FDIC Narrows Protection on Retirement Accounts : Insurance: The new rules limit coverage--up to $100,000--to one account only at individual banks.

The Federal Deposit Insurance Corp. adopted regulations Tuesday that will narrow its coverage of some retirement accounts.

Accounts such as IRAs, Keoughs and 401Ks are now insured up to $100,000 each. Under the new rules, which take effect on Dec. 19, the agency will cover only $100,000 per individual at any one bank.

Thus, if a depositor has three retirement accounts at one institution totaling $120,000, only $100,000 will be protected if the bank fails.

But the wider insurance protection now in force will remain in effect for current accounts until they mature, according to FDIC spokesman Alan Whitney.

Also, depositors will still be able to maintain coverage for more than $100,000 through different ownership arrangements. For instance, a married couple could each maintain an individual account and a joint account, thus obtaining $300,000 coverage at one bank.

The new rule applies only to self-directed accounts, and does not affect accounts where an employer chooses the bank.

In a separate action, the FDIC adopted new bank auditing rules that the General Accounting Office had criticized as too weak. The detailed rules were put into the form of guidance to banks and their examiners.

The GAO, the congressional watchdog agency, complained that the move amounted to “a serious weakening” of regulations aimed at policing banks’ management practices.

But Whitney said the guidance, which is less rigid than a formal regulation, could be more productively enforced by examiners using their judgment than could “an overly prescriptive regulation that mandates everything down to the last detail.”

Both the auditing and deposit insurance rules were required under the FDIC Improvement Act of 1991.