Shopping CD Rates Can Mean BIG Bucks

Reader Question:  According to information on, investors can earn higher interest rates on their savings and money markets by banking on-line than they can earn at local banks. For example, Synchrony Bank pays 1.25% on a one-year CD. Is there any risk in doing this?  G.H.

Answer:  No, just be certain your bank is a member of the FDIC and that your account does not exceed the FDIC insurance limits, currently $250,000.  If you have more than $250,000, there are still ways to get full insurance coverage by splitting the funds into accounts with different titling.  For example, you could have one account titled in your name, one in your husband’s name and one titled jointly under both of your names…allowing you to up to $1,000,000 fully insured in a single bank.  How much difference can ‘shopping rates’ make?  A $100,000 one-year CD at your Internet bank would pay $1,250 in interest while a large Birmingham, Alabama bank would pay only $100!

Reader Question:  If stock is sold in an IRA and there is a loss, why can’t that loss be taken off your taxes just like you have to report a gain doing the same thing? C.J.

Answer:  Federal laws for the Traditional IRA do not allow losses to be taken from your income taxes.  Think of a Traditional IRA as a contract that has a beginning, a middle, and an end.  In the beginning, when you contribute to your IRA, you receive an income tax deduction.  At the end, when you withdraw money from your IRA, those withdrawals are taxable as ordinary income.  In the middle, if you sell a security for a loss, there is no tax deduction.  Likewise, if you sell a security for a gain, that gain is not taxable.

Reader Question:  I work part time and have no health insurance. In 2014 I made under the threshold for paying the penalty. For 2015 I made more ($12,560.) which is over the threshold ($11,880).  My question is can I open a regular IRA now and put in $1000 to get me under the penalty limit? I already have a Roth IRA.  I am 55 years old.  J.W.

Answer:   “The Obamacare penalty is specific to size of family and is based on Modified Adjusted Gross Income.  There are also several potential exemptions that you may qualify for that would allow you to avoid the penalty.  Your best bet is to complete your tax return for 2015 to determine your actual MAGI, then you can determine how much to invest in a Traditional (deductible) IRA in order to avoid the penalty”, says Kimberly Reynolds, CFP, a partner at The Welch Group.  As a reminder, you have until April 18th, 2016 to make your IRA contribution for calendar year 2015.

Reader Question:  Regarding the statement:  “In any calendar year, you are allowed to give away up to $14,000 per person to as many people as you desire without triggering any gift taxes.” Does this mean you can give 10 people $14,000 each or that you can only give a total of $14,000 divided among the 10 people?  S.T.

Answer:  For 2016, you can give as many people as you wish $14,000 each.  If you are married, you can join in the gifts and together give up to $28,000 to as many people as you choose.

SAVE THE DATE: Would you be interested in receiving free one-on-one financial advice from a financial pro?  How about expert advice on investing, retirement strategies, estate and will planning, college planning and much more?  If your answer is, “Absolutely!”, then plan on attending the Alabama Money Expo on Saturday, March 5th at Carver High School.  This is a free event put on by the Financial Education Outreach (a qualified charitable organization). You’ll also get to see a live magic show by nationally acclaimed magician and star of America’s Got Talent, Hart Keene. If you’re a teen, parent or senior citizen, there is something for you!  For more information visit