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Posted by
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FDIC Insurance
Posted by Rex Feral
on 3/14/23 at 11:35 am
0
0A 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?
I think it has to do with how it is setup at the bank.
Based on your scenario, that should fit the coverage requirement. 4 separate accounts to 4 separate LLCs.
Keep in mind that FDIC reserves 100 years to pay the claim in full. That is their legal obligation to fulfill qualified claims.
I'm not a banker.
Based on your scenario, that should fit the coverage requirement. 4 separate accounts to 4 separate LLCs.
Keep in mind that FDIC reserves 100 years to pay the claim in full. That is their legal obligation to fulfill qualified claims.
I'm not a banker.
quote:It could be.
Do you think this would be a workaround the $250k limit?
e.g. In terms of personal accounts, a personal and a trust are separate. Spousal accounts are additive. So a joint account would be covered to $500K + TF's at $250K X2 could reach $1M covered.
re: FDIC InsurancePosted by Tigerholic 
on 3/14/23 at 12:58 pm to Rex Feral
on 3/14/23 at 12:58 pm to Rex FeralOnly answer is to call your bank and ask them.
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re: FDIC InsurancePosted by schexyoung on 3/14/23 at 1:43 pm to Rex Feral
on 3/14/23 at 1:43 pm to Rex FeralYou can fully insure more than $250,000 in deposits at one bank. Ask your bank if they are part of the interfi network. They may know it as promontory or CDRS.
Every night your funds over $250k sweep into other banks, earn yield, get FDIC coverage, and then sweep back the next morning. The program is nearly two decades old.
Why didn’t SVB use this common tool? Many are asking, haven’t heard any good answers yet.
Every night your funds over $250k sweep into other banks, earn yield, get FDIC coverage, and then sweep back the next morning. The program is nearly two decades old.
Why didn’t SVB use this common tool? Many are asking, haven’t heard any good answers yet.
re: FDIC InsurancePosted by TigerTatorTots on 3/14/23 at 1:55 pm to Rex Feral
on 3/14/23 at 1:55 pm to Rex FeralHaven't you heard? The $250k limit doesn't exist anymore. Unlimited insurance
re: FDIC InsurancePosted by glorymanutdtiger on 3/14/23 at 2:58 pm to TigerTatorTots
on 3/14/23 at 2:58 pm to TigerTatorTotsThere is no limit for FDIC if you use big banks. Fed will bail you out. We just learned it this week
quote:
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?
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.
This post was edited on 3/14 at 3:42 pm
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