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The Best Business Money Market Accounts of September 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

Reviewed By

You’ve poured your heart and soul into the small business you founded, but when it comes to financing day-to-day operations, you’ll need to strictly separate your personal wealth from your business funds. A business money market account can help provide a safe place for your company’s cash, allowing it to earn relatively high interest while still remaining liquid enough to take care of business expenses.

Scouring our database for the business money market accounts that earn the highest APY and are available nationwide, we’ve come up with the best places for you to keep the money that funds your business.

The best business money market accounts

InstitutionAPYMinimum balance to earn APYMaximum balance to earn APY

Premier Members Credit Union

2.00%$0$2,000

Affinity Federal Credit Union

0.80%$2,500None

Primary Bank

0.85%$0.01None

nbkc bank

0.60%$0.01None

TAB Bank

0.75%$1None

Paramount Bank

0.75%$100None

Latino Credit Union

0.75%$1,000None

First Internet Bank

0.60%$100None

Service Credit Union

0.60%$25,000None

Premier America Credit Union

0.55%$25,000None

Premier Members Credit Union — Business Money Market account

While you’ll only earn the attractive 2.00% APY on your first $2,000 — with a minimum deposit of only $5 — Premier Members Credit Union’s rate is still significantly higher than the following spots on our list. Balances between $2,000 and $5,000 will net you a still competitive 0.50% APY, and the APY between $5,000 and $10,000 is a decent 0.35%. Once you go over the $10,000 mark, you’ll want to consider the other banks on this list.

Premier Members Credit Union is available mostly to people and companies in the Colorado area, but anyone can join through their affiliation with Impact on Education, the primary charity for the Boulder Valley School District.

SEE DETAILS Secured

on Premier Members Credit Union’s secure website

NCUA Insured

Affinity Federal Credit Union — Business Money Manager Account

A balance of just $2,500 earns you the APY on Affinity Federal Credit Union’s Business Money Manager Account. You need at least $2,500 to open this account, and you’ll get hit with a $10 monthly fee if your average daily balance falls below that amount on any given day.

As a credit union, Affinity requires you to become a member before you can open an account, including the Business Money Manager Account. One way to join is by making a $5 donation to the New Jersey Coalition for Financial Education or the Connecticut Jump$tart Coalition.

SEE DETAILS Secured

on Affinity Federal Credit Union’s secure website

NCUA Insured

Primary Bank — Choice Business Money Market account

A relative newcomer to the banking scene, Primary Bank was established in 2015 in Bedford, N.H. The bank’s Choice Business Money Market account makes for a compelling option to place some of your business funds.

This account earns an APY of 0.85% on all balances. Though it requires a minimum deposit of $10,000 to open, the APY is still one of the higher ones out there on the market. You’ll also need to maintain a minimum balance of $10,000 to avoid a $7 monthly service fee. This option is certainly worth a look thanks to its high APY.

SEE DETAILS Secured

on Primary Bank’s secure website

Member FDIC

nbkc bank — Business Money Market Savings account

This Kansas-based bank offers a decent interest rate on its Business Money Market Savings account. With no minimum deposit, you can open this account and start earning 0.60% APY.

While nbkc charges very little in terms of fees, keep in mind the six withdrawal per month limit on money market accounts stems from federal regulations and isn’t subject to the whims of individual financial institutions. If you need to access your money more frequently, you may want to consider supplementing your money market account with a business checking account.

SEE DETAILS Secured

on nbkc bank’s secure website

Member FDIC

TAB Bank — Business Money Market account

Not associated with the diet soda for people who need to feel different, TAB Bank offers a business money market account that’s nonetheless pretty sweet, earning an APY of 0.75% on all balances over $1. You will, however, need to deposit at least $25 to open this account (and if that’s a problem then maybe you have bigger fish to fry than choosing the right money market account for your business.)

SEE DETAILS Secured

on TAB Bank’s secure website

Member FDIC

Paramount Bank — Money Market Deposit

Paramount Bank began in Missouri in 1970 and has evolved so that today it offers a wide range of products, including its business money market deposit account. Make sure you’re able to keep at least $5,000 in the money market account before committing to it, however, because if your balance drops below this level, you’ll pay a $20 monthly fee. Paramount also offers small business checking. It won’t earn you an APY but can be opened with just $100.

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on Paramount Bank (MO)’s secure website

NCUA Insured

Latino Credit Union — Micro Business Money Market Account

To become a member of Latino Credit Union and enjoy this rate, you’ll need to pay a one-time membership fee of $10 to the Latino Community Development Center, which goes toward providing financial education. A $1,000 minimum initial deposit and balance will net you 0.75% APY. Your money is federally insured up to $250,000 by the National Credit Union Administration.

SEE DETAILS Secured

on Latino Credit Union’s secure website

NCUA Insured

First Internet Bank — Business Money Market Savings account

This online-only bank has a real knack for offering customers competitive rates with its money market accounts, and its business product doesn’t stray from the pattern. Account holders can expect an APY of 0.60%, so long as they make the minimum deposit of $100 to open the account. There’s no minimum balance needed to earn the APY, but a $5 monthly fee will be charged by First Internet Bank if the average daily balance for that month falls below $4,000.

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on First Internet Bank’s secure website

Member FDIC

Service Credit Union — Business Money Market account

For a minimum investment of $25,000, your money will earn at this APY. If you need to scale that back, you’ll still get a rate that hovers near our top 10 for any amount of $2,500 and over. This is just one business savings product offered by Service Credit Union. You can also get a savings, secondary savings or CD for your business funds.

If you live or work in the state of New Hampshire or the Falmouth, Mass., area, you can join Service Credit Union. Membership is also open to active duty military, veterans and their families, as well as employees and former employees of the Department of Defense and their families. You’re also eligible for membership if you join the American Consumer Council; if you use the promo code “Service,” membership is free.

SEE DETAILS Secured

on Service Credit Union’s secure website

NCUA Insured

Premier America Credit Union — Business Tiered Money Market account

The more you can contribute to this tiered money market account, the higher APY you’ll earn. To get this APY, you’ll need to invest between $25,000 and $50,000. Anything less (but still above $2,500) will still get you an APY that would just miss this list by a hair. As you climb the tiers, you’ll also jump up 0.95%.

Premier America has been around since 1957 and can easily be joined outside California through membership to the Thousand Oaks Alliance for the Arts.

SEE DETAILS Secured

on Premier America Credit Union’s secure website

NCUA Insured

Business money market accounts vs. business savings accounts

Since both business money market accounts and business savings accounts earn a comparatively high interest rate and give you a place to deposit your business funds separate from your personal money, how should you go about choosing between the two products? While nothing is wrong with a business savings account, money market accounts hold two distinct advantages over them:

  • Higher APYs: While not true across the board, money market accounts earn higher interest than savings accounts in general. For example, looking at the rate tables at DepositAccounts.com, the average business savings account available nationwide is 0.126%. When compared to the APYs listed above, all of which are at 0.35% and above, it’s clear that business money market accounts earn higher rates.
  • Easier Access to Funds: Business savings accounts don’t generally come with a debit card or checks to help depositors withdraw their funds from the account. While these features aren’t universal with business money market accounts, they’re more prevalent compared to other types of accounts. However, both money market accounts and savings accounts fall under the jurisdiction of the Federal Reserve Board’s Regulation D, which only allows a maximum of six withdrawals from the account each month.

Business money market accounts vs. CDs or checking accounts

While a business money market account earns a high APY and — if it comes with perks such as online banking, checks and/or a debit card — allows easy access to funds, it can’t have the same liquidity as a checking account. For regular business expenses you need to pay with any sort of frequency, you’ll need a checking account from which you’ll pay vendors, staff, etc. However as with personal checking accounts, don’t expect to earn a high APY.

Certificates of deposit (CDs) are the most restrictive product in terms of liquidity — unless you’re dealing with the relatively-rare CD, which incurs no penalty for early withdrawals, the money you’ve deposited is untouchable until the certificate matures. However, CDs do have the advantage of locking in your money at fixed interest rates (whereas the bank can change how much interest the money in a money market or savings account earns whenever it wants) and earning the highest APY.

Why you need to separate your business and personal banking

There’s nothing explicitly stopping you legally from funding your business with your personal money, but doing so is generally frowned upon for the following reasons:

  • You remove any legal distinction between you and your business: To paraphrase a certain businessman-turned-president, “Corporations are people too.” This becomes more than a campaign slogan when you’ve mingled your personal and business finances and someone successfully sues your business. If a court takes a look at your books and determines there’s no real distinction between your business’s finances and your personal wealth, they can include your own money in any damages that have to be paid.
  • The IRS won’t let you deduct expenses: Even though you consider your Etsy shop a budding corporate empire, the IRS has its own definition of what constitutes a business versus what’s a hobby that makes you money — and changes what you can deduct based on its decision. One of the first criteria the IRS lists is “Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records” (emphasis ours). Having separate accounts goes a long way toward proving your hobby is actually a legitimate business.

What do I need to open a Business Money Market Account?

While the exact materials and information needed to open one of these accounts varies by institution, you should probably have on hand the following information when you’re ready to open an account:

  • Employer Identification Number (this is a nine-digit number you receive after applying to the IRS which, if you own a business, you probably already have).
  • A legal document indicating when the business was formed
  • Your own social security number or government-issued ID

You may need additional information depending on how your company is structured (if you aren’t the sole proprietor, for example, you’ll probably need to provide ownership papers to the bank), but the above is a good place to start when gathering the materials you’ll need to open one of these accounts.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Earning Interest

Top Jumbo CD Rates for September 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

Reviewed By

Conservative savers generally consider certificates of deposits (CDs) as sanctuaries where their money is kept safe and they enjoy a decent yield without stomaching the risk of investing in the stock market.

You agree to deposit your money in a bank or credit union for a fixed amount of time (which can be as short as a few months or as long as several years) and get the satisfaction of knowing your money is likely earning a higher annual percentage yield (APY) than it would in a checking or savings account.

Jumbo CDs, which in most cases require a minimum deposit of $100,000, have traditionally promised even higher APYs for customers than regular CDs. But a combination of unsettled interest rates and fierce competition among banks — both online and traditional — for the deposits of customers have given rise to many normal CDs that offer a better return than jumbo CDs.

It’s not entirely clear why banks haven’t been similarly aggressive in offering higher-yield jumbo CDs, but one possibility is that they are interested in attracting more customers rather than big money deposits. In other words, banks would rather have the business of 100 customers each depositing $5,000 CDs than 10 customers depositing $500,000 jumbo CDs.

That said, if you feel the need to go big when it comes to your CD, check out how our top picks compare to the national average.

Regular 1-Year CD vs 1-Year Jumbo CD

Institution

Marcus by Goldman Sachs

Advancial

CD Term

1 year

1 year

APY

0.85%

0.88%

Minimum Deposit Amount

$500

$25,000

SEE DETAILS Secured

on Marcus By Goldman Sachs’s secure website

Member FDIC

SEE DETAILS Secured

on Advancial’s secure website

NCUA Insured

Regular 3-Year CD vs 3-Year Jumbo CD

Institution

Discover Bank

Advancial

CD Term

3 year

3 year

APY

0.70%

1.03%

Minimum Deposit Amount

$2,500

$25,000

SEE DETAILS Secured

on Advancial’s secure website

NCUA Insured

Regular 5-Year CD vs 5-Year Jumbo CD

Institution

Marcus by Goldman Sachs

Advancial

CD Term

5 year

5 year

APY

0.90%

1.19%

Minimum Deposit Amount

$500

$25,000

SEE DETAILS Secured

on Marcus By Goldman Sachs’s secure website

Member FDIC

SEE DETAILS Secured

on Advancial’s secure website

NCUA Insured

As of September 2020
All rates expressed in annual percentage yield (APY) unless otherwise stated.

The top jumbo CD rates of September 2020

To determine the best CDs for your jumbo-sized deposit, we turned to the database found on DepositAccounts.com, a website that like MagnifyMoney is also owned by LendingTree. For each common CD term, we assumed the customer was planning to deposit $100,000 in the account so as to include traditional jumbo CDs which typically have a higher minimum deposit needed to open. All the accounts included are also available nationwide.

You’ll notice as you read through the list of CDs we’ve selected, that some of them have minimum deposits of far less than $100,000. That’s because we’re focused on informing you of the best CD accounts for your money, and there are plenty of large minimum deposit CDs that still offer a great APY. You can rest assured we aren’t leaving out any good deals just because a financial institution’s marketing team decided not to call a CD “jumbo.”

Institution

CD Term

APY

Minimum Deposit Amount

Advancial3 month0.79%$25,000
Advancial6 month0.88%$25,000
Hiway FCU12 month0.95%$25,000
Hiway FCU18 month0.95%$25,000
Hiway FCU2-year1.00%$25,000
Hiway FCU3-year1.20%$25,000
Hiway FCU4-year1.30%$25,000
Hiway FCU5-year1.35%$25,000

Banks that offer the best jumbo CD rates

Advancial – 3-month CD, 0.79% APY and 6-month CD, 0.88% APY

3 Month Junior Jumbo Certificate from Advancial

Headquartered in Dallas, Advancial is a credit union that has roots dating back to 1937. While this credit union only has a handful of locations in Alaska, Texas, Oklahoma and Louisiana, membership is still open to anyone who joins Connex and pays a $5 fee.

Advancial offers a slew of CDs, including regular, IRA, business and jumbo iterations. Its junior jumbo CDs are worth highlighting, which boast the following APYs for minimum deposits of $25,000: 3-month CD with a 0.79% APY, 6-month CD with a 0.88% APY.

SEE DETAILS Secured

on Advancial’s secure website

NCUA Insured

Hiway FCU – 1-year CD,0.95% APY, 18-month CD,0.95%, 2-year CD, 1.00% APY, 3-year CD, 1.20% APY, 4-year CD, 1.30% APY and 5-year CD, 1.35% APY

12 – 23 Month CD from Hiway Federal Credit Union

Hiway FCU has a number of attractive financial products, and currently boasts the best rates for CDs with short and long term lengths. It offers an impressive 0.95% APY on its 12-23 month certificate for balances of at least $25,000, 1.00% APY on its 24-35 month CD, 1.20% APY on its 36 – 47 month CD, 1.30% APY on its 48-59 month CD and 1.35% APY on its 60-month CD.

Based in St. Paul, Minnesota, Hiway says it counts over 77,000 people as members. Membership to the credit union is open to anyone who joins the Minnesota Recreation and Park Foundation, as well as anyone who joins the Association of the U.S. Army.

SEE DETAILS Secured

on Hiway Federal Credit Union’s secure website

NCUA Insured

Go jumbo or stick to regular CDs?

To be considered “jumbo,” a CD needs to require a large minimum deposit, usually $100,000, as opposed to a normal CD which may not even require a minimum deposit. The deal banks made with well-off depositors boiled down to ‘if you leave lots of your money with us in this jumbo CD, we’ll give you a higher yield than if you deposited it in a normal CD.’

It’s important to note the differences between a jumbo CD and regular CD aren’t set in stone and have more to do with how the bank or credit union markets their savings products than any hard and fast rule, says Ken Tumin, founder of DepositAccounts.com, another LendingTree-owned site.

“I’ve seen banks and credit unions with jumbo CD minimums as low as $10,000 and as high as $250,000,” Tumin told MagnifyMoney. “Even if a bank doesn’t offer jumbo CDs with high minimums, someone could still deposit a large balance into a regular CD. They just wouldn’t be earning any higher interest than someone depositing a small balance.”

As the difference in earnings from a jumbo CD and traditional CD has diminished (or disappeared completely), the drawbacks of parking so much money in a CD become more apparent. For example, the jumbo CDs with the highest APY usually require a longer period of time to mature, which means you have at least $100,000 exposed to inflation—which means you possibly end up earning less than you expected.

Withdrawal penalties on jumbo CDs

According to a recent survey, the penalties for withdrawing your money from your CD early could be serious. Some banks will even take part of your principal as a penalty.

Below are the most common penalties, according to the survey:

  • 3 month CD: Three months of interest
  • 6 month CD: Three months of interest
  • 1 year CD: Six months of interest
  • 2 year CD: Six months of interest
  • 5 year CD: A year’s worth of interest

So, it’s important to be confident that you want to put your money in a CD. When you do this, you’re making an agreement with the bank to leave it there for a set period of time. If you’re unsure if you want to tie up your money for a long period of time, consider a high-yield savings account instead.

How jumbo CDs are taxed

It’s important to know that the interest you earn on your jumbo CD will be taxed as interest income, not as capital gains income.

This means that your bank or credit union will send you a 1099-INT form at the end of the year to show how much interest you earned in your jumbo CD and you will be taxed on that.

Are jumbo CDs safe?

According to the U.S. Securities and Exchange Commission: “Certificates of deposit are considered to be one of the safest savings options. A CD bought through a federally insured bank is insured up to $250,000.”

Some people prefer investing in the stock market over CDs because you can often get higher rates of returns; however, the stock market is a riskier bet, and returns are not guaranteed like those associated with CDs.

CDs are not affected by the whims of the stock market. The interest rate you agree on with your bank is the rate you will get. That interest rate, however, may not outpace inflation, meaning you may not really earn much, if anything, over time.

Final thoughts

If you have over $100,000 and want to invest it in a jumbo CD, you have several options. Like the chart above shows, you can choose many different terms and durations for your jumbo CD. Just be sure to research the bank you invest with so you know you’re putting your money with a top-rated institution. Also, be sure that you’re comfortable with putting your money in a CD long-term because there are often penalties for withdrawing your money early.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Best of

The Best IRA Savings Accounts

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

Reviewed By

Saving enough for retirement remains a daunting goal for many Americans. A 2018 survey by financial services company Northwestern Mutual found 41% of respondents worried about their retirement savings. Individual retirement accounts (IRAs) can help keep your blood pressure down by providing you with a powerful savings tool for retirement with significant tax advantages.

While you may associate IRAs with investing in stocks and bonds, one of the safest places to open an IRA is with a bank or credit union in the form of a savings or money market account. The list of IRA savings accounts below are the best for earning a high interest rate on your savings while keeping your future nest egg secure.

Top 10 IRA savings accounts of September 2020

Account

Minimum opening deposit

APY

Premier Members Credit Union IRA Money Market Account (Traditional, Roth)

$0

2.00%

Patelco Federal Credit Union Money Market Select IRA (Traditional, Roth, CESA)

$0

2.00%

Latino Community Credit Union IRA Share Account (Traditional, Roth, SEP)

$25

1.26%

Signature Federal Credit Union IRA Savings (Traditional, Roth, CESA)

$0

1.00%

Communitywide FCU IRA

$2,000

1.00%

Ally Bank IRA Online Savings Account (Traditional, Roth, SEP)

$0

0.60%

Lake Michigan Credit Union (Traditional, Roth)

$5

0.80%

TIAA Bank Yield Pledge Money Market IRA

$500

0.75%

Capital One 360 IRA Savings (Traditional, Roth)

$0

0.65%

Alliant Credit Union IRA Savings (Traditional, Roth, SEP)

$0

0.65%

Premier Members Credit Union IRA Money Market Account (Traditional, Roth) — APY 2.00%, minimum deposit $5

Premier Members Credit Union is the merged company formed by two well-established credit unions: Boulder Valley Credit Union and Premier Members Federal Credit Union. It caters to residents of Colorado, but you can also join through their affiliation with Boulder Valley School District’s charity Impact on Education. It’s worth noting that you’ll only earn this high APY on your first $2,000. After that, the rate drops down in tiers.

SEE DETAILS Secured

on Premier Members Credit Union’s secure website

NCUA Insured

Patelco Federal Credit Union Money Market Select IRA (Traditional, Roth, CESA) — APY 2.00%, minimum deposit $0

Just as Premier’s rate is dependent on the size of your deposit, Patelco Federal Credit Union also steps down its APY the more money you have invested; the rate begins dropping after $2,000. Patelco is based in California, and you’re eligible to join if you live, attend school or worship in certain California communities. Students at a few universities also qualify, as do employees of one of their member companies and associations. If none of these apply to you, you can also join by becoming a member of the nonprofit Financial Fitness Association, and your first year is on the credit union.

SEE DETAILS Secured

on Patelco Credit Union’s secure website

NCUA Insured

Latino Community Credit Union IRA Share Account — 1.26%, minimum deposit $25

This North Carolina credit union offers its banking products to anyone in the nation so long as they make a one-time $10 donation to the Latino Community Development Center, a nonprofit promoting financial literacy and general economic development “for low-income Latino and other immigrant communities in North Carolina,” according to its mission statement.

The credit union offers an IRA share account — their version of a savings account — with either a Traditional, Roth or SEP plan. The account requires a minimum deposit of $25 and currently earns an APY of 1.26%.

SEE DETAILS Secured

on Latino Credit Union’s secure website

NCUA Insured

Signature Federal Credit Union IRA Savings — 1.00% APY, $0 minimum deposit

Membership in the American Consumer Council qualifies you to join up with this Virginia-based credit union, which offers Traditional, Roth and CESA IRAs. The barrier to funding these IRAs couldn’t be lower—there’s no minimum deposit required, meaning you could open an IRA savings account with the change you find under a couch cushion (though we recommend trying to save more for your retirement). The APY should also entice you, as the interest earned starts to rapidly drop off the further you get down this list.

SEE DETAILS Secured

on Signature Federal Credit Union’s secure website

NCUA Insured

Communitywide Federal Credit Union IRA — 1.00% APY, minimum deposit $2,000

Anyone can become a member of Communitywide FCU by joining the Michiana Goodwill Boosters or the Marine Corps League of St. Joseph Valley. Communitywide offers both traditional IRA and Roth IRA accounts, with a $2,000 deposit needed to open, with dividends paid into the account on a quarterly basis.

SEE DETAILS Secured

on Communitywide Federal Credit Union’s secure website

NCUA Insured

Ally Bank IRA Online Savings Account— 0.60% APY, $0 minimum deposit

Ally may be an online-only bank, but its history stretches back to the beginning of the 20th century as a financial institution that helped automaker General Motors finance sales. In its current iteration, Ally offers a wide range of competitive savings products, including an IRA account that earns an APY of 0.60%. Ally offers three different types of plans: Traditional, Roth and SEP, covering a variety of retirement needs while offering a high rate of return.

SEE DETAILS Secured

on Ally Bank’s secure website

Member FDIC

Lake Michigan Credit Union Money Market Savings — APY 0.80%, minimum deposit $5

You don’t have to belong to any specific industry, company or organization to join Lake Michigan Credit Union. Becoming a member allows you to access all of their products and services and requires only a minimum donation of $5 to the ALS (Amyotrophic Lateral Sclerosis) Foundation if you live outside Michigan or Florida.

Lake Michigan Credit Union offers traditional and Roth IRA plans, with no maintenance fees. The APY is 0.80%.

SEE DETAILS Secured

on Lake Michigan Credit Union’s secure website

NCUA Insured

TIAA Bank Yield Pledge Money Market — APY 0.75%, minimum deposit $500

You might be more familiar with TIAA as an investment company, but it also operates a banking division based out of Islandia, N.Y. You can open an IRA within a Yield Pledge Money Market account at this bank with an APY of 0.75%. The only catch is that this rate applies for a term of one year; after that, it will drop back down to the normal rates (currently 0.50%0.60%, depending on your balance level). In addition, if you already have a Yield Pledge Money Market account or a Yield Pledge Checking account at TIAA, you can’t open this account with the same money. It’ll need to come from elsewhere.

SEE DETAILS Secured

on TIAA Bank’s secure website

Member FDIC

Capital One IRA Savings Account — APY 0.65%, $0 minimum deposit $0

Capital One offers a range of products, including checking, savings, credit cards, loans and this IRA account. Both Traditional and Roth IRAs are available. You’ll pay no monthly fee and earn the APY on your entire balance. Capital One was established in Richmond, Va., in 1994.

Alliant Credit Union IRA Savings— APY 0.65%, minimum deposit $0

Although based in Illinois, it’s a simple matter for anyone in the country to join this credit union. A $10 donation to Foster Care to Success qualifies you for membership and the ability to take advantage of Alliant’s personal banking products, including their IRA Savings account.

Alliant offers three different plans for its IRA savings: Traditional, Roth and SEP. The APY is 0.65%.

SEE DETAILS Secured

on Alliant Credit Union’s secure website

NCUA Insured

What’s the benefit of an IRA savings account?

Like any IRA account, an IRA savings account provides tax advantages to the saver. The exact benefits depend on the IRA plan or type you choose. While the two most common types of IRA offered are Traditional and Roth, more specialized versions of the account are also available, including:

  • Simplified Employee Pension (SEP): A type of IRA that can be used by either small business owners on behalf of their employees, or by self-employed individuals, the SEP IRA functions similar to a Traditional IRA — except it has a much higher annual contribution limit. You can contribute 25% of your annual compensation to the plan or $57,000 (whichever is the lesser), and like a Traditional IRA, those contributions are tax-deductible.
  • Savings Incentive Match Plan for Employees (SIMPLE): Another IRA tailored for small-business owners or those who are self-employed, SIMPLE plans allow you to put up to $13,500 of your business net earnings into the account, where the money remains tax-deferred until you start taking your withdrawals.
  • Coverdell Education Savings Account (CESA): This account aids with saving for education costs for those 18 years old or younger, but functions similar to a Roth IRA with more limits. For example, the beneficiary must be 18 years or younger when the account is set up (or be a special needs beneficiary), and you can make a maximum contribution of $2,000 per year. Only those with modified adjusted gross incomes of up to $110,000 ($220,000 if filing a joint return) may make a contribution to the account, and the contributions are not tax-deductible. The beneficiary can use the funds from the CESA for qualifying expenses toward their education.

How does an IRA savings account work?

You can contribute money to your IRA savings account anytime, just as you would with an ordinary savings account. However, because this is an IRA product, it’s still subject to a 2020 contribution amount limit of $6,000 (or $7,000 if you’re age 50 or older), the same as an IRA account at a brokerage firm.

In that same vein, the penalties for withdrawing money early from your IRA remain in effect for the IRA savings account. Taking money from your Traditional IRA savings account incurs a 10% penalty if you’re younger than 59 1/2 years old (and assuming you don’t qualify for one of the special circumstances allowing a penalty-free withdrawal, such as a first-time home purchase).

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.