Savings Archives - SouthStar Bank, S.S.B.

by SouthStar BankAugust 29, 2025

Self-Directed IRA (SDIRA) Rules You Need to Know

A Self-Directed IRA (SDIRA) can provide you with unique benefits to maximize your retirement. At SouthStar Bank, you can utilize your SDIRA to invest in options beyond stocks and bonds, including real estate, private equity, tax liens, and private loans. While there are numerous benefits to using an SDIRA, the IRS enforces strict regulations to protect your retirement savings and maintain your account’s tax advantages. In this guide, we’ll cover the most important Self-Directed IRA rules you need to know to avoid penalties and maximize your retirement benefits. What Is a Self-Directed IRA? A Self-Directed IRA is an individual retirement account that allows investors to diversify their portfolios with alternative assets. Unlike traditional IRAs, which limit investments to stocks, bonds, and mutual funds, SDIRAs offer a broader range of investment options, including real estate, precious metals, private loans, and other alternatives. Top Self-Directed IRA Rules You Must Follow 1. Account Holders Must use an IRS-approved Custodian or Trustee Every Self-Directed IRA must be held by a qualified IRA custodian or trustee. SouthStar Bank offers custodial services to customers for their SDIRAs that have Checkbook Control-style accounts1. This structure allows you to invest in alternative assets beyond conventional options and provides easier access to your funds compared to traditional IRAs. 2. Account Holders Must Avoid Prohibited Transactions and Disqualified Persons The IRS prohibits certain transactions, known as prohibited transactions, involving disqualified individuals. Disqualified individuals include the IRA owner, spouse, ancestors, descendants, and controlled entities. Examples of prohibited transactions are: Buying property from yourself or a family member Using IRA-owned property for personal use Lending money to yourself or related parties Violating these rules can trigger taxes and penalties, disqualifying your IRA’s tax benefits. 3. No Self-Dealing Self-dealing occurs when you personally benefit from your SDIRA investments outside the account. For example, living in or using real estate owned by your IRA is strictly forbidden. All income and expenses must flow through the IRA to preserve its tax-advantaged status. 4. Know What You Can and Cannot Invest In While SDIRAs allow many alternative investments, certain assets are banned by the IRS, including: Collectibles like art, antiques, and most coins (except specific precious metals) Life insurance policies Always verify investment eligibility with your custodian before proceeding. 5. Required Minimum Distributions (RMDs) Apply If you have a traditional SDIRA, you must start taking required minimum distributions (RMDs) by age 73 (as of 2023). It’s important to note that Roth SDIRAs do not require RMDs during the owner’s lifetime. 6. Be Aware of UBTI and UDFI Tax Rules Investments generating Unrelated Business Taxable Income (UBTI) or Unrelated Debt-Financed Income (UDFI) can incur additional taxes. For example, using leverage (non-recourse loans) to buy real estate or investing in an active business may trigger these taxes, which reduce your overall returns. In Conclusion Understanding the rules of a Self-Directed IRA is crucial to legally maximizing your retirement account’s growth and avoiding costly penalties. From working with an experienced custodian to steering clear of prohibited transactions, knowledge is […]

Savings

by SouthStar BankAugust 27, 2025

5 Benefits of Saving Early for Your Child’s Future with a Youth Savings Account

When it comes to securing your child’s financial future, opening a youth savings account early can make a significant difference. Whether you want to help your child build wealth, teach money management, or set them up for long-term financial independence, saving money for your child from an early age offers numerous advantages. Read on to explore the key benefits of contributing early to your child’s savings and why opening a dedicated children’s savings account is a smart financial move for any parent. 1. Harness the Power of Compound Interest in a Savings Account One of the most significant advantages of starting a child savings account early is the power of compound interest. Compound interest allows your savings to grow significantly over time as you earn interest on both your initial deposit and the accumulated interest. Even small, consistent deposits in a youth savings account can add up significantly by the time your child is headed off to college or heading into adulthood. 2. Set Your Child Up for Long-Term Financial Independence Opening a youth savings account can help your child build a strong financial foundation. The money saved can serve as a launching pad for important life goals, such as buying a first car, moving out, or starting a business. By establishing a healthy savings balance early, your child gains greater financial freedom and independence in the future. 3. Reduce Financial Stress by Saving Consistently Saving early through a child savings account helps spread out contributions over time, making it easier to build a substantial nest egg for your child’s future without pressure to make large deposits. Automating deposits into the savings account ensures consistent growth and encourages disciplined saving habits without financial strain. 4. Teach Your Child About Money Management Through a Youth Savings Account Opening a youth savings account can be an excellent tool to teach your child financial responsibility. Involving your child in monitoring their savings account balance or setting savings goals encourages good money habits from an early age. Kids who learn about saving and budgeting through their own accounts tend to develop lifelong financial skills and respect for money. 5. Encourage a Positive Relationship with Money Early On Early exposure to managing their own savings account can help your child develop a positive attitude toward money, saving, and investing. This early experience fosters confidence and prepares them for more complex financial decisions later in life. Financial knowledge is crucial for long-term success and viability. Establishing strong principles early can be essential to your child’s development. How to Get Started with a Youth Savings Account Get started today at your local SouthStar Bank branch with our Shooting Star Savings account featuring no minimum balance requirement and no monthly service charges! While setting up the account, ask the team about automating monthly contributions to make saving effortless and encourage your child to take part in the process. Even small amounts grow over time, so the key to reaping the full benefits of a youth savings account is […]

Savings

by SouthStar BankJuly 8, 2025

Money Market vs Traditional Savings: What Account is Right for You?

When deciding how to save money effectively, money market accounts and traditional savings accounts are two popular and safe options offered by banks. Both types of accounts provide interest earnings and federal insurance protection, but they differ in features, interest rates, access, and minimum balance requirements. Understanding the differences in each account is crucial to finding the right account for your needs! What Is a Traditional Savings Account? A traditional savings account is a basic deposit account that allows you to securely save money while earning interest. It’s a low-risk option insured by the FDIC up to $250,000 per depositor, providing peace of mind that your funds are safe. Features of Traditional Savings Accounts Lower interest rates: Typically range between 0.01% and 0.50%. Check our current rates here. Easy access to funds: Withdrawals and deposits are simple, though federal regulations limit certain withdrawals to six per month. Low minimum deposit requirements: A Traditional Savings Account at SouthStar Bank has a minimum opening deposit of $100 (as of 6/26/25). Minimal or no fees: Monthly fees are often waived when minimum balances are maintained. What Is a Money Market Account? A money market account (MMA) combines features of savings and checking accounts, often paying higher interest rates due to investments in short-term government securities and other low-risk instruments. Like traditional savings, MMAs are FDIC insured up to $250,000. Features of Money Market Accounts Higher interest rates: MMAs generally offer better returns than traditional savings accounts. Check our current rates here. Limited check-writing privileges: You may be able to write checks, offering more transactional flexibility. Higher minimum balance requirements: Usually require $1,000 or more to open and avoid fees. Money Market Account vs Traditional Savings Account: A Side-by-Side Comparison Feature Traditional Savings Account Money Market Account Interest Rates Typically Lower Typically Higher Minimum Deposit Low Higher ($1,000 or more) Access to Funds Limited withdrawals, no checks Checks allowed Fees Usually none or low Possible monthly fees if balance not met Safety FDIC insured FDIC insured Which Is Better: Money Market Account or Traditional Savings Account? Choosing between a money market account vs traditional savings account depends on your savings goals, balance, and how frequently you need access to your funds: If you want a straightforward, low-maintenance account to grow your emergency fund with easy access, a traditional savings account is likely the better choice. If you want to maximize interest earnings and appreciate some check-writing access with your savings, and you can maintain a higher balance, a money market account may be more suitable. Tips to Maximize Your Savings Avoid monthly fees by meeting minimum balance requirements. Use money market accounts for larger emergency funds or short-term savings that require occasional access. Use traditional savings accounts for smaller balances or savings goals with less frequent withdrawals. Both money market accounts and traditional savings accounts offer safe, insured ways to save money, but they serve different needs. Money market accounts typically provide higher interest and more access options but require larger balances. Traditional […]

Retirement, Savings, Self-Directed IRA

by SouthStar BankJune 17, 2025

5 Benefits of a Self-Directed IRA (SDIRA)

When planning for retirement, most consumers assume that traditional options, such as 401(k)s, IRAs, or employer-sponsored plans, which typically include mutual funds and stocks, are the only available options. However, many people long to have more control over their retirement and are unaware of the other options available. Enter the Self-Directed IRA (SDIRA) — a powerful yet often overlooked retirement account that puts the customer in control of their investments. Understanding the benefits of using a self-directed IRA will help an investor optimize their retirement planning. Benefits of Self-Directed IRAs: Expanded Investment Options Unlike traditional IRAs, SDIRAs allow account holders to invest in a variety of investment options, including: Real estate (residential, commercial, raw land) Precious metals (gold, silver, etc.) Tax Liens Private Equity/Companies Having investment control opens up opportunities for higher returns, better diversification, and investment in areas where investors have personal knowledge and expertise. Diversification Outside of the Stock Market Relying solely on the stock market can expose your retirement to volatility amidst economic downturns. With a SDIRA, investors can hedge against inflation and market risk by investing in hard assets or alternative markets. For instance, real estate or private lending can provide stable, passive income streams even when the stock market is down. Tax Advantages Just like traditional and Roth IRAs, SDIRAs offer tax-deferred growth depending on the account type: Traditional SDIRA: Contributions are tax-deductible, and growth is tax-deferred until withdrawal. Roth SDIRA: Account holders make contributions after tax, but qualified withdrawals are tax-free. Greater Control and Flexibility With an SDIRA, the account holder has complete control over their investment. They decide which assets to invest in and when to make a move, which is especially attractive to experienced investors or entrepreneurs who want more input in the use of their retirement funds. Potential for Higher Returns By investing in assets, the account holder will typically invest in options that they have a strong understanding of and feel confident will be a beneficial investment. One commonly chosen investment is real estate used as rental properties. Building a portfolio centered around unique investments may generate higher returns than a traditional stock-based portfolio. While these investments may carry higher risk, they also offer the potential for substantial rewards. Before Opening a SDIRA While SDIRAs offer numerous advantages, they also include additional responsibilities for the investor. For example, account holders must avoid prohibited transactions (such as self-dealing or using SDIRA assets for personal benefit) and follow IRS rules carefully. It’s critical to work with a qualified custodian, such as SouthStar Bank, and consult with financial or legal professionals who have experience working with SDIRAs. In Conclusion A Self-Directed IRA isn’t for everyone, but for investors looking to diversify and take control of their retirement planning, it could be a top account option. Whether you’re a real estate investor or simply looking to escape market dependency, an SDIRA gives you the flexibility to build a retirement portfolio on your terms. Interested in starting your SDIRA journey? SouthStar Bank is ready to […]

Retirement, Savings

by SouthStar BankJune 5, 2025

5 Benefits of a Health Savings Account (HSA)

When it comes to managing healthcare expenses and planning for the future, a Health Savings Account (HSA) offers more than just a way to pay for doctor visits. SouthStar Bank is proud to offer HSAs to our customers, as the benefits of a health savings account include several practical and financial advantages that can have a big impact on your overall financial wellness. If you’re enrolled in a high-deductible health plan, here are five major benefits of opening and contributing to an HSA. Triple Tax Advantage One of the most compelling reasons to contribute to an HSA is the triple tax benefit. First, contributions are tax-deductible (or pre-tax if made through payroll), which lowers your taxable income. Second, any interest or investment gains in the account grow tax-free. Third, withdrawals are tax-free when used for qualified medical expenses. This rare combination makes HSAs one of the most tax-efficient savings tools available—more advantageous than even traditional retirement accounts like IRAs or 401(k)s when it comes to medical spending. Funds Roll Over Year After Year An HSA allows your unused funds to roll over indefinitely. You don’t have to worry about spending the money by the end of the year. Instead, you can let your balance grow year after year, building a cushion for future healthcare costs. This feature makes HSAs ideal not only for short-term medical expenses but also for long-term financial planning. You Own the Account An HSA is yours—even if you change jobs, switch health plans, or retire. It’s not tied to your employer, which means you keep the account and the funds no matter where life takes you. That’s different from some other workplace benefits that may be lost or changed when you leave a job. This portability gives you greater control and peace of mind, knowing your healthcare savings remain intact and accessible. Use Funds for a Wide Range of Expenses You can use HSA funds to pay for a long list of qualified medical expenses. This includes doctor visits, prescriptions, dental and vision care, and even certain over-the-counter medications. You can also use it to cover expenses for your spouse and dependents—even if they’re not on your health plan. After age 65, HSA account holders can use funds for any expense—medical or not—without penalty. You’ll just pay regular income tax on non-medical withdrawals, similar to a traditional IRA or 401(k). Flexible Contribution Options HSAs are simple to fund and manage. You can contribute through payroll deductions (if offered by your employer), make direct deposits from your bank account, or even contribute by check. You can make contributions at any time during the year, up to the IRS annual limits. For 2025, individuals can contribute up to $4,300 and families up to $8,550. This flexibility helps you tailor your contributions to fit your budget and financial goals, whether you’re planning for upcoming medical expenses or saving for the future. Health Savings Accounts are more than just a way to pay for your next doctor’s visit, they’re […]

Retirement, Savings

by SouthStar BankApril 15, 2025

What is a SDIRA & How Does it Work?

What is a Self-Directed IRA (SDIRA) & How Does it Work? A Self-Directed IRA (SDIRA) is a retirement account that allows you to manage and select your investments. While financial institutions typically manage traditional IRAs with a set range of investment options, SDIRAs will enable you to invest in a wider array of assets. These can include real estate, tax liens, private companies, and physical precious metals. SDIRAs offer the same tax advantages as Traditional IRAs or Roth IRAs. Whether you choose a traditional Self-Directed IRA (tax-deferred) or a Roth Self-Directed IRA (tax-free withdrawals), the key difference is the broader range of investment opportunities and more control over where and how to invest your money. How Does a Self-Directed IRA Work? Open a Self-Directed IRA Account To open a Self-Directed IRA, the account holder must first choose a custodian or trustee who specializes in these types of accounts. These custodians ensure that your investments comply with IRS regulations, but don’t offer financial advice. SouthStar Bank can provide custodial services for SDIRA account holders. Fund Your Account SDIRAs are typically funded through rollovers from other retirement accounts (e.g., 401k, traditional IRA), contributions, or transfers from other IRAs. Select Your Investments Once the account is funded, SDIRA account holders have the flexibility to invest in a wide range of assets, including: Real estate Precious metals like gold or silver Private equity or venture capital Tax liens Private loans or promissory notes Follow IRS Rules While account holders control their investment decisions, following IRS guidelines is essential. For example, you can’t invest in businesses you or close family members are involved with. All investments must comply with IRS regulations to avoid penalties. Monitor and Manage Your Portfolio As the account holder, you are responsible for managing your investments, including researching opportunities and ensuring IRS compliance. Why Consider a Self-Directed IRA? The main appeal of a Self-Directed IRA is the ability to diversify your retirement portfolio. Traditional retirement accounts focus on stocks, bonds, and mutual funds, which can be affected by market volatility. Investing in alternative assets, such as real estate or precious metals, can help spread your risk across different asset classes. A Self-Directed IRA allows you to invest in what you know best, such as real estate or businesses you are familiar with, offering the potential for better returns and more control. Interested in opening a Self-Directed IRA? SouthStar Bank is proud to offer a range of IRA products, including our SDIRA offering, the Custodian Checkbook IRA. Our experts would be happy to assist you with the account opening process or any questions you may have! Contact ira@southstarbank.com or call our dedicated IRA line at (512) 384-3948 to begin. SouthStar Bank S.S.B. is an independent passive Custodian and is not associated or affiliated with and does not recommend, promote or advise any specific investment, investment opportunity, investment sponsor, investment company or investment promoter or any agents, employees, representatives or other of such firms or entities. Investments are not insured, have no guarantee, […]

Savings

by SouthStar BankFebruary 28, 2025

Youth Savings Account Scholarship

Looking to jump start your child’s savings? Our Youth Account Scholarship could be the perfect fit! Open a Shooting Star Savings Account for your child before 4/30/25 and receive a $100 Scholarship Bonus with your $25 Minimum Opening Deposit. Starting your child’s saving journey early can be a great way to educate them financially and set them up for long term success! Shooting Star Savings Account Details: Ages 0-17 $25 Minimum opening deposit No monthly service fees No minimum balance requirement 00% APY* Visit your local branch today to claim your child’s scholarship bonus! While you’re there, ask about our other Youth Account offerings along with our wide variety of accounts and lending products or learn more here! *APY = Annual Percentage Yield. Interest rates are variable and may change at any time without notice. APY valid as of 3/1/2025. Fees may reduce earnings. Not eligible for checks or debit card. One account per person. Customers currently holding a Rising or Shooting Star Account, or those who previously had a Rising Star Account are not eligible. Account changes to regular savings upon student’s 18th birthday. Scholarship Bonus is considered interest and will be reported on IRS 1099-INT. Scholarship valid for first 1000 accounts through 4/30/25, one per person deposited into savings.

Savings

by SouthStar BankApril 5, 2024

America Saves Week: Saving Automatically

America Saves Week has arrived! America Saves offers a number of helpful resources and tips on how to save effectively. To kick things off we are sharing their article on the importance and effectiveness of Saving Automatically: Regularly contributing to a savings account is the best way to work toward your future goals…….and the best way to make regular contributions is through saving automatically. It’s our favorite way to save! Saving through automatic deposits or transfers is the most effective way to save and helps make it easy by allowing you to choose what and when you’ll save. How To Start Saving Automatically First, you’ll want to have a clear view of your finances, so you know what you are capable of stashing away. Start with our list of 6 Steps to Establishing a Spending and Saving Plan. These steps will walk you through gathering your financial documents like pay stubs, utility bills, mortgage statements, etc., and will help you calculate your income and expenses as well as setting goals and making a plan to achieve them. Don’t worry or get discouraged if it’s not as much as you would like at first. At America Saves, we say Start Small, Think BIG! Even small amounts add up over time. Once you determine the amount you’d like to start saving, there are two ways to start saving automatically: No matter how you choose to save automatically, the most important thing is building the habit of saving – there is no amount too small to save! Saving is a Habit, Not a Destination That’s right – Saving is a Habit….and, practice makes perfect! By definition, a habit is something you do on a regular basis consistently until it becomes second nature. Eventually, it will become something you do automatically without even thinking about it. Saving is no different! A series of small steps, like setting up a direct deposit or auto transfer, can get you closer to your goal and lead to big rewards in the long run. Every step matters – no matter how big or how small. The more you do it, the more likely you are to stick with it. Read more and view all the resources America Saves has to offer here: Home | America Saves SOURCE: America Saves