Roth IRA ---FDIC ???

Question

I currently have a roth IRA which is composed of a mutual fund...With all the banks going under how does someone move out there money in there IRA if the bank starts to go under....You cant with draw it unless you are of age....and its not FDIC insured like regular savings accounts...so you could lose everything....are there any IRA's that are FDIC protected whats the best bet

Answer 1

Roth's and other types of accounts are not insured, it is the products themselves that can be insured!

The investments of CD's are FDIC insured, so if you invest in a cd in your Roth IRA then it would be covered if the banks went out of business.  However you will not get growth out of those CD's and your Roth Grows Tax Free.  Stick with the funds and ride it out.  You can withdraw anytime you would like, but if you are under 59 1/2 ( exception is regulation 72q for age 55) then you will pay a 10% penalty on your withdrawal.

Answer 2

IRAs are not FDIC insured, but the instrument may be...

Answer 3

Where is your IRA account? At a bank? A mutual fund family?

If the account is at a bank you can only invest in that bank's products (savings account, CD, etc).

If it is at a mutual fund family (Vanguard, Fidelity, Price, etc) you can only invest in funds in that family.

If you move it to a brokerage (Ameritrade, Etrade, Scottrade, etc) you can invest in stocks, bonds, mutual funds, ETFs or just about anything else.

As the others have said, the IRA is not protected but what it invests in may be protected. Most brokerage accounts have some protection but it is not as sure as FDIC's protection of bank accounts.

Unfortunately, most FDIC protected products offer very low yields. The interest rate on most CD will barely keep up with inflation. If you need true growth (and we all do) you have to go with stocks or mutual funds.

They will fluctuate over time but in the long run they do fairly well. The overall stock market has averaged something like 11% over the last 60 years. Many individual stocks have lost money but many have done much much better.

Get some investing books at your local library and learn how the system works. You will be glad you did.

Answer 4

You are talking about mutal fund and bank as if they are the same thing.  How is mutal fund performing?  That is the question.  No investment is FDIC insured. Anything that is will give you a very poor rate of return.

Watch the performance of the mutal fund. If the bank is the largest bank in the world and has the highest profits ever  the mutal fund can still perform poorly and visa versa.