SIPC coverage limits cap what you can recover at $500,000 per customer, per separate capacity, including a $250,000 sub-limit for cash, when a member brokerage firm fails and customer assets are missing. SIPC has never covered an investment that simply lost value.
Jump to the tool to see how many separate SIPC limits your accounts actually have.
And the part almost nobody explains: the rule that means most brokerage failures never reach a SIPC claim at all.
How Many Separate SIPC Limits Do You Actually Have?
A note before you calculate: money market fund balances are generally treated as securities, not cash, for the SIPC cash sub-limit above. SIPC limits apply per firm, so the same capacities at a second firm produce their own separate limits.
What SIPC Actually Is, and the Three Layers
You might be asking a simpler question first: is my money safe in a brokerage account? SIPC, the Securities Investor Protection Corporation, is part of the answer, but only the second part. It is a nonprofit fund of last resort. It steps in only when a SIPC member brokerage firm fails and customer securities or cash are missing. It does not evaluate firms, and it does not predict failures.
The reframe matters more than the definition. Segregation is the first layer: federal rules require every broker-dealer to keep customer securities and cash separate from the firm’s own money, so that in an ordinary failure, your assets are simply there and get moved to another firm. SIPC’s statutory protection is the second layer, and it exists only for the abnormal case, where that segregation did not hold. Private excess coverage, where a firm carries it, is a third layer on top of that. Outside all three sits everything this framework was never built to touch, starting with a market that goes down.
The layers, in one line each:
- Segregated: the SEC’s Customer Protection Rule requires broker-dealers to keep customer securities in their possession or control, and to hold a reserve of cash at least equal to what customers are owed, separate from the firm’s own funds.
- Statutory: when segregation has failed and property is missing, SIPC advances funds to restore it, up to the published limits.
- Private excess: some firms buy additional insurance that responds only after the SIPC limits are used up, on its own terms.
| Layer | What it requires or provides | When it matters | What it does not do |
|---|---|---|---|
| Segregation of customer assets by the firm | Keeps customer securities and cash separate from the firm’s own assets, with a matching cash reserve | Every business day a member firm operates | Does not stop a firm’s investments, or your own, from losing value |
| The SIPC statutory protection | Advances funds up to the stated limits to replace securities and cash missing from a failed firm | Only once segregation has already failed and property is short | Does not replace a market decline, and does not cover bad advice |
| Private excess coverage | Insurance some firms buy privately, responding only once SIPC’s protection is exhausted | The rare case where a shortfall is larger than even the statutory limits | Is not guaranteed at every firm, and carries its own aggregate limit shared across that firm’s customers |
Congress created SIPC through the Securities Investor Protection Act of 1970. It is not a federal agency and has no power to regulate or examine brokerage firms; that job belongs to the SEC and FINRA. SIPC is a nonprofit membership corporation, funded entirely by mandatory assessments on its member broker-dealers, not by taxpayers.
People often ask, are my investments insured by SIPC? Not in the way that word usually means. Deposit insurance and investment insurance both promise to make a specific kind of loss whole; SIPC protection instead restores a specific, missing asset, and only if a firm has failed. Calling it “SIPC insurance,” which brokerages themselves often do, is common shorthand, not a legal description.
If you are also weighing where to hold an account in the first place, that is a separate question from what SIPC does. Our guide to choosing an online broker covers fees, tools, and service; it does not evaluate anyone’s safety, and neither does this page.
What SIPC Does Not Cover
Start here, because this is the correction most pages skip. A security that simply lost value has never been covered by SIPC, is not covered now, and no version of this protection would have helped. Almost everyone assumes otherwise, which is a reasonable thing to assume given how the topic is often marketed, but it is not how the statute works.
Bad advice sits in the same excluded category. An unsuitable recommendation, a poorly timed trade, or a broker who simply got it wrong are not failures of custody, and SIPC only ever addresses custody. Who is obligated to act in your interest is a separate question entirely, governed by different rules.
Several other categories sit outside SIPC by statute, not by oversight:
- Commodity futures contracts, unless held in a specific portfolio margining account
- Foreign exchange trading positions
- Fixed annuity contracts that are not themselves registered with the SEC as securities
- Investment contracts, including some limited partnerships, that were never registered under the Securities Act of 1933
Fraud, a Hacked Account, and Missing Assets
This is the most emotionally loaded version of this question, and the distinction that decides it is simple to state and easy to miss. SIPC addresses securities and cash that are missing from a failed member firm’s records. It does not restore money that was used to buy a real investment that then performed badly, and it does not undo a scheme that persuaded you to hand money over in the first place, if the firm itself remains solvent. Where a firm’s own records show fictitious or inflated positions, the trustee generally works from the firm’s books and the customer’s net equity to sort out what was really owed, within a liquidation proceeding, rather than simply paying out whatever a statement once displayed.
A hacked account is a different matter again. If someone breaks into your account and moves cash or securities out while the firm itself stays solvent, that is a security breach, not a firm failure, and it is handled by the firm’s own fraud-reimbursement policies and potentially law enforcement, not by SIPC, because SIPC only engages once a firm itself is in a liquidation proceeding.
Digital assets follow the same registration logic as everything else here. A crypto asset is only a “security” under this statute if it is itself registered with the SEC; unregistered digital assets are not protected by SIPC, even when held at a member firm. How custody and safety work for digital assets generally is covered on its own page.
Exchange-traded funds are not named by that term in the statute, but they fall within its general definition of a security, so SIPC treats them as covered like any other security. Foreign securities held in a member firm’s ordinary U.S. brokerage account can also qualify, provided the specific holding meets the statute’s definition of a security; the analysis still turns on the particular security, so treat this as a general rule rather than a guarantee for every foreign holding.
Set against what actually is inside the framework, the boundary is easier to see at a glance:
- Stocks, bonds, ETFs, and mutual funds held as securities at a member firm
- Money market mutual funds, treated as securities
- Treasury securities and certificates of deposit held in the account
- Uninvested cash held for the purpose of buying securities
- Any decline in the market value of what you hold
- Bad advice, unsuitable recommendations, and poor performance
- Commodity futures, foreign exchange, and unregistered fixed annuities
- Unregistered investment contracts and most digital assets
| What you hold or what happened | Which layer applies | Generally within SIPC protection? | What actually determines the outcome |
|---|---|---|---|
| A stock that fell in value | Outside all three layers | No | Market risk is never covered, whatever the reason for the decline |
| Securities missing from a failed member firm | The statutory protection | Yes, up to the limits | Whether the firm’s records show it as yours and it is missing after the firm fails |
| Uninvested cash held for buying securities | The statutory protection, cash sub-limit | Yes, up to the cash sub-limit | Whether it was awaiting investment rather than left to earn interest |
| A money market fund balance | The statutory protection, full securities portion | Yes, under the higher limit | It is treated as a security, not as cash |
| Treasury securities, CDs, and ETFs in the account | The statutory protection | Yes, up to the limits | Whether they were held in the brokerage account as securities |
| Foreign securities in a U.S. member firm account | The statutory protection, generally | Usually yes, if the holding itself qualifies as a security | Whether the specific foreign holding meets the statute’s definition of a security |
| Commodity futures and foreign exchange positions | Outside all three layers | No | The statute’s definition of a security excludes these outright |
| A fixed annuity contract | Outside all three layers, unless SEC-registered | Generally no | Whether it was registered with the SEC as a security |
| An investment contract never registered | Outside all three layers | No | Registration under the Securities Act of 1933 is what makes it a security here |
| Digital assets | Outside all three layers, unless the specific asset is an SEC-registered security | Generally no | Whether that particular digital asset is itself a registered security |
| A hacked account, or an unauthorized transfer from an otherwise solvent firm | Outside SIPC; a firm and law-enforcement matter | Not through SIPC | Whether the firm itself is in a liquidation proceeding, not just whether money moved without permission |
The SIPC Limits, and How to Multiply Them Legitimately
The two figures most people know are $500,000 in total, and $250,000 of that for cash. What most people miss is that the cash figure sits inside the total, not beside it. If you are owed $400,000 in securities and $300,000 in cash, the securities are covered in full, but the cash is capped at $250,000, for a combined recovery of $650,000, not $700,000.
The cash figure was raised from $100,000 to $250,000 by the Dodd-Frank Act in 2010, which is why older material sometimes still quotes the smaller number. As of this writing, SIPC’s board has decided not to raise it again for the five-year period beginning January 1, 2027, so $250,000 is likely to remain the figure for some time yet.
It is also worth being precise about the unit this limit is measured in. This is coverage per customer, in each separate capacity, not coverage per account you happen to open with your broker; opening a third individual account in your own name adds nothing on its own.
Each separate capacity is treated as its own customer, with its own full SIPC limit. Accounts held in the same capacity at the same firm are combined into one limit, not stacked. The recognized capacities include an individual account, a joint account, a corporate or entity account, a trust account created under state law, a traditional retirement account, a Roth retirement account, an account held by an executor for an estate, and an account held by a guardian for a minor.
| Account type | Recognized as a separate SIPC capacity? | Combined with which of your other accounts? | What decides it |
|---|---|---|---|
| A second individual account in your own name | No | Your other individual accounts at the same firm | All accounts held in your own name at one firm are one capacity |
| A joint account | Yes, its own capacity | Other qualifying joint accounts owned by the exact same co-owners at the same firm | A qualifying joint account is one separate customer, shared by its co-owners, not doubled per owner |
| A traditional retirement account | Yes | Other traditional retirement accounts you hold at the same firm | It is a capacity distinct from your individual account |
| A Roth retirement account | Yes, separate from a traditional account | Other Roth accounts you hold at the same firm | Traditional and Roth accounts are treated as different capacities from each other |
| A trust account | Yes | Other accounts for that same trust at the same firm | The trust, not you personally, is the account owner |
| A custodial account for a minor | Yes | Other custodial accounts for the same minor at the same firm | The named minor is the beneficial owner of that capacity |
| A business or entity account | Yes | Other accounts for that same entity at the same firm | The entity, not the person who controls it, is the account owner |
| The same account types at a different firm | Yes, at that firm | Nothing at your first firm | The SIPC limit applies per member firm, not across firms |
Money Market Funds: Securities, Not Cash
This one line is worth real money to anyone who keeps a large uninvested balance at a brokerage firm, because it changes which SIPC ceiling applies to that balance. How that same balance is taxed and how it earns yield is a different question, covered in our guide to where to park cash; this page is only about which limit it falls under if a firm fails.
The SIPC limit also resets at each separate firm. If you hold an individual account and a retirement account at one firm, and the identical account types at a second firm, the second firm gives you its own fresh set of limits. That is a fact about how coverage is structured, not an instruction to move anything; what you do with it is your call.
What Actually Happens When a Firm Fails
Most people expect a claims process. In the ordinary case, there is not one. Regulators monitor member firms, and when a firm is in trouble but its records are in order, SIPC and the firm’s regulators typically arrange for its customer accounts to be transferred in bulk to another member firm, and customers simply keep their positions without ever filing anything.
When that is not possible, SIPC asks a federal court to place the firm into liquidation, and a trustee is appointed. The trustee publishes notice of the proceeding and mails claim forms to customers on the firm’s books. There are two deadlines from that point, both measured from the date the notice is published: a court-set deadline, usually 60 days and sometimes as little as 30, for customers asking to have specific securities returned to them directly; and an absolute federal deadline of six months, after which a SIPC claim is barred outright, with almost no exceptions.
The trustee reviews each claim and issues a determination letter, allowing or denying it. If you disagree, you have 30 days from that letter to object to the court. Keeping your own account statements and trade confirmations is what makes any of this move quickly, since they are the record you would rely on if the firm’s own records are incomplete.
Is the SIPC Limit Enough?
The honest answer depends on a short list of facts about your own accounts, not on how large your portfolio is in general.
- How many separate capacities you actually hold, since each one carries its own SIPC limit
- Whether your balance sits in securities, in a money market fund, or in true uninvested cash
- Whether you hold assets at more than one firm, since the limit is per firm
- Whether your firm carries private excess coverage, and what its own terms say
Where a brokerage firm offers additional private coverage beyond the SIPC limit, that coverage only responds once SIPC’s own protection is exhausted, and it operates under its own policy terms. The detail brokerage marketing pages tend to leave out is the aggregate limit: that private coverage is typically capped for the whole firm’s customer base combined, not set aside separately for each customer, so in an unusually large firm-wide shortfall, the aggregate ceiling could be reached before every claim under it is paid in full.
| Question | At a brokerage firm (SIPC) | At a bank (FDIC) |
|---|---|---|
| What it protects against | Securities and cash missing after a member firm fails | Deposits lost if an insured bank fails |
| What triggers it | The firm entering a liquidation proceeding with property missing | The bank being closed by its regulator |
| The stated limit | $500,000 per separate capacity, including $250,000 for cash | $250,000 per depositor, per ownership category, per insured bank |
| How multiple accounts are grouped | By separate capacity: individual, joint, retirement, trust, and similar | By ownership category: individual, joint, certain retirement accounts, and similar |
| Whether cash is treated differently | Yes, a lower sub-limit applies to uninvested cash specifically | No, all insured deposits are treated the same way |
| Whether it covers a decline in value | No | Not applicable; a deposit balance does not fluctuate the way a security does |
| Whether it is a federal agency | No, a nonprofit membership corporation | Yes, an independent federal agency |
The comparison is useful mainly for one reason: neither SIPC nor FDIC coverage ever protects against a loss caused by an investment simply performing badly. If you want the deposit-insurance side of this in full, our guide to FDIC coverage limits covers ownership categories and bank failures on their own terms.
Frequently Asked Questions
- What is SIPC coverage?
- It is a statutory backstop that restores securities and cash missing from a failed brokerage firm, up to set limits. It does not cover a decline in the value of your investments.
- How much does SIPC cover?
- Up to $500,000 per customer, per separate capacity, including a $250,000 sub-limit for cash claims within that total.
- Is the $250,000 cash limit on top of the $500,000?
- No. The cash figure is a sub-limit inside the $500,000 total, not an amount added to it.
- Does SIPC cover market losses?
- No. A security that fell in value has never been covered, regardless of why it fell.
- Does SIPC cover bad investment advice?
- No. Unsuitable recommendations and poor advice sit entirely outside SIPC, which only addresses missing custody, not investment outcomes.
- Do I get $500,000 for each of my accounts?
- Only if each account is held in a different separate capacity. Accounts held in the same capacity at the same firm are combined into one limit, so this is coverage per customer per capacity, not per account opened.
- Are two individual accounts at the same firm covered separately?
- No. They are combined and share a single $500,000 limit, not doubled.
- Are a traditional IRA and a Roth IRA separate capacities?
- Yes. They are each recognized as their own capacity, with their own limit, distinct from each other and from your individual account.
- Is a joint account covered separately from my individual account?
- Yes. A qualifying joint account is its own separate customer with its own limit, shared by the co-owners rather than multiplied by the number of owners.
- Are money market funds treated as cash or as securities?
- As securities. That means they fall under the full SIPC limit, not the smaller cash sub-limit.
- Are mutual funds protected?
- Yes, mutual funds and money market mutual funds are both treated as securities under SIPC.
- Are Treasury securities and CDs in my brokerage account protected?
- Yes, when they are held as securities in the brokerage account itself.
- Are ETFs covered by SIPC?
- Yes. Exchange-traded funds are not named by that term in the statute, but they fall within its general definition of a security, so SIPC treats them the same as any other covered security.
- Are foreign securities covered?
- Usually, when they are held in your ordinary U.S. brokerage account at a member firm and the specific holding itself meets the statute’s definition of a security. It is not an automatic yes for every foreign instrument, so treat it as a general rule rather than a guarantee.
- Is crypto covered by SIPC?
- Generally no. A digital asset is only protected if it is itself registered with the SEC as a security; unregistered crypto assets are not covered, even at a member firm.
- Does SIPC cover fraud?
- It addresses securities and cash missing from a failed firm’s own records. It does not restore money lost to an investment that simply turned out badly, and a hacked account or unauthorized transfer at a solvent firm is handled outside SIPC entirely.
- What happens if my brokerage firm fails?
- In most cases, your account is transferred to another member firm and you keep your positions without filing anything. A formal SIPC claims process only begins if that transfer is not possible.
- How long does a SIPC claim take?
- There are two deadlines from the date the liquidation notice is published: a court-set deadline, usually 60 days, for requesting securities back directly, and an absolute six-month federal deadline for any claim at all.
- Is SIPC a government agency?
- No. It was created by federal law and is overseen by the SEC, but it is a nonprofit corporation funded by its member firms, not a government agency.
- Is SIPC the same as FDIC insurance?
- No. SIPC protects brokerage securities and cash if a broker-dealer fails; FDIC protects bank deposits if a bank fails. Neither one ever covers an investment simply losing value.
- What is excess SIPC coverage?
- Private insurance some brokerage firms choose to carry beyond the SIPC limits. It only applies once SIPC protection is used up, follows its own policy terms, and is typically capped by an aggregate limit shared across all of that firm’s customers combined.
This article is for general education about SIPC, not investment, legal, or tax advice, and this publication is not a broker-dealer, an investment adviser, or an insurer, and does not receive anything from any brokerage firm in connection with this page. SIPC protection applies only to customers of member firms, covers only specified categories of securities and cash, and does not protect against a decline in the market value of an investment, unsuitable advice, or any other kind of loss. The limits, recognized capacities, covered asset categories, exclusions, and claims procedures above are stated as general principles, verified against the Securities Investor Protection Act, SIPC’s own rules and published guidance, and the SEC’s investor bulletins, as of the date below, and any of them may change. Whether a specific account, asset, or situation qualifies depends on facts particular to you and on rules containing conditions this article does not test. Nothing here evaluates the safety of any firm, predicts any failure, or recommends where to hold your assets. The tool above applies SIPC’s published capacity rules to the account types you enter; it stores nothing, sends nothing anywhere, assesses no firm, and does not determine your actual coverage. For your own situation, talk to a licensed professional.
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Daniel Hayes is the founder and sole researcher at AdvoraHQ. He covers U.S. personal finance, insurance, and consumer law — working directly from IRS publications, federal and state statutes, court opinions, and SEC filings rather than secondary summaries. His focus is the gap between what readers think they know and what the source documents actually say. Daniel is not a licensed attorney, CPA, or financial advisor; his articles are educational and not personalized advice. Reach him at Daniel.Hayes@advorahq.com.
