re: FDIC Insurance

quote:

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A multimember LLC with $1M in the bank sets up four wholly owned single member LLCs. The multimember LLC transfers to each LLC's bank account $250,000. The main operating company still has control of the $1M, but it's spread among four separate legal entities.

Do you think this would be a workaround the $250k limit?

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For corporations/business accounts, it's $250K per tax ID number. In your example, I'd create the account with the main LLC with an FDIC bank who is a part of the ICS or CDAR network as a poster above said. That will allow your bank to sweep funds in excess of $250K and distribute them to other banks who are a part of the ICS/CDAR network into an account at each, up to the $250K limit.

For example, say you have $2M to deposit. You deposit it at Community Bank A.

Community Bank A retains $250K and sweeps $1.75M into the network so you effectively then have $250K at Community Bank B, $250K at Community Bank C, etc. The funds earn interest, your whole $2M is fully insured, and if you want to withdraw $500K you can do so at Community Bank A and not have to travel to the others to access your funds.

It's important to note that ICS and CDARS work in the same way but ICS is for demand accounts (checking/savings) and CDARS is for CDs.