Transcript Testing the layout here - Texas Council on Economic Education

Making Cents of Savings
Jennifer Ramon
SVP, Product Development and Review
PlainsCapital Bank
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© 2013 PlainsCapital Bank | Member FDIC | Equal Housing Lender
Why Save?
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Emergency fund
Big purchase
Retirement
Education
Grow idle funds
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© 2013 PlainsCapital Bank | Member FDIC | Equal Housing Lender
Consider Your Objectives
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How often will you need access to funds?
How will you access funds?
What is your risk tolerance?
What is your ultimate savings goal?
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© 2013 PlainsCapital Bank | Member FDIC | Equal Housing Lender
Savings Options
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Personal Savings Accounts
Money Market Deposit Accounts
Certificates of Deposit
Individual Retirement Accounts
Coverdell Education Savings Accounts
Brokerage Accounts
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© 2013 PlainsCapital Bank | Member FDIC | Equal Housing Lender
Personal Savings Accounts
A good option for an emergency fund, where you’ll need only
occasional access to funds and rate is not a top priority
Benefits
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Minimal balance requirement
Nominal rate of interest
Unlimited deposits
Unlimited withdrawals at ATMs
and teller lines
• FDIC-insured or NCUA-insured
Limitations
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No check-writing
Limited by Federal Regulation
D (“Reg D”) to six preauthorized withdrawals or
transfers per statement cycle
Excess transactions may result
in fees or account closure
Interest earned in excess of $10
per year is taxable income
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© 2013 PlainsCapital Bank | Member FDIC | Equal Housing Lender
Money Market Deposit Accounts
Offer more convenient access to funds and often higher interest
Benefits
• Typically higher and often tiered
rates of interest
• Unlimited deposits
• Unlimited withdrawals at ATMs
and teller lines
• Limited check-writing permitted
• FDIC-insured or NCUA-insured
Limitations
• Often higher balance
requirements than savings
• Limited by Reg D to six preauthorized withdrawals or
transfers per month, no more
than three of which may be by
check, point-of-sale or ACH
• Excess transactions may result
in fees or account closure
• Interest earned in excess of $10
per year is taxable income
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© 2013 PlainsCapital Bank | Member FDIC | Equal Housing Lender
Certificates of Deposit (CDs)
An insured option with fixed terms and fixed or variable rates
Benefits
• Offered in many fixed terms
• Fixed or variable rates
• Typically pay higher rates of
interest for longer terms
• Banks may occasionally offer
“specials” with premium rates
• May offer special features, such
as a “bump” or “step up” in rate
• May be renewed at maturity at
prevailing rates
• FDIC-insured or NCUA-insured
Limitations
• Generally higher opening
balance requirement
• Not intended for transactions
• Withdrawals before maturity
usually subject to penalties
• Interest earned in excess of $10
per year is taxable income
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© 2013 PlainsCapital Bank | Member FDIC | Equal Housing Lender
Traditional Individual Retirement Account (IRA) CD
Tax-advantaged, secure option for retirement savings
Benefits
Limitations
• Offered in many fixed terms
• Typically pay higher rates of
interest for longer terms
• Contributions may be taxdeductible
• Earnings grow tax-free until
distributed
• May accept roll-over funds from
other retirement plans
• FDIC-insured or NCUA-insured
• Federal limitations on eligibility
and maximum contributions
• Required distributions begin at
age 70½
• Distributions subject to taxes
Please consult your tax professional for tax rules.
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© 2013 PlainsCapital Bank | Member FDIC | Equal Housing Lender
Roth IRA CD
Tax-advantaged, secure and flexible retirement savings option
Benefits
Limitations
• Offered in many fixed terms
• Typically pay higher rates of
interest for longer terms
• Earnings are tax- and penaltyfree after five years when funds
withdrawn for a qualified reason
(age 59½, first-time home
purchase, death/disability)
• No required distributions at 70½
• May accept roll-over funds from
other retirement plans
• FDIC-insured or NCUA-insured
• Contributions are made with
after-tax dollars
• Federal limitations on eligibility
and maximum contributions
Please consult your tax professional for tax rules.
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© 2013 PlainsCapital Bank | Member FDIC | Equal Housing Lender
Coverdell Education Savings Accounts (CESAs)
Tax-advantaged, secure option for education savings
Benefits
Limitations
• Generally low opening balance
• Typically pay higher rates of
interest for longer terms
• Earnings grow tax-free until
distributed
• Distributions are tax-free if used
for qualified education expenses
• When beneficiary turns 30,
unused funds may be rolled into
a CESA for a family member
• FDIC-insured or NCUA-insured
• Contributions are not taxdeductible
• Contributions may be made until
the beneficiary is 18
• Federal limitations on eligibility
and maximum contributions
• When beneficiary turns 30,
unused funds must be distributed
within 30 days and earnings are
subject to taxes
Please consult your tax professional for tax rules.
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© 2013 PlainsCapital Bank | Member FDIC | Equal Housing Lender
Brokerage Accounts
Many investment options with potential for high growth
Benefits
Limitations
• Many options available,
including stocks, bonds and
mutual funds
• Potential for higher returns
based on performance
• Option to use a full-service
brokerage house with investment
advisors or discount brokerage
services online
• Not FDIC- or NCUA-insured
• Subject to market risk and
fluctuations
• Earnings subject to taxes
Please consult your tax professional for tax rules.
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© 2013 PlainsCapital Bank | Member FDIC | Equal Housing Lender
Thank You
Jennifer Ramon
SVP, Product Development and Review
PlainsCapital Bank
214.252.4066
[email protected]
www.plainscapital.com
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© 2013 PlainsCapital Bank | Member FDIC | Equal Housing Lender