#SWEEP ACCOUNT HOW TO#
#SWEEP ACCOUNT FULL#

You should review your cash balances at each bank that participates in your broker-dealer’s sweep program to ensure that no cash balance exceeds FDIC insurance coverage levels, or (if it does) that you are comfortable having uninsured cash at a participating bank.

You should also be aware that most broker-dealers place the responsibility on you to monitor your cash level so that you do not lose FDIC insurance coverage. You can determine how much cash is in your bank sweep accounts from your brokerage account statements or by contacting your brokerage firm. Thus, it is important to know how much of your cash your broker-dealer has swept into each FDIC-insured bank participating in your broker-dealer’s bank sweep program at any given time, because any cash in these accounts that exceeds the $250,000 limit will not be protected by FDIC insurance. The standard insurance amount is $250,000 per depositor ( i.e., per brokerage customer), per insured bank, for each account ownership category.Ĭash swept into deposit accounts through bank sweep programs is covered by FDIC insurance up to the $250,000 limit per customer at each FDIC-Insured bank that participates in the bank sweep program. FDIC insurance covers all deposit accounts, including checking and savings accounts, money market deposit accounts and certificates of deposit.

#SWEEP ACCOUNT FULL#

FDIC insurance is backed by the full faith and credit of the United States Government. The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government that protects the funds depositors place in banks and savings associations. Generally, you may liquidate your bank sweep account at any time and have the proceeds returned to you or placed in your brokerage account.ĭoes FDIC insurance cover the cash in bank sweep programs?

#SWEEP ACCOUNT HOW TO#

If you decide to change your cash sweep option, ask your broker-dealer how to do that. You also may want to consider asking your broker-dealer about other options for your cash as well as the return offered, risks and costs of each option. If the description of the bank sweep program is not clear to you, you may want to consider asking your broker-dealer to explain how its bank sweep program works. Your brokerage account opening materials should explain how your broker-dealer’s bank sweep program works and your broker-dealer must give you 30 days written notice of any changes to the bank sweep program. Beginning in March 2014, your broker-dealer must obtain your written consent to participate in a bank sweep program for any new account you open. Many bank sweep programs are the “default” option for managing cash in a brokerage account, so you may have agreed to participate in your broker-dealer’s bank sweep program when you opened your brokerage account. You should review your brokerage account agreement and statement to determine if you are participating in a bank sweep program for your cash. How do I know if I am participating in a bank sweep program? The protections for cash at a bank primarily will derive from banking laws and regulations, including FDIC deposit insurance. The terms and conditions of bank sweep programs vary.

This investor alert focuses only on the first option: bank sweep programs. Other options include leaving cash in the brokerage account, or sweeping cash to one or more money market mutual funds. One option, a bank sweep program, typically involves the automatic transfer (or “sweep”) of cash in the brokerage account into a deposit account at a bank that may or may not be affiliated with the broker-dealer. This Investor Bulletin describes some of the potential risks associated with bank sweep programs and suggests questions you may want to consider asking your broker-dealer to help you decide how to best manage the cash in your brokerage account.īroker-dealers may offer you several options for managing your cash. The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors about bank sweep programs, which some broker-dealers offer to their customers as a way to manage cash in their brokerage accounts.

Sweep account