Jessica Reinhardt

Our Beautiful Thousand Oaks Branch, Located at 3366 Thousand Oaks Blvd

Jessica Reinhardt

Our Beautiful Camarillo Branch, Located at 761 Daily Drive

In times of uncertainty, it's important to get the facts---and not panic. Headlines can send the calmest people running for the hills. In recent news, there have been a lot of misleading statements regarding federal deposit insurance. As a financial professional (full disclosure), I invite you to learn the facts. Before you stuff your mattress with your life savings, read on---you will sleep much better at night. But don't take my word for it---do your own research.

Since I work at a Credit Union, I will be describing the insurance coverage pertaining to Credit Unions. While the Federal Deposit Insurance Corporation, or FDIC, federally insures banks, the National Credit Union Administration, or NCUA, federally insures Credit Unions. The insurance coverage offered by these two entities is virtually identical. For more information, please visit the websites listed at the end of this article.

Share Insurance

The National Credit Union Share Insurance Fund (NCUSIF), an arm of the NCUA, insures the money deposited in a credit union. Established by Congress in 1970 to insure member accounts at federally insured credit unions, the NCUSIF is managed by NCUA under the direction of the three-person NCUA Board. Share insurance is similar to the deposit insurance protection offered by the Federal Deposit Insurance Corporation (FDIC).

Credit unions that are insured by the NCUSIF must display in their offices the official NCUA insurance sign. All federal credit unions must be insured by NCUA, and no credit union may terminate its federal insurance without first notifying its members.

Here are some important facts to remember about share (deposit) insurance:

Not one penny of insured savings has ever been lost by a member of a federally insured credit union. The federal insurance fund has several programs to help insured credit unions that may be experiencing problems. The NCUSIF is backed by the full faith and credit of the United States government, so although the insurance fund is extremely well capitalized, in addition to the assets of NCUSIF the U.S. Government guarantees protection of insured credit union deposits.

Accounts in federally insured credit unions are insured up to the Standard Maximum Share Insurance Amount, which is $100,000 as of April 2006, but may be increased in the future. Recent legislation has increased the insurance coverage on certain retirement accounts, such as IRAs and Keoghs, up to $250,000.

Generally, if a credit union member has more than one account in the same credit union, those accounts are added together and insured in the aggregate. There are exceptions: you may obtain additional separate coverage on multiple accounts, but only if you have different ownership interests or rights in different types of accounts.

For example, if you have a regular share account and an Individual Retirement Account (IRA) at the same credit union, the regular share account is insured up to $100,000 and the IRA is separately insured up to $250,000. However, if you have a regular share account, a share certificate, and a share draft account, all in your own name, you will not have additional coverage. Those accounts will be added together and insured up to $100,000 as your individual account.

Coverdell Education Saving Accounts, formerly education IRAs, are insured as irrevocable trust accounts and will be added to a member's other irrevocable trust accounts and insured up to the SMSIA. Roth IRAs will be added together with traditional IRAs and insured up to $250,000.

Additional coverage is available on revocable trust or payable on death accounts. You can now name a parent or sibling as a beneficiary to get separate coverage. Previously, beneficiaries had to be a spouse, child or grandchild.

The rules on joint accounts have been simplified. A co-owner's interest in all joint accounts in the same credit union will be added together and insured up to the SMSIA, separate and in addition to the insurance coverage on individually owned accounts. This is true no matter how many joint owners there are on an account.

In addition, some institutions might opt to place additional insurance policies in place to insure you in excess of federal mandates. Through American Share Insurance (ASI), Pacific Oaks Federal Credit Union has insurance coverage of up to $250,000 provided at no additional cost to our members, separate and in addition to the NCUA insurance.

While failures of banks and credit unions are rare, it is extremely important to understand how you can protect your funds to the fullest. If you have a question about coverage, be sure to ask for help. One great way to check your coverage is to consult the FDIC or NCUA websites directly. There are coverage calculators that can help you find any potential coverage issues. To calculate your coverage at a credit union, visit http://webapps.ncua.gov/Ins/

Locally owned and trusted for over 60 years, Pacific Oaks Federal Credit Union continues to be a financial steward to Ventura County; firmly committed to helping members and the residents of Ventura County achieve their financial goals. For more information on our commitment to financial education, including resources and information on upcoming free financial seminars, please visit www.pacificoaksfcu.org.

If you have a group interested in learning more about financial education, please contact me at Jreinhardt@pacificoaksfcu.org.

For More information on Deposit Insurance visit: www.pacificoaksfcu.org; www.NCUA.gov; www.FDIC.gov; www.americanshare.com.