January 19, 2011
The FDIC Board approved a final rule
regarding the inclusion of IOLTA accounts within the temporary
unlimited FDIC insurance coverage. A link to the press release
announcing the rule (which contains a link to the rule) is found
below.
http://www.fdic.gov/news/news/press/2011/pr11008.html
The major elements of the rule are:
Insured Depository
Institutions (IDIs) must post by February 28th a revised notice that
includes language indicating that funds held in IOLTAs are fully
insured from December 31, 2010 through December 31, 2012. That notice
must be posted in the lobby of the IDI's main office, each domestic
branch and if it offers Internet deposit services, on its website.
IDIs that already sent the old notice are encouraged, but not
required to send a revised notice to IOLTA depositors that the funds
will be fully insured from December 31, 2010 through December 31,
2012.
The rule does not become official until posted in the
Federal Register.
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
