Is Fidelity FDIC Insured? Money Market, SPAXX, Cash Management & Roth IRA
POINTS
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Fidelity offers FDIC insurance on eligible cash deposits.
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FDIC coverage is generally limited to $250,000 per depositor, per bank.
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SPAXX is not FDIC insured because it is a money market fund.
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Fidelity money market funds are investments, not bank deposits.
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SIPC protects eligible brokerage assets if Fidelity fails.
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Check your account details to confirm FDIC coverage.
Fidelity customers can hold cash alongside investments, but the protections for the cash are not uniform across Fidelity accounts and holdings.
Fidelity is a brokerage firm rather than a bank, and its accounts can hold both bank deposits and investment products.
Your Cash that is held through Fidelity can therefore be subject to different forms of federal protection depending on the product involved.
Which Fidelity Accounts Are FDIC Insured?
Fidelity accounts can have different types of protection depending on where your money is held.
FDIC insurance generally applies to eligible bank deposits, while SIPC protection applies to eligible securities held in a Fidelity brokerage account.
| Fidelity Account / Holding | FDIC Insured? | SIPC Protected? | Notes |
|---|---|---|---|
| CMA — FDIC Sweep | Yes | No | Cash is deposited at FDIC-insured banks |
| CMA — SPAXX | No | Yes | SPAXX is a money-market fund, not a bank deposit |
| Brokerage — SPAXX | No | Yes | Investment is a security |
| Brokerage — Stocks, Bonds, Funds | No | Yes | Protected against brokerage failure, not investment losses |
| Eligible IRA — FDIC Sweep | Yes | No | Cash is deposited at FDIC-insured banks |
| IRA — SPAXX / Investments | No | Yes | These are securities |
| Brokered CD | Yes* | No | FDIC insurance comes from the issuing bank |
Remember that FDIC and SIPC protect against different risks:
- FDIC insurance protects eligible bank deposits if an insured bank fails, while
- SIPC protects eligible brokerage assets if a brokerage firm fails and customer assets are missing; neither protects against normal investment losses.
How Fidelity’s FDIC Sweep Program Works
Fidelity’s FDIC-Insured Deposit Sweep Program automatically moves your uninvested cash into FDIC-insured bank accounts to provide deposit insurance.
| Step | Process | Example |
|---|---|---|
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1. You Add Money
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You deposit cash into your Fidelity account. | You deposit $500,000 |
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2. Fidelity Holds the Cash Temporarily
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Your money sits in the account’s cash/core position. | $500,000 |
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3. Fidelity Moves the Cash to Banks
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Fidelity automatically “sweeps” your cash into participating banks. | Money moves to Bank 1 |
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4. Fidelity Spreads It Across Banks
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To help maximize FDIC coverage, Fidelity generally puts up to $245,000 per bank. | Bank 1: $245k |
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5. More Money Goes to the Next Bank
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Any remaining cash moves to additional participating banks. | Bank 2: $245k |
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6. The Remainder Goes to Another Bank
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Fidelity continues until the cash is allocated. | Bank 3: $10k |
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7. Your Deposits Can Have FDIC Insurance
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Money held at the participating banks is eligible for FDIC insurance, subject to FDIC rules and limits. | $500k spread across 3 banks |
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8. You Still Use Fidelity
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You don’t have to contact or manage those banks yourself. | You keep using Fidelity normally |
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9. You Spend or Withdraw Money
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Fidelity automatically moves money back from the banks when needed. | You spend $2,000 → Fidelity gets $2,000 |
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10. You Keep Earning Interest
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The bank deposits earn interest, which is handled automatically through the sweep. | Your cash continues earning interest |
- If a Program Bank Fails: If a partner bank closes, the FDIC will honor insured deposits up to $250k per depositor. Customers would then receive a payout or have the deposits transferred to another bank.
- If Fidelity Fails (Broker Failure): In a broker failure, SIPC would oversee the resolution of brokerage accounts. But your sweep deposits remain your property at the banks. They would continue to be treated as deposits by the FDIC, not subject to SIPC.
FDIC vs. SIPC: What’s the Difference?
| Factor | FDIC | SIPC |
|---|---|---|
| Protects | Bank deposits | Brokerage assets |
| If this institution fails | Bank | Brokerage firm |
| Typical examples | Checking, savings, CDs | Stocks, bonds, mutual funds, brokerage cash |
| Coverage limit | $250K per depositor, bank, ownership category | $500K per customer, including a maximum of $250K for cash |
| Market losses covered? | No | No |
Key Differences:
- FDIC insures bank deposits; SIPC insures brokerage assets.
- FDIC limits are per bank per category; SIPC limits are per brokerage per customer.
- FDIC protection applies automatically on deposits; SIPC applies if a broker fails.
Is Fidelity SPAXX & Fidelity Money Market FDIC Insured?
Fidelity’s money market funds (e.g., Fidelity Government Money Market Fund SPAXX) are not FDIC-insured.
| Feature | SPAXX | FDIC Deposit Sweep |
|---|---|---|
| FDIC insured? | No | Yes |
| What is it? | Money market fund | Bank deposits |
| SIPC protected? | Yes* | Not applicable to the bank deposits |
| Main protection | Securities held by the fund | FDIC insurance |
| Can you lose money? | Possible, but low risk | Generally protected within FDIC limits |
| Best for | Higher-yield cash with low risk | Maximum FDIC protection |
They are mutual funds whose assets are securities, not bank deposits. Thus:
- No FDIC: SPAXX is explicitly not a bank account and carries market risk.
- SIPC Coverage: SPAXX shares held in a Fidelity brokerage or CMA are considered securities, so they are protected by SIPC.
- Custody if Fidelity Fails: Fidelity mutual funds are separate legal entities with independent custodians. Customer shares in SPAXX are held by the fund, not Fidelity, so if Fidelity went under, the SPAXX fund itself would continue, and customers’ shares would remain in the fund’s custody.
How to Check Whether Your Fidelity Money Is FDIC Insured
- Log in to Fidelity
- Go to Positions
- Look for FDIC-Insured Deposit Sweep.
- If you see it, your eligible cash is held through Fidelity’s FDIC-insured deposit program.
- Check which banks hold your money.
- Fidelity spreads deposits among participating banks to provide FDIC coverage.
- Check your total deposits.
- FDIC insurance limits apply to your combined eligible deposits at the same bank and ownership category.
- Watch for SPAXX.
- If your money is in SPAXX, it is not FDIC-insured because SPAXX is a money market mutual fund.
Fidelity FDIC Insurance FAQ
No, not automatically. Brokerage cash is typically held in a money market fund and covered by SIPC, unless you use an FDIC-insured sweep program.
Yes, cash swept to partner banks is FDIC-insured up to $250,000 per bank, with coverage of about $4 million across multiple banks. Cash held in SPAXX or other funds is not FDIC-insured.
Yes, IRA cash held through the FDIC Sweep is FDIC-insured up to $250,000 per bank. Investments such as stocks, bonds, and mutual funds are not FDIC-insured but may be SIPC-protected.
Fidelity publishes its current Program Bank List in its disclosures, and you can also request the list by contacting Fidelity.
Usually, the FDIC makes insured deposits available within one to two business days after a bank failure, although uninsured amounts may take longer.
You can increase coverage by using different account ownership categories and spreading deposits across multiple FDIC-insured banks. Fidelity’s sweep program already distributes cash among participating banks.
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