With more banks expected to disappoint, it’s a welfare time to look into the protections available for your retirement accounts

by Ellen Hoffman

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In the wake of the historic government bailout of Fannie Mae (FNM) and Freddie Mac (FRE), investors wonder which bank will miss nearest. Indeed, images of customers lined up last July outside offices of the failed IndyMac Bank to withdraw their coin are hard to forget. The Federal Deposit Insurance Corp. (FDIC) recently reported that 117 banks, the highest number in five years, are on its "problem" list, and "more banks will come on the list as credit problems worsen."

It’s no wonder that some Americans are asking themselves if the wealth they’ve accumulated in retirement accounts is adequately protected. "Clients are expressing concerns about whether their accounts are safe. This has occurred because of the demise of both IndyMac Bank and Bear Stearns and the major decline in utmost bank and financial stocks," says Kevin Reardon, a pecuniary planner in Brookfield, Wis.

In general, the answer is that your privacy accounts are safe. Three key factors determine how well your money is protected: the type of account you have, where the account is located, and how abundant is in each regard. Here’s a rundown on the rules to take part with you determine if you need to make any changes in where and in what plight you hold retirement savings in banks, brokerage accounts, and your 401(k).

At this point just round everyone knows your standard bank account is insured by the FDIC for up to $100,000. Less well known is that since 2006, a traditive or Roth IRA, a Simplified Employer Plan (SEP), and several other types of retirement accounts that you clutch in each FDIC-insured bound are covered by means of assurance up to $250,000. The security against loss applies to the retirement account in addition to insurance in succession your other accounts in the same tier. The FDIC does not release its list of problem banks, but it does offer a roll of bank rating sources you can consult if you’re concerned about a particular enactment. If your FDIC-insured retirement account exceeds $250,000, or if you are worried surrounding the shallow’s financial freedom from disease, you can move some or all of the asset to another institution. But just make sure you follow the rules for a trustee-to-trustee transfer so you don’t get fit with taxes or penalties on a withdrawal.

Retirement accounts housed at a brokerage receive the same preservation considered in the state of other types of brokerage accounts if the firm belongs to the Securities Investor Protection Corporation, each organism funded by securities broker-dealers. SIPC is charged with returning "customers’ cash, stock and other securities" in the event a company fails or purchaser assets are wanting. But SIPC rules differ from those of the FDIC, and some types of investments, such as commodities contracts, are not insured by SIPC.