What SIPC protects
The Securities Investor Protection Corporation (SIPC) protects against the loss of cash and securities, such as stocks and bonds, held by a customer at a SIPC-member firm that fails. Cash is protected when it is held in connection with buying or selling securities. SIPC's limit is $500,000, which includes a $250,000 limit for cash.
| Account at a failed member firm | Up to this much protected |
|---|---|
| Individual account: $400,000 securities, $50,000 cash | $450,000 |
| Individual account: $200,000 securities, $350,000 cash | $450,000 |
| Individual account: $700,000 securities | $500,000 |
The second account shows the cash sub-limit at work: $350,000 of cash counts only up to $250,000. The amounts are examples.
What it does not protect
- Market losses. SIPC does not protect against the decline in value of your securities.
- Commodity futures contracts, unless held in a special portfolio margining account.
- Foreign exchange trades.
- Fixed annuities and investment contracts, such as limited partnerships, unless registered with the SEC.
- Digital asset securities that are unregistered investment contracts, which do not qualify as securities under the Securities Investor Protection Act, even when held at a member firm; see cryptocurrency taxes for how digital assets are treated otherwise.
Separate capacities
SIPC applies its limits per customer per separate capacity, and accounts in the same capacity at the same firm are combined. The capacities SIPC lists:
| Separate capacity | Limit |
|---|---|
| Individual accounts | $500,000, of which up to $250,000 cash |
| Joint accounts | $500,000, of which up to $250,000 cash |
| Corporate accounts | $500,000, of which up to $250,000 cash |
| Trusts created under state law | $500,000, of which up to $250,000 cash |
| Individual retirement accounts (IRAs) | $500,000, of which up to $250,000 cash |
| Roth IRAs | $500,000, of which up to $250,000 cash |
| Estate accounts held by an executor | $500,000, of which up to $250,000 cash |
| Accounts held by a guardian for a ward or minor | $500,000, of which up to $250,000 cash |
An investor with an individual account, a joint account with a spouse, an IRA and a Roth IRA at one firm therefore has four separate $500,000 limits there, while two individual accounts at the same firm share one.
SIPC and FDIC
- FDIC insures deposits at failed banks: FDIC insurance limits.
- SIPC restores missing cash and securities at failed brokerage firms.
- Neither covers investment losses. The net worth calculator is a simple place to list what is held where, and mutual funds vs ETFs covers the products most brokerage accounts hold.
This guide follows SIPC's pages on what it protects and on multiple accounts. Whether a firm is a SIPC member, and how a particular account is titled, decide the protection in a given case.
Frequently asked questions
What does SIPC protect?
The cash and securities, such as stocks and bonds, that a customer holds at a SIPC-member brokerage firm that fails, per SIPC. Cash is protected when it is held for buying or selling securities. The limit is $500,000 per customer in each separate capacity, of which no more than $250,000 can be cash.
Does SIPC protect me if my investments lose value?
No. SIPC says it does not protect against the decline in value of your securities. It restores missing cash and securities when a member firm fails; market losses are the investor's risk.
What is not covered by SIPC?
SIPC lists commodity futures contracts (except in a special portfolio margining account), foreign exchange trades, and fixed annuities and investment contracts such as limited partnerships unless registered with the SEC. Digital asset securities that are unregistered investment contracts do not qualify as securities under the law SIPC administers, so they are not protected even at a member firm.
Can I get more than $500,000 of SIPC protection?
Yes, through separate capacities. SIPC protects each separate capacity up to $500,000, including $250,000 of cash: individual accounts, joint accounts, corporate accounts, trusts created under state law, IRAs, Roth IRAs, estate accounts held by an executor, and accounts held by a guardian. Accounts in the same capacity at the same firm are combined.
How is SIPC different from FDIC insurance?
FDIC insurance covers deposits at a failed bank; SIPC covers cash and securities missing from a failed brokerage. Neither protects against investment losses.
Sources
- SIPC: What SIPC protects (cash and securities held by a customer at a failed SIPC-member firm; $500,000 limit including $250,000 for cash; no protection against declines in value; commodity futures, foreign exchange, unregistered fixed annuities and investment contracts, and unregistered digital asset securities not protected)
- SIPC: Investors with multiple accounts (protection per separate capacity up to $500,000 including $250,000 cash; accounts in the same capacity combined; the list of separate capacities)
General information based on the sources above, not tax, legal or financial advice.