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