• Uncurious3512@lemmy.world
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    1 month ago

    One thing I never realized until this weekend was that the SIPC insurance your brokerage firm provides is not just by account owner. Each “separate capacity” is protected up to $500,000!

    From the SIPC website:

    SIPC protection of customers with multiple accounts is determined by “separate capacity.” Each separate capacity is protected up to $500,000 for securities and cash (including a $250,000 limit for cash only). Accounts held in the same capacity are combined for purposes of the SIPC protection limits.

    Examples of separate capacities are:

    • individual account;
    • joint account;
    • an account for a corporation;
    • an account for a trust created under state law;
    • an individual retirement account;
    • a Roth individual retirement account;
    • an account held by an executor for an estate; and
    • an account held by a guardian for a ward or minor.

    The following are examples of separate accounts:

    • Mary has an account in her name at her brokerage firm. Mary is protected by SIPC up to $500,000.
    • Joe has two brokerage accounts, each in his own name. For purposes of SIPC protection, Joe’s accounts are combined, and Joe is protected by SIPC only up to a total of $500,000.
    • Joe and Mary are married and they have a joint brokerage account which is separate from the individual accounts that they each have at the firm. An additional maximum of $500,000 of SIPC protection is available for the joint account.
    • Joe has a Roth account and an IRA account, at the same brokerage. Joe is protected up to $500,000 for the Roth account and up to $500,000 for his IRA account.

    The more you know! Hope that knowledge wasn’t super obvious to everyone but me and helps someone!

    • sugar_in_your_teaM
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      1 month ago

      A bit less fun fact, SIPC is generally not automatic, you need to file, whereas FDIC is automatic. That said, most brokerages will do everything they can to make you whole w/o going through SIPC, so it probably doesn’t matter in practice unless there’s a severe issue involving both the brokerage and the funds you’re invested in.