SIPC insurance rules SIPC Insurance: What It Does
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Posted On: 10/02/2021 7:53:51 AM
SIPC insurance rules
SIPC Insurance: What It Does and Does Not Protect
https://www.nerdwallet.com/article/investing/...ot-protect
Topic: You can have multiple accounts at the same broker (for additional insurance protection):
Unfortunately, it's more complicated than just having multiple accounts at a broker, because (for additional insurance) the accounts have to be seen as separate accounts according to the SIPC insurance rules:
Is SIPC coverage enough?
SIPC coverage is limited to $500,000 total per customer. However, if you have more than that at the institution, you may still be insured for a greater amount based on …
Separate accounts: The “per-customer” rule of coverage is based on ownership capacity. If, for example, you have an IRA account in your name and a joint account with your spouse, the SIPC treats them as separate accounts and insures each up to $500,000. (Unlike with FDIC coverage, joint accounts aren’t insured to the full amount for each account holder with SIPC insurance.) Other examples of separate capacity include accounts held for a trust or a corporation, by a guardian for a ward or minor or by an estate executor. A margin account is not considered a separate account.
Cash: Claims on money that’s not invested and is in cash are capped at $250,000. That $250,000 counts toward the full $500,000 policy. SIPC protection may not be adequate if you keep a lot of cash in your brokerage. Note that money market mutual funds and certificates of deposit (CDs) are considered an investment and not cash under the rules.
SIPC coverage provides ..
Up to $500,000 in total coverage per customer for lost or missing assets of cash and/or securities from a customer’s accounts held at the institution.
Up to $250,000 of that total can be applied to protect cash within a customer's account that is not yet invested in securities. Protection in case of unauthorized trading or theft from an account.
Note: Talk to your broker about this. I talked with Etrade at one point about stolen securities/funds. They said they would cover this in most cases.
SIPC insurance doesn’t cover:
Losses due to account hacking
If after adding up your assets in all their separate and combined capacities it turns out SIPC coverage falls short, consider moving a portion of your money to a different institution.
SIPC Insurance: What It Does and Does Not Protect
https://www.nerdwallet.com/article/investing/...ot-protect
Topic: You can have multiple accounts at the same broker (for additional insurance protection):
Unfortunately, it's more complicated than just having multiple accounts at a broker, because (for additional insurance) the accounts have to be seen as separate accounts according to the SIPC insurance rules:
Is SIPC coverage enough?
SIPC coverage is limited to $500,000 total per customer. However, if you have more than that at the institution, you may still be insured for a greater amount based on …
Separate accounts: The “per-customer” rule of coverage is based on ownership capacity. If, for example, you have an IRA account in your name and a joint account with your spouse, the SIPC treats them as separate accounts and insures each up to $500,000. (Unlike with FDIC coverage, joint accounts aren’t insured to the full amount for each account holder with SIPC insurance.) Other examples of separate capacity include accounts held for a trust or a corporation, by a guardian for a ward or minor or by an estate executor. A margin account is not considered a separate account.
Cash: Claims on money that’s not invested and is in cash are capped at $250,000. That $250,000 counts toward the full $500,000 policy. SIPC protection may not be adequate if you keep a lot of cash in your brokerage. Note that money market mutual funds and certificates of deposit (CDs) are considered an investment and not cash under the rules.
SIPC coverage provides ..
Up to $500,000 in total coverage per customer for lost or missing assets of cash and/or securities from a customer’s accounts held at the institution.
Up to $250,000 of that total can be applied to protect cash within a customer's account that is not yet invested in securities. Protection in case of unauthorized trading or theft from an account.
Note: Talk to your broker about this. I talked with Etrade at one point about stolen securities/funds. They said they would cover this in most cases.
SIPC insurance doesn’t cover:
Losses due to account hacking
If after adding up your assets in all their separate and combined capacities it turns out SIPC coverage falls short, consider moving a portion of your money to a different institution.
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