The federal insurance limit for retirement accounts at banks will more than double to $250,000 this year – just in time for retiring baby boomers.

The increased coverage will apply to accounts such as Keoghs, individual retirement accounts and individual 401(k)s. The new limit is expected to take effect no later than November, although it could kick in as early as next month.

“Our hope is to make it before the April 15th date because many banks really encourage additional contributions through IRAs and rollovers before the tax date,” said Jim Chessen, chief economist at the American Bankers Assn.

The maximum coverage on other bank deposit accounts will remain the same at $100,000 at least until 2011.

Beginning then, and every five years thereafter, the limits on other bank deposits and retirement accounts can be raised in increments of $10,000 based on inflation, said David Barr, spokesman for the Federal Deposit Insurance Corp., which insures banks and thrifts.

FDIC insurance comes into play when a bank fails. That hasn’t occurred since June 2004, leaving a record number of days between bank failures. Still, when it happens, consumers whose account balance exceeds the insurance limit can lose money. Often, these tend to be retirees who keep retirement savings in a bank account for easy access.

Barr recalls the 1999 failure of the First National Bank of Keystone in West Virginia that had the reputation as one of the healthiest, best-run community banks in the country.

“It literally failed overnight from fraud. Half the assets were completely gone,” Barr said. “A lot of retirees lost their money.”

Coverage was last raised in 1980 from $40,000 to $100,000. Legislation to raise the insurance limits at a more rapid pace had stalled for years. Small banks in particular wanted the coverage bumped up to attract and retain local customers who might otherwise think it’s safer to keep big balances in large institutions, experts said.

Meanwhile the opposition, which included former Federal Reserve Chairman Alan Greenspan and two Treasury secretaries, worried that banks might take on greater risk if limits were raised, consumers wouldn’t care as long as they were insured and a potential bailout by taxpayers would be steeper, experts said.

A compromise was reached. Insurance limits on most accounts will rise more slowly. And protection for retirement accounts, which was less controversial, was increased more quickly, experts said.

The rules on FDIC insurance can be confusing. If you’re unsure, call the FDIC at (877) 275-3342 or go to its Electronic Deposit Insurance estimator at www.fdic.gov.

The Web program will ask about your accounts and calculate whether all deposits are covered.

The FDIC’s Barr said his agency had seen bank failures where customers ended up with uninsured money because of wrong advice from bankers or financial advisers.

“That doesn’t help them out in the bank failure. The responsibility ultimately rests with the person who owns those accounts,” he said.