee (TAG) provisions of the TLGP. Financial institutions opting out of the TAG coverage must display a notification to customers. The additional coverage is in effect until December 31, 2009, unless extended. Full text of the final Rule can be found at:

http://www.fdic.gov/news/board/08BODtlgp.PDF