Expanded FDIC Insurance for College Savings Accounts

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FDIC Consumer News – Winter 2005/2006 – Expanded FDIC Insurance for College Savings Accounts


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Expanded FDIC Insurance for College Savings Accounts

A new rule from the FDIC provides that people who place "529-plan" college savings into bank deposits are better protected against loss if the bank were to fail. State-sponsored 529 plans (named after section 529 of the Internal Revenue Code) are tax-advantaged accounts that help families and individuals save for higher education expenses. Under the new rule, deposits that a 529-plan administrator places at a bank on behalf of many different individuals are federally insured up to $100,000 for each participant, not to $100,000 for all of the participants combined. While most states don't allow participants to have their 529-plan money placed in bank deposits — they instead limit the choices to investments such as stocks and bonds — several states have begun adding bank deposits as an option. The rule took effect December 27, 2005.


Winter 2005-2006 Main Menu


FDIC Consumer News is published by the Federal Deposit Insurance Corporation


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Find current and past issues of FDIC Consumer News at http://www.fdic.gov/consumernews. Refer to this same index to locate the issues that are specially formatted for being reprinted in any quantity.


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Last updated on 2/02/2006

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