FDIC vs. SIPC: What's the Difference?

June 13, 2024

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Whether you’re looking to save or invest, it’s important to understand what type of protections you may be entitled to when you park your money at a bank or brokerage firm. While both FDIC and SIPC insurance programs can protect your cash up to a certain dollar amount, there are key differences in how they work.

FDIC insurance

The Federal Deposit Insurance Corporation or FDIC is an independent federal agency established in 1933 to help protect customer deposits held at FDIC-member financial institutions in the event of a bank failure. The FDIC insures your money, up to a certain dollar amount, held in deposit accounts like:

Savings accounts
Certificate of deposit accounts
Checking accounts
Money market deposit accounts

There’s no need to apply for FDIC insurance: Coverage is automatic whenever you open a qualifying deposit account at an FDIC-insured bank or financial institution.

Currently, the FDIC coverage limit is $250,000 per depositor, per FDIC-insured bank, per account ownership category.

Good to know: You can use the FDIC’s Electronic Deposit Insurance Estimator (EDIE) to help you calculate your coverage. Find it at www.fdic.gov/edie.

FDIC coverage may also extend to certain retirement accounts held at an FDIC-insured bank in which you have the right to direct how the money is invested, including:

Individual Retirement Accounts (IRAs)
Self-directed define contribution plans (e.g, 401(k) or profit-sharing plans)
Self-directed Keogh plan accounts
Section 457 deferred compensation plan accounts (whether self-directed or not)

Important: FDIC coverage does not extend to retirement accounts held at a broker-deal or investment firm.

Also be aware that if you own multiple retirement accounts listed above at the same bank, they are all added together for insurance purposes. So for instance, if you have multiple IRAs at one bank, all of the accounts combined are insured up to the $250,000 limit.

Keep in mind: FDIC insurance only covers money held in deposit accounts at FDIC-insured banks. It does not cover non-deposit investment products like stocks, bonds, or mutual funds – even if your financial institution offers them. For a complete list of financial products that are not insured by the FDIC, visit FDIC.gov.

SIPC insurance

When it comes to protecting your investments (e.g., stocks and bonds) in a brokerage account, this is where the Securities Investor Protection Corporation or SIPC can step in.

In the rare event that your brokerage firm fails, the SIPC protects the securities and cash in your account up to a certain limit, which is currently $500,000. The $500,000 protection includes up to $250,000 protection for cash in your account to buy securities.

Certain conditions apply – SIPC covers your investments only if:

Your brokerage firm is a SIPC member.
You own securities at your brokerage firm.
You have cash at your brokerage firm to buy securities.

Unlike FDIC insurance, you must file a claim to receive protection from SIPC.

Be aware: SIPC does not protect you from market loss – for example, if your stocks lose value due to market volatility. It also won’t protect you if you’re sold worthless assets or if you lose money as a result of receiving bad investment advice. SIPC insurance also doesn’t cover commodities or futures contracts.

In short, SIPC doesn’t shield you from all the potential risks that come with investing, but it does offer some protection if your SIPC-member brokerage firm were to go out of business.

Good to know: Most brokerage firms in the US are members of the SIPC. By law, all registered brokers or dealers are SIPC members, but there are some exceptions. If you’re unsure about your brokerage firm’s membership status, you can check the SIPC’s membership list here or contact the SIPC.

FDIC vs. SIPC: What's covered?

FDIC

SIPC

	FDIC	SIPC
What's covered	Money held in a checking, savings, certificate of deposit, or money market deposit account at a FDIC-member bank.	Securities, such as stocks and bonds, as well as cash held at a financially-troubled SIPC-member brokerage firm.
Coverage limits	$250,000 per depositor, per FDIC-insured bank, per account ownership category.	$500,000, which includes a $250,000 limit for cash.

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This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this website were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice.