Holding more than $250k in an IRA means that there's risk if the broker or clearing firm goes down since SIPC only insures up to $250k in a cash position. Therefore, is it possible to spread 1 IRA account to several brokers and still be fully insured on the IRA account? If so, is it moving to diff brokers or diff brokers with diff clearing firms that really matters as far as SIPC goes?
I would suggest sending an email to the SIPC and receive an official response: asksipc@sipc.org Please update regarding the response, it's an interesting issue.
My understanding is that an IRA is immune from bankruptcy of a broker. When a broker goes under, all cash accounts (by designation, not by balance) are held separately than margin accounts. The broker has no claim to them for any purposes and so they aren't eligible to be given to creditors.
So I just looked it up. You are correct $250K MAX per acct. UNLESS it is a NON-interest bearing acct. in which case you are unlimited coverage. Looks like your best option is to divide the amount among acct at different institutions so that each one is insulated as much as possible. Your acct is insured per depositor not per acct so just having mutiple acct in the same insititution would NOT help.
I may be wrong but I think it's the clearing firms that have to be different. If you have 2 brokers using the same clearing firm, do you get $250k insurance on each account or combined $250k on both? What do you mean by a "non-interest bearring account" which has unlimited coverage? what type of account would that be?
Not sure about the clearing firm question but I suspect it has no bearing as the institution the acct is with would not have gone under in this case. As the FDIC site says it is "per BANK". See link below at the very top of the webpage. As for the unlimited insurance thing...they have unlimited coverage (not just $250K) when the acct is a cash acct that does NOT earn interest. Here is the link: http://www.fdic.gov/deposit/deposits/unlimited/index.html