Same Day Deposit Regulations for Annuities

by Eric Feigenbaum

Every financial institution has a cut-off time for deposits each day. Deposits made before the cut-off time are credited on the day of deposit. Those made after the cut-off time get held for processing the next day. Although a financial institution or firm may physically accept the money, it will record the post cut-off time transaction as occurring the next business day. Federal regulations are specific and detailed about deposits made to banks, savings and loans and credit unions. However, annuities are offered by insurance companies, which have few rules about same-day transactions.

Annuity Creation

An annuity doesn't officially exist without an initial deposit. Therefore, insurance companies, including Fidelity Investments, record opening deposits on the day they are made. Of course, if a check used to make a deposit bounces, the annuity may be canceled. An investor may then have to go through the application and deposit process again and the annuity opening date would be pushed back until a successful deposit occurs.


Usually, deposit posting policies including cut-off times are listed in investment prospectuses. A potential investor or annuity holder should read her documentation carefully to understand the deposit rules before opening an annuity. Once an investor has opened an account and signed paperwork, she is bound to the rules of her contract.

Holds and Electronic Deposits

Companies that accept checks risk receiving payments that bounce because of insufficient funds. That's why many businesses, including insurance companies, don't credit a payment until a check has cleared. Given today's technology, some checks clear instantly. However, depending on the banking systems a company uses, it may still take several business days to confirm a check has cleared. Therefore, not all insurance companies offer same day check deposits. To remedy this problem, investment companies offer scheduled electronic debits that take money from an investor's checking account on authorized dates to ensure instantly confirmed and on-time payments.


Annuity holders who feel their investment company is not handling or crediting their deposits fairly or securely have recourse. State departments of insurance govern insurance companies operating within their state. Investors can file complaints to initiate investigations. In addition, the federal Securities and Exchange Commission (SEC) and its subsidiary Financial Industry Regulatory Authority (FINRA) oversee securities transactions and trade -- including annuities. Both the SEC and FINRA take complaints online, by phone and via mail.

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