Certificates of Deposit (CDs)
A CD is an instrument that earns a fixed rate of interest for a specific amount of time. The interest rate is generally higher than the current rate for a savings account. There is a penalty involved if a CD is redeemed before maturity. Most CDs automatically renew at maturity. Interest can be paid monthly, quarterly, semiannually, annually, or can be deposited directly to the certificate upon maturity.
Availability: Certificates of deposit are available to any individual, organization, corporation, etc.
Terms: Although CDs are purchased for a set length of time, they can be redeemed early. A penalty will be assessed unless there is a death of the owner or co-owner of the certificate.
- $500.00 minimum deposit to open a CD
- Terms for Certificates of Deposit range from 3 to 60 months
Savings Incentive Match Plans for Employees
Availability: A SIMPLE IRA Plan may be maintained only by an "eligible employer." An "eligible employer" must employ 100 or less employees who received at least $5,000 of compensation for the previous calendar year.
Terms: Contributions to a SIMPLE IRA can be deposited into certificates of deposit with terms from 6 months to 60 months.
- The employer must make contributions into every employee's SIMPLE IRA according to the company's plan documents. The employer may make contributions up to the yearly limit.
- A minimum deposit of $500.00 is required to open a fixed rate SIMPLE IRA
- A minimum of $5.00 is required to open a variable rate SIMPLE IRA
Simplified Employee Pensions
Availability: A SEP may be established by an employer, such as a sole proprieter, partnership, and corporation. A SEP may not be established by an individual who is not an employer.
Terms: Contributions to a SEP can be deposited into certificates of deposit with terms from 6 months to 60 months.
- SEP contributions for employees are a deductible business expense for the employer
- A minimum deposit of $500.00 is required to open a fixed rate SEP
- A minimum of $5.00 is required to open a variable rate SEP
Fixed Rate & Variable Rate IRAs
This product is a savings plan, the proceeds of which are to be used as supplemental income upon retirement. Consult your financial advisor or accountant for the contribution limit for the current year. Deposits can be made anytime throughout the year or in one lump sum. Funds in an IRA are invested in CDs for a specific period of time, as determined by the consumer. The IRA owner can withdraw funds after the age of 59½ without penalty. When the IRA owner reaches age 70½, a set amount of distributions per year must be taken from the IRA.
Availability: An Individual Retirement Account (IRA) is available to any person with earned income who is under 70½ years of age.
Terms: Terms for Fixed Rate IRAs range from 6 to 60 months. The term for a variable rate IRA is 18 months.
- $500.00 minimum deposit required to open a fixed-rate IRA
- $5.00 minimum deposit required to open a variable-rate IRA.
- Deposits can be made at any time
- The funds can be withdrawn before an individual is 59½ years of age without a penalty if they are reinvested within 60 days. If not reinvested in this time, the government imposes a 10% penalty.
- Interest rates are determined by the bank.
- Allows participant to save easily for retirement and enjoy immediate tax savings on their income tax.
Coverdell Education Savings Account (CESA)
Contributions to this account are not tax deductible, but if the funds are distributed for "qualified education expenses," they are tax-free; therefore, the earnings on the CESA are generally tax-free. Contributions may be made by anyone for the benefit of the designated beneficiary provided the designated beneficiary has not attained age 18. All funds must be used for qualified educational purposes before the designated beneficiary reaches age 30. Consult your financial advisor or accountant for contribution limits.
Availability: An Education Savings Account (ESA) contribution may be made by any contributor for a designated beneficiary.
Terms: Contributions to an ESA can be deposited into certificates of deposit with terms from 6 months to 60 months.
- $500.00 minimum deposit to open an ESA
- No fees
- A valuable tool to save for a child's education
- Distributions that do not exceed "qualified education expenses" are tax-free.
Contributions to this account are not tax deductible, but if the funds are distributed in a "qualified distribution," they are tax-free; therefore, the earnings on this account are generally tax-free. Consult your financial advisor or accountant for the contribution limit for the current year.
Availability: A Roth IRA is available to any person with earned income who is under 70½ years of age.
Terms: Contributions to a Roth IRA can be deposited into certificates of deposit with terms of 6 months to 60 months.
- Allows participants to save easily for retirement
- Pays market-based rates of interest
- Investment is separately insured by the FDIC from participant's other deposits
- The earnings are tax free when distributed
The U.S. Department of the Treasury has ended over-the-counter sales of paper savings bonds. Technology makes it possible for the Treasury Department to sell and maintain savings bonds and other Treasury securities electronically in TreasuryDirect® at a reduced expense to taxpayers. To purchase savings bonds, set up accounts and/or cash-in a bond, go to www.treasurydirect.gov.