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FDIC Insurance - Corporate Custodial Accounts

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Question: 
FDIC rules allow corporations/LLCs to hold funds for others as custodians and allows each of their owners/principals to be covered by the $100,000 FDIC insurance. How should the account be set up and what should we have on file for all the custodial clients for it to be insured? How should the account read when our customer is a payroll company (custodian)?
Answer: 

The account should be styled so that the fiduciary or agency nature of the account is clearly revealed in the account title. It is not necessary for the bank to have a record of the beneficial owners of such accounts if the depositor (fiduciary or agent) maintains complete records of beneficial ownership. For the record, from October 3, 2008 through and including December 31, 2009, the $100,000 figure is increased to $250,000. Each beneficial owner's interest in the fiduciary account is aggregated with other individual or joint deposit account balances in the name of the beneficial owner in the same bank and insured in to $250,000. For details, see the FDIC regulation at 12 CFR Part 330, Section 330.7.

First published on BankersOnline.com 1/26/09

First published on 01/26/2009

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