This may be a silly question but nevertheless here goes....

With the expiration of unlimited deposit insurance coverage on Jan 1,2013, will Interest on Lawyers Trust accounts still be considered "non interest bearing accounts?

This is from the FAQ the FDIC release concerning the expiration of unlimited insurance. Not sure if it exactly answers your question, but may provide some insight.

2. How will the expiration of the Dodd-Frank Deposit Insurance Provision affect deposit insurance coverage for Interest on Lawyer Trust Accounts (IOLTAs)?

After December 31, 2012, funds deposited in IOLTAs will no longer be insured under the Dodd-Frank Deposit Insurance Provision. However, because IOLTAs are fiduciary accounts, they generally qualify for pass-through coverage on a per-client basis. FDIC regulations provide that deposit accounts owned by one party but held in a fiduciary capacity by another party are eligible for pass-through deposit insurance coverage if (1) the deposit account records generally indicate the account's custodial or fiduciary nature and (2) the details of the relationship and the interests of other parties in the account are ascertainable from the deposit account records or from records maintained in good faith and in the regular course of business by the depositor or by some person or entity that maintains such records for the depositor.

If an IOLTA does qualify for pass-through coverage as a fiduciary account, then each separate client for whom a law firm holds funds in an IOLTA may be insured up to $250,000 for his or her funds.

For example, if a law firm maintains an IOLTA with $250,000 attributable to Client A, $150,000 to Client B, and $75,000 to Client C, the account would be fully insured if the IOLTA meets the requirements for pass-through coverage. If the clients have other funds at the same IDI, those funds would be added to their respective shares of the funds in the IOLTA for insurance coverage purposes.

IOLTA accounts won't be considered non-interest bearing transaction accounts after the end of the year. We can go back to understanding the phrase to mean what it says. Actually, the phrase will lose all relevance in the regulation.

Thanks John, Marketing wanted to include the verbiage Noninterest bearing transaction account includes traditional checking account and also includes Interest on Lawyers Trust Accounts and that did not seem correct to me.

What is the marketing department working on? If it's a message to tell affected depositors that the unlimited deposit coverage is ending, IOLTA accounts are included.

In addition to the FDIC verbiage they wanted to put a clarification as to what a non-interest bearing transaction account was and the types of accounts included. In that clarification, they stated that IOLTA was a non-interest bearing transaction account. That is incorrect as I understood it, I thought.

If they are trying to tell people that at the end of the year the unlimited deposit coverage will expire, they could use something like this (please note that my tongue is firmly in my cheek):

"Unless the good folks in Congress get off their buns and change the law before the end of the year, the law providing unlimited FDIC deposit insurance coverage for non-interest bearing transaction and IOLTA accounts will sunset on 12/31/2012. Beginning on 1/1/2013 ...."

John, I like your version of the statement much better than the one we have going out!