How Your Brokerage Account Is Actually Protected: SIPC, Excess SIPC, FDIC Sweeps, and the Futures Gap

Compiled September 2026. Regulatory limits and private insurance policies change. Confirm current terms on each firm's disclosure pages and at sipc.org, fdic.gov, and cftc.gov before relying on a specific number.

Three protection regimes behind one balance

A modern brokerage account that trades stocks, options, and futures is not one account in the legal sense. It is up to three, each governed by a different regulator and backed by a different kind of protection. Which regime applies to a given dollar depends on where that dollar legally sits at the moment the firm fails, not on where it came from or what the app's combined balance says.

Regime	What it covers	Insurance behind it	Regulator
SEC / SIPC (securities side)	Stocks, ETFs, mutual funds, bonds, listed options, and cash in the securities account	SIPC: $500,000 per customer per capacity, including up to $250,000 cash, plus the broker's private excess-SIPC policy	SEC and FINRA
CFTC segregation (futures side)	Futures, options on futures, and the cash margining them	None. Segregation rules only, no insurance fund	CFTC and NFA
FDIC (bank side)	Cash swept into program banks	$250,000 per depositor, per bank, per ownership category	FDIC

Three misconceptions do most of the damage in this area. First, FDIC never covers securities. Not at Fidelity, not in a 401(k), not in a rollover IRA, not anywhere. FDIC insures bank deposits. The securities in an IRA are protected by segregation and SIPC exactly like any other brokerage position. Second, nothing here protects against market losses. SIPC, excess SIPC, FDIC, and CFTC segregation all address a broker or bank failing with customer assets missing. A trade that lost money is not a covered event. Third, a 401(k) has one extra layer the others lack: ERISA requires plan assets to be held in trust, out of reach of the employer's and the custodian's creditors. That protection comes from its being an employer plan, not from the custodian.

Layer 1: Segregation, the defense that almost always does the work

Before any insurance matters, customer assets at US broker-dealers are segregated by law. On the securities side, SEC Rule 15c3-3, the Customer Protection Rule, requires fully paid securities and customer cash to be kept apart from the firm's own assets, with a special reserve bank account backing customer cash. Segregated assets are not available to the broker's general creditors in an insolvency. On the futures side, CFTC customer-segregated-funds rules require futures margin to be held in segregated accounts, computed and reported daily. Foreign futures sit in a third bucket, the 30.7 secured amount, which has historically been slightly weaker.

In most broker failures, customers are made whole by segregation alone. Accounts are bulk-transferred to a healthy broker and the insurance layer is never touched. Insurance exists for the rare case where assets are actually missing because of fraud or a segregation violation.

Layer 2: SIPC, for securities accounts only

Nearly all US-registered broker-dealers must be members of the Securities Investor Protection Corporation. SIPC is a non-profit, member-funded corporation created by the Securities Investor Protection Act of 1970. It is not a government agency, it is not FDIC's sibling, and it does not insure investments against loss.

SIPC's own description of its limit is direct: protection is capped at $500,000 per customer, which includes a $250,000 limit for cash. It covers the net equity of your account, positions plus cash, when a member firm fails and assets are missing. Coverage applies per separate capacity, which multiplies it: an individual account, a joint account, a traditional IRA, and a Roth IRA at the same firm each receive their own $500,000.

What counts as a security for this purpose is broad: stocks, bonds, ETFs, mutual funds held in the brokerage account, listed options, and brokered CDs. Money market funds are treated as securities rather than cash, which turns out to be a useful planning fact. What SIPC never covers is also specific: commodity futures contracts, foreign exchange, precious metals, fixed annuities, unregistered investment contracts, and crypto, along with market losses, bad advice, and hacks while the firm remains solvent. Within the securities bucket there is no tiering by asset type. A quarter-million dollars of options spreads is protected exactly like a quarter-million dollars of index funds.

The cash sub-limit trap

Layer 3: Excess SIPC, which only matters above $500,000

Most large brokers buy a private insurance policy that pays after SIPC's per-capacity limit is exhausted. These are large aggregate policies, typically placed in the London market, that are renegotiated periodically. They are only relevant to accounts above $500,000 in a single capacity. Below that line, the excess layer is never reached and every SIPC member is identical.

Firm	Aggregate limit	Per-customer limit	Cash sub-limit
Fidelity	$1 billion	No per-customer limit on securities	$1.9 million
Schwab (including thinkorswim)	$600 million	$150 million	$1.15 million
Interactive Brokers	$150 million	$30 million per account	$900,000
tastytrade (via clearing firm Apex)	$150 million	$37.5 million	$900,000

Fidelity's figures were confirmed against Fidelity's account-protection disclosure on September 6, 2026. The Schwab, Interactive Brokers, and tastytrade figures were compiled from each firm's published disclosures in September 2026 and should be confirmed on the firm's own page before you rely on them, because these policies are renewed and re-priced regularly.

Two structural notes. tastytrade does not custody assets itself; Apex Clearing holds customer assets and carries the excess policy. And for very large accounts the ranking is Fidelity, then Schwab, then Interactive Brokers and tastytrade roughly level. For accounts under $500,000 per capacity, the table is irrelevant.

Layer 4: FDIC, for bank-swept cash only

FDIC insurance applies only to uninvested cash that has been swept into program banks. Securities, money market funds, and cash that has not yet been swept are not FDIC-insured, even at firms that own banks. Schwab sweeps into affiliated banks at $250,000 per bank per depositor, stacking across multiple program banks. Interactive Brokers runs an insured bank deposit sweep program for eligible accounts that spreads cash across program banks. Fidelity offers an FDIC-insured deposit sweep as a core-position option in many account types. tastytrade has no FDIC sweep: idle cash sits at the broker and clearing level under SIPC's $250,000 cash limit alone. For a cash-heavy account, that is tastytrade's one structural weakness.

Futures: a different universe

Futures and options on futures are excluded from SIPC at every broker. tastytrade states this explicitly in its disclosures, and it is true industry-wide. Protection on the futures side is segregation only. Customer funds must be walled off from firm money, but there is no insurance fund. If segregation is violated, customers share pro rata in what is recovered.

The canonical failure is MF Global in 2011. Customer segregated funds were improperly tapped as the firm collapsed. Customers eventually recovered close to all of their money, but through years of litigation and clawbacks rather than an insurance payout. Foreign futures, held in the CFTC's 30.7 secured-amount bucket, have historically been weaker still. Crypto held through a broker's partner, such as tastytrade's arrangement with Zero Hash, has no SIPC, no FDIC, and no CFTC segregation, making it the least-protected asset class discussed here.

How one login hides two accounts

A universal account that trades stocks, options, and futures is legally two paired accounts: a securities account at the broker-dealer under the SEC and FINRA regime, SIPC-protected, and a futures account at the futures commission merchant, often a separate affiliated entity, under the CFTC regime, segregation only. A dollar cannot legally sit in both a 15c3-3 reserve and a CFTC segregated account at once. The firm's ledger tracks which side every dollar is on even when the app shows one blended balance.

Protection follows location, not origin. Profits from closing a futures position are segregation-only while they rest on the futures side. The moment they are journaled to the securities side they become ordinary SIPC-protected free credit. Cash has no memory.

Practical sweep hygiene

1. Keep only required margin plus a working buffer on the futures side. Excess should sweep back to the securities side. Interactive Brokers exposes this as an explicit excess-funds sweep setting; Schwab and tastytrade journal semi-automatically. Confirm the timing and defaults with each firm.
2. Intraday exposure is irreducible. Cash committed as futures margin is outside SIPC during the trading day no matter how the sweep is configured.
3. Variation margin timing matters. A large winning futures day creates a temporarily larger unprotected balance until the nightly sweep.
4. Money market funds are a SIPC-friendly parking spot for buffers on the securities side, since they count as securities rather than cash.

Who regulates what

Body	Role
SEC	Federal securities regulator; writes Rule 15c3-3 on customer protection and segregation
FINRA	Self-regulatory organization for broker-dealers; examines firms and enforces conduct rules
SIPC	Member-funded liquidation backstop for failed broker-dealers; returns missing customer assets
FDIC	Federal insurer of bank deposits, $250,000 per depositor per bank per ownership category
CFTC	Federal futures regulator; writes the customer-segregated-funds rules
NFA	Self-regulatory organization for the futures industry; oversees futures commission merchants
ERISA / Department of Labor	Governs employer retirement plans, including the 401(k) trust protections

All four brokers discussed here are regulated by the SEC and FINRA on the securities side and, where they offer futures, by the CFTC and NFA on the futures side.

What this means at different account sizes

Under $500,000 per capacity

All four brokers are equally safe, because you never exhaust SIPC and the excess-SIPC differences are moot. What actually matters is keeping raw cash at or below $250,000, or swept, or in a money market fund, since that is the only way to have a gap at this size. Treat any futures or crypto sleeve as a separate and categorically less-protected bucket. If you want a tiebreaker anyway, it is counterparty scale: Schwab and Fidelity are the largest, Interactive Brokers is heavily capitalized, and tastytrade is smaller with custody at Apex. Otherwise, choose the broker on trading merits, not safety.

Consider a concrete case: $250,000 in cash and $250,000 in listed options spreads. Protection is identical at all four firms and fully inside standard SIPC. The account sits exactly at the $500,000 ceiling, so any appreciation pushes the excess into the firm-specific excess-SIPC layer, which is still covered but is where the firms begin to differ. Within the securities bucket there is no protection difference between stocks, options, and mutual funds.

Above $500,000 per capacity

Excess-SIPC depth starts to matter, in the order Fidelity, Schwab, then Interactive Brokers and tastytrade. Splitting assets across account capacities, individual, joint, traditional IRA, and Roth IRA, multiplies base SIPC coverage before the excess layer is ever needed.

A note for active traders: value is protected, continuity is not

SIPC protects account value, not the ability to trade. In a liquidation under the Securities Investor Protection Act, accounts are typically bulk-transferred to a healthy broker, but there is an unavoidable freeze window during which you cannot trade, adjust, or roll positions. For a book of short-dated options spreads, several days of forced inaction around expiration and assignment is a real operational risk that no insurance addresses. Defined-risk structures and position sizing are the protection there, because the insurance layer only restores value after the fact.

Retirement accounts

A Fidelity 401(k) or rollover IRA holds securities protected by SIPC and Fidelity's excess-SIPC policy, not FDIC, and a 401(k) adds ERISA trust protection on top. IRA protection follows the same SIPC rules as any other account, and each IRA type is its own $500,000 capacity. Brokers differ in what they let an IRA do: Interactive Brokers offers the full range of IRA types, supports direct rollovers from employer plans, and permits defined-risk options spreads in an IRA margin account with no cash borrowing or short stock. Fidelity IRAs allow spreads once the account has options Level 3 and a signed spreads agreement, subject to the firm's cash reserve and minimum balance requirements. Level 3 is the IRA maximum at Fidelity, so uncovered options are not available. None of these permissions change the protection math. They change what you can hold, not how it is protected.

Frequently asked questions

Does FDIC insurance cover the stocks and funds in my brokerage account or IRA?

No. FDIC insurance covers bank deposits only. Securities in a brokerage account or an IRA, including at a firm that also owns a bank, are protected by SEC segregation rules and SIPC, plus any excess-SIPC policy the firm carries. Only cash that has been swept into a program bank is FDIC-insured.

Is a $300,000 brokerage account fully covered by SIPC?

It depends on how much of it is cash. SIPC covers up to $500,000 of net equity per customer per separate capacity, but only $250,000 of that can be cash. A $300,000 account that is mostly securities is fully inside the limit. A $300,000 account held entirely in uninvested cash has $50,000 above the cash sub-limit.

Are futures and options on futures covered by SIPC?

No, at any broker. Futures accounts fall under CFTC customer-segregation rules rather than SIPC. Segregation requires the firm to keep customer margin separate from its own money, but there is no insurance fund behind it. If segregated funds go missing, customers share pro rata in whatever is recovered.

Does excess-SIPC insurance matter for an account under $500,000?

Not in practice. Excess-SIPC policies only pay after SIPC's $500,000 per-capacity limit is exhausted. For an account below that limit, the protection is identical at every SIPC-member broker, so the differences in excess policies between firms are irrelevant until your account grows past $500,000 in a single capacity.

Do my individual account, joint account, and IRA each get their own $500,000 of SIPC coverage?

Yes. SIPC coverage applies per customer per separate capacity. An individual account, a joint account, a traditional IRA, and a Roth IRA at the same firm are treated as separate capacities, and each receives its own $500,000 limit with its own $250,000 cash sub-limit.

One-page summary

• Segregation under SEC Rule 15c3-3 and CFTC rules is the first and usually the only defense you will ever need.
• SIPC: $500,000 per customer per capacity, $250,000 cash sub-limit, securities accounts only, identical at all four brokers.
• Excess SIPC differs by firm but only matters above $500,000: Fidelity ($1 billion aggregate), then Schwab ($600 million), then Interactive Brokers and tastytrade ($150 million each).
• FDIC covers swept bank cash only. Schwab, Interactive Brokers, and Fidelity offer sweeps; tastytrade does not.
• Futures are CFTC segregation with no insurance fund. Crypto has essentially no failure protection.
• Cash protection follows the ledger side it sits on, not where it was earned. Configure sweeps to pull excess back to the securities side.
• Under $500,000 per capacity, pick your broker for trading capability. On safety, it is a wash.

Related reading on this site: the Backdoor Roth pro-rata calculator for the IRA side of the capacity question, and the financial machine explainer for how bank deposits and central bank reserves fit together.