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4 Places To Put Your Retirement Money

There is no shortage of options when deciding where to put your retirement money. Strategies and tools are available to all investors, no matter where you may be in your retirement planning journey.

These options range from DIY to completely hands-off. Investors can break down their choices into three main decisions: the account, the investments, and finally the bank or platform.

Here are your options for your retirement investing strategy—and how to choose between them.

Where To Invest Retirement Money: First, Choose an Account

A typical first choice for an account to save and invest for the long-term is a designated retirement account. There are many different types of retirement plans, including Roth IRAs and employee-sponsored 401(k)s, most of which provide tax incentives to invest for the long haul.

It is important to remember, though, that retirement accounts are just that—accounts. For example, a 401(k) and a Roth IRA are not investments but instead, accounts that hold investments. Said another way, they provide a place where you can invest, but are not themselves an investment. This can be confusing, as many workplace retirement plans also automatically invest contributions made to the account.

Therefore, the decision on which retirement account to use will largely depend on what makes the most sense for your personal tax situation, and which you have access to. Here are some common options.

1. Workplace Retirement Plan

For individuals with access to one, a workplace retirement plan can be a convenient option that offers the benefit of automatic paycheck deduction. Many workplace plans, such as 401(k), 403(b), and SIMPLE (Savings Incentive Match Plan for Employees) IRA accounts, provide an easy place where retirement saving and investing can happen automatically.

As a bonus, many workplace plans offer a company match: when you contribute to your account, they do too. Many investors think of a company match as additional salary or “free money” that will help them reach their goals.

2. Tax-deferred Retirement Account

Tax-deferred retirement accounts, which include traditional IRAs, 401(k)s, and solo 401(k)s and SEP IRAs, offer tax deferral—meaning that you contribute with pre-tax dollars. When you open an IRA (or other similar account), income taxes on all contributions are deferred until you withdraw money, usually in retirement.

One benefit of tax deferral is that an individual might be more likely to have a lower (effective) income tax rate as a retired person, so there may be an advantage to delay taxes.

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SoFi IRAs now get a 1% match on every dollar you deposit, up to the annual contribution limits. Open an account today and get started.


Only offers made via ACH are eligible for the match. ACATs, wires, and rollovers are not included.

3. Roth IRA

Neither a Roth IRA or a Roth 401(k) offer tax deferral, so money entering into the account will be subject to income taxes. But that means that the money can be withdrawn tax-free, upon retirement or at other qualified times.

A Roth IRA could be a compelling option for someone looking to supplement their existing workplace plan, or someone who may not have access to an account through work. That said, Roth IRA accounts have income limitations, meaning that a high salary may disqualify you from using one.

There is one universal benefit to using a retirement account—as opposed to a non-retirement investment account—whether it’s tax-deferred or not: Tax-free investment growth. In a non-retirement account, money earned through investing will be subject to an additional tax on investment earnings. Within a retirement account, there is no such tax on any money earned through investing.

4. Non-retirement investment account

Non-retirement investment accounts, such as brokerage accounts or general investing accounts, offer more flexibility in accessing your money than retirement accounts typically do. Typically, an individual can incur penalties if money is removed from their retirement account before age 59 ½. If an investor is planning to retire before this age or would like the flexibility to do so, a non-retirement investment account might be appealing.

Additionally, a non-retirement investment account isn’t subject to the contribution limits of a retirement plan like a 401(k) or a Roth IRA (the latter of which is $7,000 for 2024 and $6,500 for 2023). Some investors may choose to max out retirement accounts and open up a taxable investment account in order to fully fund their retirement goals.

Choose an Investment Strategy

Once an investor has decided where to put retirement money, it is time for the next step, which is how to invest that money. While many workplace retirement plans automatically invest money, it should be viewed as a separate step in the process.

Typically, investors choose (at minimum) a mix of stocks and bonds within their long-term investment portfolios. When contemplating bonds vs. stocks, it’s helpful to think of the differences in this way: Stocks tend to be higher growth, but that growth comes with more risk. On the other hand, bonds have historically lower rates of growth, but are considered to be less risky. An individual may want to determine their personal mix of stocks and bonds by assessing their goals, investing timeline, and risk tolerance.

Once an investor has determined their preferred mix of stocks, bonds, and any other major asset classes (called asset allocation), it is time to determine how to fulfill these allocations. There are several options, ranging from the completely DIY (buying individual stocks, for example) to the completely uninvolved (such as having a professional manage your portfolio).

Individual Stocks

Those who have an inherent interest in picking individual stocks could certainly do so, though it is not a requisite to building an investment portfolio. As you consider if and how to choose your first stock, it also makes sense to look into whether you’re more interested in a concentrated vs. diversified investment portfolio.

Index Funds and ETFs

A common way to invest for retirement is by using mutual funds or exchange-traded funds (ETFs). These funds are, essentially, baskets that hold lots of investments. That basket could hold stocks, bonds, something else entirely, or some combination of different investment types.

Some investors may find buying big baskets of investments easier than attempting to choose individual investments, like stocks. Individuals whose retirement plan automatically invests may already have a combination of funds.

Both mutual funds and ETFs can be either actively managed or “index.” Index funds—whether mutual funds or ETFs—are a popular choice because they are low-cost and often represent a broad swath of the market. For example, it’s possible to buy a low-cost index fund that invests in the entire US stock market. With just a handful of index funds, it may be possible to build a fully diversified portfolio.

Recommended: Are Mutual Funds Good for Retirement?

Target-date Funds

Similarly, there are options that utilize a passive, index fund strategy but that build a portfolio on your behalf. First, retirement target-date funds (also called lifecycle funds) are funds that typically hold other funds (as opposed to individual stocks and bonds) in amounts that are appropriate for your investing timeline—that’s why you pick one that corresponds to your approximate retirement date.

Target-date funds are popular within workplace retirement plans, but it also may be possible to buy into one at the brokerage bank of your choosing. Be sure to check and see whether the fund consists of index funds, which are typically lower cost, or holds managed funds, which generally have higher fees.

Robo-advisor Service

Another hands-off option is to use a digital “robo-advisor” service that manages a portfolio of index funds on your behalf. This option might appeal to those who want a bit more assistance in maintaining a retirement investing strategy. Most of these services encourage a passive, long-term investment strategy.

Generally, you’ll answer questions about your goals, investing timeline, and risk tolerance, which indicates to the service your most suitable investment mix. Then, this strategy is built and maintained for you. Typically, this service comes with an additional cost on top of the cost of the funds used.

The Takeaway

For investors deciding where to put retirement money, choosing a preferred account type and an investment strategy are two ways to get started. With tax-deferred options like 401(k)s and other choices like traditional and Roth IRAs, an investor is likely to find at least one retirement plan account that suits their lifestyle and goals.

In considering possible investment strategies, it’s useful to think about how hands-on one wants to be. Putting together a stock portfolio requires more direct involvement, whereas utilizing robo-advisor services might require less.

Deciding where to invest and with what strategy will help guide an investor’s third and final decision regarding the bank or investing platform.

No matter where and how an individual decides to invest their retirement money, they’re not likely to welcome unnecessary fees. Service fees and other costs embedded in accounts can seriously erode any potential profit earned on an investment.

For investors interested in a DIY approach for retirement investments, a low-cost brokerage bank or trading platform, like SoFi Invest®, may be appealing. With SoFi Invest, members can build out a diversified investment strategy—including stocks and ETFs—without high costs.

For individuals who favor a hands-off approach, a robo-advisor could be the right fit. SoFi Automated Investing builds and maintains a diversified portfolio for investors guided by their personal money goals and smart digital algorithms. Portfolios are built using low-cost ETFs.

Find out how SoFi Invest can help you meet your retirement goals.


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, LLC and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“SoFi Securities”).
Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above, please visit https://www.sofi.com/legal/.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Why You Should Start Retirement Planning in Your 20s

Why You Should Start Retirement Planning in Your 20s

When you’re in your 20s, the last thing on your mind may be the end of your career and the retirement that comes after. But thinking about retirement now can ensure your financial security in the future.

The longer you have to save for retirement, the better. Here’s why you should start thinking about retirement planning and investing in your 20s.

Main Reason to Start Saving for Retirement Early

When you start investing in your 20s, even if you begin with just a small amount, you have more time to build your nest egg. Typically, having a long time horizon means you have time to weather the ups and downs of the markets.

What’s more — and this is critical — the earlier you start saving, by opening a savings vehicle such as a high-yield savings account or a money market account, for instance, the more time you’ll have to take advantage of compound interest, which can help boost your ability to save. Compound interest is the reason small amounts of money saved now can go further than much larger amounts of money saved later. The more time you have, the more returns compound interest can deliver.

Compound Interest Example

Imagine you are 25 with plans to retire at 65. That gives you 40 years to save. If you save $100 a month in a money market account with an average annual return of 6% compounded monthly, at age 60, you would have saved about $200,244.

Now, let’s imagine that you waited for 30 years, until age 55 to start saving. You put $1,000 a month into a money market account. With an average annual return of 6% compounding monthly, you’d only have about $165,698 by the time you’re ready to retire, far less than if you’d started saving smaller amounts earlier.

The lesson? The longer you wait to start saving for retirement, the more money you’ll have to save later to make up the difference. Depending on your financial situation, it could be difficult to find these extra funds when you’re older.

Though it may not sound fun in your 20s to start putting money toward retirement, it may actually be easier in the long run.

💡 Quick Tip: Before opening an investment account, know your investment objectives, time horizon, and risk tolerance. These fundamentals will help keep your strategy on track and with the aim of meeting your goals.

Boost your retirement contributions with a 1% match.

SoFi IRAs now get a 1% match on every dollar you deposit, up to the annual contribution limits. Open an account today and get started.


Only offers made via ACH are eligible for the match. ACATs, wires, and rollovers are not included.

How to Start Saving for Retirement in Your 20s

If you’re new to saving, starting a retirement fund requires a little bit of planning.

Step 1: Calculate how much you need to save

Set a goal. Consider your target retirement date and how long you’ll expect to be retired based on current life expectancy. What kind of lifestyle do you want to lead? And what do you expect your retirement expenses to be?

Step 2: Choose a savings vehicle

When it comes to where to put your savings, you have a number of options. For example, as of early August 2023, you could get around 4.5% APY on a high-yield savings account.

Many retirement savers also opt to use an investing account, such as a taxable brokerage account or tax-advantaged retirement savings account instead.

Keep in mind that investments in equities or other securities are riskier than savings accounts, but that allows for the possibility of better returns. Young investors may be better positioned than older investors to take on additional risk, since they have time to recover after a market decline. However, the amount of risk you’re willing to take on is an important consideration and a personal choice.

Step 3: Start investing

Once you’ve opened an account, your investment strategy depends on age, goals, time horizon and risk tolerance. For example, the longer you have before you retire, the more money you might consider investing in riskier assets such as stock, since you’ll have longer to ride out any rocky period in the market. As retirement approaches, you may want to re-allocate more of your portfolio to less risky assets, such as bonds.

Types of Retirement Plans

If you’re interested in opening a tax-advantaged retirement plan, there are three main account types to consider: 401(k)s and traditional IRAs, and Roth IRAs.

401(k)

A 401(k) is an employer sponsored retirement account that you invest in through your workplace, if your employer offers it. You make contributions to 401(k)s with pre-tax funds (meaning contributions lower your taxable income), usually deducted from your paycheck. Your 401(k) will typically offer a relatively small menu of investments from which you can choose.

Employers may also contribute to your 401(k) and often offer matching contributions. Consider saving enough money to at least meet your employer’s match, which is essentially free money and an important part of your total compensation.

Some companies also offer a Roth 401(k), which uses after-tax paycheck deferrals.

Individuals can contribute up to $23,000 in their 401(k) in 2024. Individuals can contribute up to $22,500 in their 401(k) in 2023. And those aged 50 and up can make an additional catch-up contribution of $7,500.

Money invested inside a 401(k) grows tax-deferred, and you’ll pay regular income tax on withdrawals that you make after age 59 ½. If you take out money before then, you could owe both income taxes and a 10% early withdrawal penalty.

You must begin making required minimum distributions (RMDs) from your account by age 73.

Learn more: What Is a 401(k)?

Traditional IRA

Traditional IRAs are not offered through employers. Anyone can open one as long as they have earned income. Depending on your income and access to other retirement savings accounts, you may be able to deduct contributions to a traditional IRA on your taxes.

As with 401(k) contributions, you’d owe taxes on traditional IRA withdrawals after age 59 ½ and may have to pay taxes and a penalty on early withdrawals.

In 2024, traditional IRA contribution limits are $7,000 a year or $8,000 for those aged 50 and up. In 2023, traditional IRA contribution limits are $6,500 a year or $7,500 for those aged 50 and up. Compared to 401(k)s, IRAs offer individuals the ability to invest in a much broader range of investments. These investments can then grow tax-deferred inside the account. Traditional IRAs are also subject to RMDs at age 73.

Roth IRA

Unlike 401(k)s and traditional IRAs, savings go into Roth IRAs with after-tax dollars and provide no immediate tax benefit. However, money inside the account grows tax-free and it isn’t subject to income tax when withdrawals are made after age 59 ½.

You can also withdraw your principal (but not the earnings) from a Roth at any time without a tax penalty as long as the Roth has been open for five tax years. The first tax year begins on January 1 of the year the first contribution was made and ends on the tax filing deadline of the next year, such as April 15. Any contribution made during that time counts as being made in the prior year. So, for instance if you made your first contribution on April 10, 2023, it counts as though it were made at the beginning of 2022. Therefore, your Roth would be considered open for five tax years in January 2027.

Roths are not subject to RMD rules. Contribution limits are the same as traditional IRAs.

Investing in Multiple Accounts

Individuals can have both a traditional and Roth IRA. But note the contribution limits apply to total contributions across both. So if you’re 25 and put $3,250 in a traditional IRA, you could only put up to $3,250 in your Roth as well in 2023.

You can also contribute to both a 401(k) and an IRA, however if you have access to a 401(k) at work you may not be able to deduct your IRA contributions.

Retirement Plan Strategies

The investment strategy you choose will depend largely on three things: your goals, time horizon and risk tolerance. These factors will help you determine your asset allocation, what types of assets you hold and in what proportion. Your retirement portfolio as a 20-something investor will likely look very different from a retirement portfolio of a 50-something investor.

For example, those with a high risk tolerance and long time horizon might hold a greater portion of stocks. This asset class is typically more volatile than bonds, but it also provides greater potential for growth.

The shorter a person’s time horizon and the less risk tolerance they have, the greater proportion of bonds they may want to include in their portfolio. Here’s a look at some portfolio strategies and the asset allocation that might accompany them:

Sample Portfolio Style

Asset allocation

Aggressive 100% stocks
Moderately Aggressive 80% stocks, 20% bonds
Moderate 60% stocks, 40% bonds
Moderately Conservative 30% stocks, 70% bonds
Conservative 100% bonds

The Takeaway

Even if you don’t have a lot of room in your budget to start investing, putting away what you can as early as you can, can go a long way toward saving for retirement. As you start to earn more money, you can increase the amount of money that you’re saving over time.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Help grow your nest egg with a SoFi IRA.

Photo credit: iStock/izusek


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

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A Guide to the 403b Retirement Plan

Understanding the 403(b) Retirement Plan: A Comprehensive Guide

If you work for a tax-exempt organization or a public school, you typically have access to a 403(b) plan rather than a 401(k). What is a 403(b)? It’s a workplace retirement plan that can help you start saving for your post-work future.

In this guide, find out how 403(b) plans work, who is eligible for them, and the rules for contributing.

Demystifying the 403(b) Plan

A retirement plan for employees of tax-exempt organizations and public schools, a 403(b) is also known as a tax-sheltered annuity or TSA plan. Employees can contribute to the plan directly from their paycheck, and their employer may contribute as well. A 403(b) can help you save for retirement.

What Exactly is A 403(b) Retirement Plan?

What is a 403(b)? The 403(b) retirement plan is a type of qualified retirement plan designed to help employees save for retirement. Certain schools, religious organizations, hospitals and other organizations often offer this plan to employees. (In layman’s terms, it’s the 401(k) of the nonprofit world.)

Like 401(k)s, 403(b) plans allow for regular contributions toward an employee’s retirement goal. Contributions are tax-deductible in the year they’re made. Also, you won’t pay taxes on any earnings in the account until you make withdrawals.

However, unlike 401(k)s, 403(b)s sometimes invest contributions in an annuity contract provided through an insurance company rather than allocate it into a stocks-and-bonds portfolio.

Distinguishing Between Different 403(b) Options

There are two main types of 403(b) plans: traditional and Roth. With a traditional 403(b), employees contribute pre-tax money to their 403(b) account. This reduces their taxable income, giving them an immediate tax advantage. They will pay taxes on the money when they withdraw it.

With a Roth 403(b), employees contribute after-tax dollars to the plan. They will not owe taxes on the money when they withdraw it.

Not every 403(b) plan offers a Roth version.

💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.

Boost your retirement contributions with a 1% match.

SoFi IRAs now get a 1% match on every dollar you deposit, up to the annual contribution limits. Open an account today and get started.


Only offers made via ACH are eligible for the match. ACATs, wires, and rollovers are not included.

The 403(b) Plan in Action: Participation and Contributions

The IRS states that a 403(b) plan “must be maintained under a written program which contains all the terms and conditions…” In other words, for the plan to be legitimate, paperwork is required.

An employee may get a whole packet of information about the 403(b) plan as part of the onboarding process. This package can include salary reduction agreement terms (this refers to employee contributions from the plan that come from the employee’s paychecks), eligibility rules, explanations of benefits, and more.

In certain limited cases, an employer may not be subject to this requirement. For example, church plans that don’t contain retirement income aren’t required to have a written 403(b) plan.

Who Gets to Participate?

Only employees of specific public and nonprofit employers are eligible to participate in 403(b)s, as are some ministers. You may have access to a 403(b) plan if you’re any of the following:

•   An employee of a tax-exempt 501(c)(3) nonprofit organization

•   An employee of the public school system, including state colleges and universities, who is involved in the day-to-day operations of the school

•   An employee of a public school system organized by Indian tribal governments

•   An employee of a cooperative hospital service organization

•   A minister who works for a 501(c)(3) nonprofit organization and is self-employed, or who works for a non-501(c)(3) organization but still functions as a minister in their day-to-day professional life

Employers may automatically enroll employees in a 403(b), though employees can opt out if they so choose. Of course, participating in an employer-sponsored retirement plan is one good way to start saving for retirement.

Universal Availability Rule: Who Doesn’t Qualify for 403(b) Participation?

Employers must offer 403(b) coverage to all qualifying employees if they offer it to one — this rule is known as “universal availability.” However, plans may exclude certain employees, including those under the following circumstances:

•   Employees working fewer than 20 hours per week

•   Employees who contribute $200 or less to their 403(b) each year

•   Employees who participate in a retirement plan, like a 401(k) or 457(b), of the employer

•   Employees who are non-resident aliens

•   Employees who are students performing certain types of services

The same laws that allow these coverage limits also require employers to give employees notice of specific significant plan changes, like whether or not they have the right to make elective deferrals.

Types of Contributions: Understanding Your Options

You can contribute to your 403(b) through automatic paycheck deductions. This process is similar to that of a 401(k) — the employee agrees to have a certain amount of their salary redirected to the retirement plan during each pay period.

However, other types of 403(b)contributions are also eligible, including:

•   Nonelective contributions from your employer, such as matching or discretionary contributions

•   After-tax contributions can be made by an employee and reported as income in the year the funds are earned for tax purposes. These funds may or may not be designated Roth contributions. In this case, the employer needs to keep separate accounting records for Roth contributions, gains, and losses.

The Cap on Contributions: Limits and Regulations

In 2024, workers can put up to $23,000 into a 403(b) plan. In 2023, workers can put up to $22,500 into a 403(b) plan. Workers who’ve been with their employer for 15 years may be able to contribute an additional $3,000 if they meet certain requirements. Those age 50 or older can contribute an additional $7,500 to a 403(b).

Combined contributions from the employee and the employer may not exceed the lesser of 100% of the employee’s most recent yearly compensation or $69,000 in 2024 and $66,000 in 2023.

Investing Within Your 403(b) Plan

A 403(b) may offer an employee a more limited number of investment options compared to other retirement savings plans.

Exploring Investment Choices for Your 403(b)

One way 403(b) plans diverge from other retirement plans, like 401(k)s and even IRAs, is how the organization invests funds. Whereas other retirement plans allow account holders to invest in stocks, bonds, and exchange-traded funds (ETFs), 403(b)s commonly invest in annuity contracts sold by insurance companies.

Part of the reason these plans are known as “tax-sheltered annuities” is that they were once restricted to annuity investments alone — a limit removed in 1974. While many 403(b) plans still offer annuities, they have also largely embraced the portfolio model that 401(k) plans typically offer. 403(b) plans now typically also offer custodial accounts invested in mutual funds.

Comparing 403(b) with Other Retirement Plans

How does a 403(b) stack up against other retirement plans, such as 401(k)s, IRAs, and pension plans? Here’s how they compare.

403(b) vs. 401(k): Similarities and Differences

These two plans share many similarities. However, one notable difference between 403(b) plans and 401(k) plans is there is no profit sharing in 403(b)s — workplaces that are 403(b)-eligible aren’t working toward a profit.

Another way 403(b) plans diverge from 401(k)s is how the organization invests funds. Whereas other retirement plans allow account holders to invest in stocks, bonds, and exchange-traded funds, 403(b)s commonly invest in annuity contracts sold by insurance companies or in custodial accounts invested in mutual funds.

403(b) vs. IRA vs. Pension Plans: What’s Right for You?

An IRA offers more investment choices than a 403(b). With a 403(b), your investment options are narrower.

403(b) plans may also have higher fees than other retirement plans. In addition, certain 403(b) plans aren’t required to adhere to standards set by the Employee Retirement Income Security Act (ERISA), which protects employees who contribute to a retirement account.

However, 403(b)s have much higher contribution limits than IRAs. IRA contributions are $7,000 for 2024 for individuals under age 50, compared to $23,000 in contributions for a 403(b). IRA contributions are $6,500 for 2023 for individuals under age 50, compared to $22,500 in contributions for a 403(b).

As for pension plans, public school teachers are typically eligible for defined benefit pension plans that their employer contributes to that gives them a lump sum or a set monthly payment at retirement. These teachers should also be able to contribute to a 403(b), if it’s offered, to help them save even more for retirement.

Advantages and Challenges of a 403(b) Plan

There are both pros and cons to participating in a 403(b) plan. Here are some potential benefits and disadvantages to consider.

Tax Benefits and Employer Matching: The Upsides

As mentioned, a 403(b) offers tax advantages, whether you have a traditional or Roth 403(b) plan. Contribution limits are also higher than they are for an IRA.

Employers may match employees’ contributions to a 403(b). Check with your HR department to find out if your employer matches, and if so, how much.

Potential Drawbacks: Fees and Investment Choices

Some 403(b)s charge higher fees than other types of plans. They also have a narrower range of investment options, as mentioned earlier.

Making Changes to Your 403(b) Plan

If a situation arises that requires you to make changes to your 403(b), such as contributing less from your paychecks to the plan, it is possible to do so.

When Life Changes: Adjusting Your 403(b) Contributions

You can adjust your contributions to a 403(b). Check with your employer to find out if they have any rules or guidelines for when and how often you can make changes to your contributions, and then get the paperwork you’ll need to fill out to do so.

Plan Termination: Understanding the Process and Implications

An employer has the right to terminate a 403(b), but they’re required to distribute all accumulated benefits to employees and beneficiaries “as soon as administratively feasible.”

Employees may be eligible to roll their 403(b) funds over into a new retirement fund upon termination.

Loans, Distributions, and Withdrawals from 403(b) Plans

Here’s information about taking money out of your 403(b), whether it’s a loan or a withdrawal.

Borrowing from Your 403(b): What You Need to Know

There are rules that limit how and when an account holder can access funds in a 403(b) account. Generally, employees can’t take distributions, without penalties, from their 403(b) plan until they reach age 59 ½.

However, some 403(b) plans do allow loans and hardship distributions. Loan rules vary by the plan. Hardship distributions require the employee to demonstrate immediate and heavy financial need to avoid the typical early withdrawal penalty. Check with your employer to find out the particulars of your plan.

Taking Distributions: The When and How

Like other retirement plans, 403(b)s have limits on how and when participants can take distributions. Generally, account holders cannot touch the funds until they reach age 59 1/2 without paying taxes and a penalty of 10%. Furthermore, required minimum distributions, or RMDs, apply to 403(b) plans and kick in at age 73.

If you leave your job, you can keep your 403(b) where it is, or roll it over to another retirement account, such as an IRA or a retirement plan with your new employer.

Maximizing Your 403(b) Plan

If you have a 403(b), the amount you contribute to the plan could potentially help you grow your savings. Here’s how.

Strategic Contribution Planning: How to Maximize Growth

If your employer offers a match on contributions to your 403(b), you should aim to contribute at least enough to get the full match. Not doing so is like leaving free money on the table.

Beyond that, many financial advisors suggest aiming to contribute at least 10% of your income for retirement. You may be able to save less if you have access to guaranteed retirement income such as a pension, as many teachers do, but consider all your options carefully before deciding.

If 10% seems like an unreachable goal, contribute what you can, and then consider increasing the amount that you save each time you get a raise. That way, the higher contribution will not put as much of a dent in your take-home pay.

Doing some calculations to figure out how much you need to save and when you can retire can help you determine the best amount of save.

The Takeaway

If you work for a nonprofit employer, contributing to a 403(b) is a tax-efficient way to start saving for retirement. The earlier you can start saving for retirement, the more time your money can have to grow.

If your employer does not offer a 403(b), or if you’re interested in additional ways to save or invest for retirement, you may want to consider opening another tax-advantaged retirement savings account such as an IRA to help you reach your financial goals.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).


Easily manage your retirement savings with a SoFi IRA.


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

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Why Alternative Investments Matter?

In times of market or economic uncertainty, investors may turn to alternative investments as a way to mitigate volatility and potentially improve risk-adjusted returns.

While alts come with risks of their own, these investments are not typically correlated with traditional stock and bond markets and can thus offer investors portfolio diversification.

In addition, alternative investments — an umbrella term for assets that fall outside standard stock, bond, and cash options — used to be accessible only to high net-worth and accredited investors. Now alts are available to a range of investors thanks to the emergence of new vehicles that include different types of alternative strategies and assets.

Key Points

•   Alternative investments are not generally correlated with traditional stock and bond markets, so they can help diversify a portfolio and mitigate risk.

•   Alternative investments may deliver higher returns when compared with conventional assets, but are also considered higher risk.

•   Some alternative investments, including some funds that invest in these assets, may provide passive income through dividends.

•   Alternative investments are typically less liquid and less transparent than conventional securities, so there can be limits on redemption, lack of data, and higher risk.

•   Alternative investments may be suitable for investors who have a higher risk tolerance, are looking for diversification, and understand the potential advantages and disadvantages of these investments.

Why Consider Alternative Investments?

Not only are alternative strategies more accessible to ordinary investors today, they offer several ways to add diversification to investors’ portfolios. Alternative investments come with risks of their own (see “Important Considerations” below), and investors need to weigh the potential upside of different alts with their disadvantages.

Unique Investment Options

For investors seeking diversification — or otherwise drawn to invest in a wider range of opportunities — the world of alts offers a number of options.

Alts include tangible assets like commodities, farmland, renewable energy, and real estate. Alternatives also include art and antiques, as well as other collectibles (e.g. antiquarian books, vinyl LPs, toys, comics, and more).

In addition, alternative investments can refer to strategies like investing in private equity, private credit, hedge funds, derivatives, and venture capital. These vehicles may deliver higher returns when compared with conventional assets, but they are typically considered higher risk, owing to their use of leverage and short strategies and other factors.

Diversification

Investors wondering why to invest in alternatives often focus on diversification. Why does diversification matter? As many investors saw in 2021-22, volatility in the equity markets can take a bite out of your portfolio, as can interest rate risk.

In order to mitigate those risks, adding alternatives to your asset allocation provides a literal alternative to conventional markets, because for the most part these assets don’t move in tandem with the stock or bond markets.

In a general sense, diversification is like taking the age-old advice of not putting all your eggs in one basket. An investor can’t avoid risk entirely, but diversifying their investments can help mitigate the risk that one asset class poses.

However, the challenge with alts is that there are no guarantees of how an alternative asset might perform. And because these assets are generally less liquid and not as highly regulated as most other securities, i.e. stocks, bonds, mutual funds, and exchange-traded funds (ETFs), there can be limits on redemption — and a limited understanding of real-time pricing.

Alternative investments,
now for the rest of us.

Start trading funds that include commodities, private credit, real estate, venture capital, and more.


The Role of Alts in Your Portfolio

Taking all that into account, what could be the role of alts in your portfolio? In other words, why invest in alts? Of course, alternatives would only be part of your asset allocation. How much to put into alts would depend on your risk tolerance and overall goals. Here are some factors to consider.

Low Correlation With Stocks

As noted above, most alternative strategies are uncorrelated with conventional stock and bond markets. During periods of volatility or uncertainty in these markets, some investors may find alternative investments more appealing.

That doesn’t mean that alternatives will always outperform bonds or equities. Low correlation means that a particular asset class moves in a different direction than conventional markets. So, if the stock market drops, uncorrelated asset classes like commodities or real estate and investment properties are less likely to experience a downturn — which can help mitigate losses overall.

The challenge with alts is that some of these assets come with their own intrinsic forms of volatility (e.g. commodities, renewables, private equity, venture capital), and investors need to keep these risk factors in mind as well.

Tax Treatment of Alts

Generally speaking, investment gains are taxed according to capital gains tax rules. This isn’t always the case with alternative investments. It may be a good idea to consult with a tax professional because alts don’t necessarily lower your investment taxes, but they are taxed in different ways.

Important Considerations When Choosing Alternative Investments

Investing in alts requires careful thought because these assets aren’t traded or regulated the same way as more conventional securities.

Liquidity

Generally speaking, most alts are illiquid compared with conventional assets. This can make them hard to evaluate in terms of price and hard to trade. In addition to which, there can be limits on redemption, depending on the asset. Some alts only allow redemptions twice a year, or quarterly.

Lack of Data

Owing to the lack of regulation in some sectors, it can be difficult to obtain accurate price history and trading data for some alts. This also adds to the challenge of trading some of these assets.

Who Should Invest in Alts?

Although some alternatives can be highly risky and expensive, retail investors may want to consider alts because of the advantages these assets offer in terms of diversification and risk mitigation.

The investors who decide to invest in alts today may be drawn to the number of options available via mutual funds and ETFs, many of them offered by well-established asset managers. And in some cases, including alts in a portfolio may capture some of the desired advantages.

That said, investors need to do their due diligence to understand the potential pros and cons of these instruments.

The Takeaway

Alternative investments are on the radar of many investors today because these assets may offer some portfolio diversification, help to tamp down certain risks, and possibly improve risk-adjusted returns. In addition, the sheer scope and variety of these investments means investors can look for one (or more) that suits their investing style and financial goals.

That said, unlike more conventional investments, alts tend to be higher risk, more expensive, and subject to complex tax treatment. Thus it’s important to do your due diligence on any investment option in order to make the best purchasing decisions and reduce risk.

Ready to expand your portfolio's growth potential? Alternative investments, traditionally available to high-net-worth individuals, are accessible to everyday investors on SoFi's easy-to-use platform. Investments in commodities, real estate, venture capital, and more are now within reach. Alternative investments can be high risk, so it's important to consider your portfolio goals and risk tolerance to determine if they're right for you.


Invest in alts to take your portfolio beyond stocks and bonds.


Photo credit: iStock/Ridofranz


An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. This and other important information are contained in the Fund’s prospectus. For a current prospectus, please click the Prospectus link on the Fund’s respective page. The prospectus should be read carefully prior to investing.
Alternative investments, including funds that invest in alternative investments, are risky and may not be suitable for all investors. Alternative investments often employ leveraging and other speculative practices that increase an investor's risk of loss to include complete loss of investment, often charge high fees, and can be highly illiquid and volatile. Alternative investments may lack diversification, involve complex tax structures and have delays in reporting important tax information. Registered and unregistered alternative investments are not subject to the same regulatory requirements as mutual funds.
Please note that Interval Funds are illiquid instruments, hence the ability to trade on your timeline may be restricted. Investors should review the fee schedule for Interval Funds via the prospectus.

SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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What Is a Liquid Certificate of Deposit?

Guide to Liquid Certificates of Deposit (CDs)

If you’re in search of a low-risk way to grow your money, a liquid certificate of deposit (CD) might be worth a closer look. A liquid CD gives you a fixed, guaranteed rate of interest for a specific term, but unlike standard CDs, you don’t pay a penalty if you withdraw the funds before the maturity date.

Granted, the returns you earn on a liquid CD may not compete with stock market investments, but knowing that your money is earning interest and likely won’t incur any losses can be powerful benefits.
Here, you’ll learn more about liquid CDs, including:

•   What a liquid CD is

•   How to withdraw money from a liquid CD

•   The pros and cons of liquid CDs

•   Alternatives to liquid CDs.

What Is a Liquid Certificate of Deposit?

Before you think about investing in a CD, here’s a look at definitions:

•   A certificate of deposit, or CD, is a savings vehicle that usually gives you a bit of interest with virtually no risk, provided you keep the money in place for a certain term. If, however, you withdraw funds before the CD matures (or reaches the end of its term), you are usually penalized. You will likely lose some or all of the interest earned and perhaps even a bit of the principal. In other words, are certificates of deposit liquid? Usually not.

•   A liquid certificate of deposit, on the other hand, gives you flexibility. It allows the account holder to withdraw money from their account prior to the maturity date without incurring penalties. This means you can access funds in the CD should you need them without penalty. However, the rates for liquid CDs tend to be lower than other kinds of CDs.


💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

Understanding a Liquid CD

You may be wondering, “What are liquid assets?” In the realm of finance, the concept of “liquid” means that an asset can quickly be converted to cash. A liquid CD is a time-bound deposit account where you can earn interest for a specific period of time. Compared to traditional CD’s however, liquid CDs will not charge you early withdrawal penalties. This means you can easily liquidate (turn into cash) your CD without taking a hit in terms of its value.

As noted above, there’s a “but” to this proposition, which you may hear referred to as no-penalty CDs: Liquid CDs typically pay less than traditional CDs. Depending on which financial institution you go to, these products can offer various terms, either as little as a few months or up to several years or longer. Your fixed interest rate will vary according to the length of the term you’ve chosen. Typically, the longer you hold your money in the liquid CD, the higher the rate of return.

What can be a big plus about CD rates is that they are locked in during the full term. This means even if interest rates decrease, your rate would not change. Some financial institutions may require a minimum deposit for these CDs, and they can be significantly higher than traditional CDs; some are at the $10,000 and up level. What’s more, the minimum deposit may go up if you are seeking a higher interest rate, while others don’t have a minimum deposit requirement at all.

How Do You Withdraw Money From a Liquid CD?

If you have decided that you need to withdraw from your liquid CD, here’s what usually happens:

•   Check with your bank about how long it will take to process a withdrawal and whether you need to withdraw a certain percentage at a time. (Some banks may require you to close the account entirely.)

•   When ready, notify your bank of your withdrawal.

•   You will likely have to wait about a week after opening the liquid CD before you can start withdrawing.

•   Wait for your funds. Withdrawal is likely not as quick as withdrawing funds from a checking or savings account; your financial institution might require anywhere from a week to a month to process the transaction.

Recommended: What Happens If a Direct Deposit Goes to a Closed Account?

Liquid CD: Real World Example

Once you have decided a no-penalty CD is right for you, you will need to go to a bank or credit union that offers this account. Once you’ve opened an account, you have to fund it.

How it grows will depend on the principal, your APY (annual percentage yield), and how often the CD compounds the interest, which could be, say, daily or monthly.

•   If you invested $10,000 in a liquid CD with a three-year at a rate of 5.30%, at the end of the three-year period with interest compounded monthly, you will have a total balance of about $11,719.28.

Get up to $300 when you bank with SoFi.

Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.60% APY on your cash!


Pros of a Liquid CD

When evaluating liquid CDs, it’s worthwhile to review the benefits of these accounts. Some of the key upsides are:

•   Liquidity. You can access and withdraw your funds prior to the term’s end. Perhaps you’re having an emergency that requires cash, or you decide to move around your money to better meet your financial goals. It’s possible!

•   No penalties. If you dip into the account before it matures, you won’t be assessed a fee.

•   Security. Liquid CDs are safe investments. These accounts are federally insured up to $250,000 per depositor, per account ownership category, per insured institution. You’ll know your money is protected when you open a liquid CD with a bank or credit union. Even in the very rare situation of a bank failure, you’re covered as noted.

•   Guaranteed returns. When you start a liquid CD account, you usually know the interest rate upfront. It may not be stratospheric, but it’s a sure thing.

Cons of a Liquid CD

Now that we’ve explored the good things about a liquid CD, we need to give equal time to the potential downsides:

•   Lower rate of return. The interest rates are significantly lower compared to certificate of deposit rates.

•   Withdrawal rules. Yes, these accounts are more accessible, but after your deposit has been in place for a week, your withdrawal guidelines may be quite specific. For instance, you may have to remove all your funds if you want to make a withdrawal, or the amount might be limited to a certain percentage that doesn’t suit your needs. Check before starting a liquid CD investment.

•   Tax implications. Earnings on your liquid CD will be taxed at your federal rate, which is something to keep in mind as that will take your return down a notch.

Recommended: How to Automate Your Personal Finances

Alternatives to a Liquid CD

If the idea of a liquid CD doesn’t sound like an appealing low-risk investment option, there are alternatives to also consider.

Traditional CDs

Traditional certificates of deposit require you to stow your money away for a certain period of time. In exchange, you receive a return at the end of that period. The catch is, you are not able to withdraw your funds during this holding period. If you have a financial emergency, for example, and need the money from your CD, you will receive penalties for withdrawing your cash before the period of maturity.

However, this might be a gamble you are willing to take, especially if you have a nice, healthy emergency fund set aside. You’ll earn a better rate of return than with a liquid CD.

Laddering

CD laddering usually involves opening CDs of different term lengths. This strategy allows you to invest long-term CDs which provide higher rates of return, while having the ability to access your funds through a shorter-term CD maturing.

Money Market Account

Another CD alternative is a money market account, which is similar to a savings account with some added benefits. Money market accounts typically require minimum balances and offer rates comparable to savings accounts, which can change over time. While the rates may be lower than a CD, money market accounts typically allow you to withdraw and transfer your money six times per month or more.

Emergency Fund

An emergency fund, or a rainy-day fund, is a savings account that should only be used in times of financial emergencies or unexpected expenses. Depending on your financial position, you can have an emergency fund in a regular savings account, money market account, CD, or liquid CD. It depends on how much you plan to access your emergency fund and how much interest you want to earn in the account.

High-Yield Savings Account

A high-yield savings account can offer a competitive rate of interest, depending on the financial institution offering it (online banks tend to pay more than traditional ones). And you’ll have more liquidity than a CD because you can deposit and withdraw from the account more frequently, though the specifics may vary with each bank. If you want easy access to your funds plus interest, a high-yield bank account may be a good option.

The Takeaway

Liquid CDs are a financial product that offers the safety and guaranteed return of a traditional CD with the bonus of not being penalized if you make an early withdrawal. For those who are comfortable locking their money into a CD but worry an emergency or other need might pop up, this accessibility can be very attractive. Worth noting: Expect lower interest rates from a liquid CD than a standard one. Alternatives to a liquid CD can include a high-yield savings account.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

Are CDs liquid investments?

Traditional CDs are not liquid investments. Funds held in a CD cannot be accessed until the account term is reached. If you need to withdraw money from your CD prior to its maturity date, you will have to pay a penalty. A liquid CD, however, offers flexibility to withdraw money from your account prior to its term date without the usual fees.

What is a non-penalty CD?

A non-penalty CD, also known as a liquid CD, is a time deposit that offers interest on your money. However, the rate is usually somewhat lower than the rate for a typical CD (the kind with penalties). The longer the term you choose for your liquid CD, the more you usually can earn.

How much is the penalty for early withdrawal from a CD?

Each financial institution has its own way of calculating this, but it usually involves losing some of all of the interest you have accrued. If you have a two-year traditional CD and withdraw funds early, the fee could vary considerably; a recent search found anywhere from two months’ to a year’s’ worth of interest. If you have a liquid or no-penalty CD, you will of course avoid these fees.


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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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