Transaction Account Guarantee TAG Program Extended

The Federal Deposit Insurance Corporation (FDIC) expanded the protection it offers to depositors at participating financial institutions, which was set to expire this month. Under the Transaction Account Guarantee Program (TAG), which has now been extended until December 2010 and possibly into 2011, participating depository institutions are able to offer unlimited protection on qualifying accounts. So if your business has $20 million or $200 million deposited in a qualifying account, it’s fully protected by the FDIC against insolvency.

In order to qualify for TAG coverage, both your account and the institution where you have the account need to qualify. The institution needs to be an FDIC member institution. The account needs to be a non-interest bearing transaction account. For TAG qualification purposes this includes:

• Checking accounts that allow for unlimited deposits and withdrawals without advance notice
• Interest on Lawyers Trust Accounts (IOLTAs) and their functional equivalents
• Negotiable Order of Withdrawal accounts (NOW accounts) that will not pay more than 0.50% interest
• Money market deposit accounts (MMDAs) are specifically excluded

To learn which financial institutions have opted out in you area, go to: fdic.gov/regulations/resources/tlgp/optout.html.