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Posted in Retirement, Savings, Self-Directed IRA
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Common Mistakes Made with Self-Directed IRA Accounts (SDIRAs)

A Self-Directed IRA (SDIRA) can be a powerful tool for those looking to diversify their retirement portfolio beyond traditional stocks and bonds. With the freedom to invest in real estate or other qualifiable assets. A Self-Directed IRA offers greater control, but also greater responsibility. Without proper guidance, it’s easy to make costly mistakes that can lead to penalties or even disqualification of your IRA. Here are five common mistakes consumers make with Self-Directed IRAs—and how you can avoid them. 1. Engaging in Prohibited Transactions One of the most common (and serious) mistakes is violating the IRS rules around prohibited transactions. These include buying or selling assets between your IRA and “disqualified persons”—such as yourself, your spouse, parents, children, or any entities they control. For example, you can’t use your Self-Directed IRA to buy a property that you or a family member lives in. Doing so could disqualify your entire IRA and trigger heavy taxes and penalties. Please abide by IRS guidelines to avoid prohibited transactions. 2. Failing to Understand IRS Rules and Compliance Unlike traditional IRAs, Self-Directed IRAs require you to stay informed about compliance regulations. The IRS has specific rules about valuation, recordkeeping, and annual reporting. If you fail to provide accurate valuations or don’t maintain proper documentation, your account could fall out of compliance. Checkbook style IRAs allow account holders flexibility, but it is your responsibility to ensure your investments remain compliant and properly reported. 3. Overlooking Due Diligence on Investments Because Self-Directed IRAs allow investment in nontraditional assets, the burden of research falls squarely on the account holder. Unfortunately, this can lead to investing in high-risk or fraudulent opportunities. Before committing your retirement funds, thoroughly vet each investment opportunity. Review financial statements, verify ownership, and assess long-term viability. If something seems too good to be true, it often is. 4. Neglecting Liquidity Needs Self-Directed IRAs often hold illiquid (cannot be sold or exchanged quickly) assets like real estate or private equity. While these investments can yield strong returns, they can also create challenges when it’s time to take required minimum distributions (RMDs) or cover unexpected expenses. It’s important to maintain some liquid assets within your IRA to ensure you can meet obligations without forcing the flash sale of long-term investments. 5. Doing It Alone Without Professional Guidance Managing a Self-Directed IRA can be complex. From IRS compliance to asset management, there are many moving parts that can trip up even seasoned investors. Working with your SouthStar Bank experts can help provide some oversight and structure needed to keep your account on track. At SouthStar Bank, we believe that every customer deserves the freedom to shape their financial future, without unnecessary risk. Whether you’re exploring real estate investments or diversifying your retirement portfolio, our experienced team can help guide you through the process with personalized support and trusted service. Have any questions? Ready to start your SDIRA journey? Contact your SouthStar Bank IRA experts today at 512.384.3948 or IRA@southstarbank.com. SouthStar Bank does not provide tax, legal or investment advice. […]

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Savings Accounts for Kids: Benefits of Opening a Savings Account for Your Child

When it comes to teaching kids about money, starting early makes all the difference. One of the best tools parents in Texas can use to help their children build a strong financial future is a child savings account. At SouthStar Bank, we believe in making banking accessible, educational, and rewarding for families. Opening a savings account for your child provides long-term benefits that extend far beyond simply setting money aside; it lays the foundation for lifelong financial responsibility. 1. Building Financial Literacy from an Early Age A child savings account provides kids with a hands-on opportunity to learn about money management. By watching their balance grow with each deposit, children start to understand the value of saving and the rewards of patience. This type of financial literacy is a skill they’ll carry into adulthood. 2. Teaching Goal-Setting and Responsibility Whether your child is saving for a new bike, a college fund, or simply learning to save, having a dedicated account makes their goals more tangible. A child savings account helps children see the connection between discipline and rewards. Each deposit reinforces responsibility and encourages positive financial habits that will benefit them for years to come. 3. A Safe Place to Grow Savings Unlike a piggy bank or cash tucked away at home, a savings account at SouthStar Bank offers safety and security. Funds are federally insured, providing parents with peace of mind as their child’s savings steadily grow. 4. Strengthening the Parent-Child Connection Opening a savings account together provides a shared experience for parents and children. Visiting your local SouthStar Bank branch to make deposits or track balances online can turn into valuable teaching moments. These experiences help kids feel proud of their financial accomplishments while allowing parents to guide them every step of the way. 5. Preparing for the Future From school expenses to college tuition, savings can play a critical role in a child’s future. A child savings account at SouthStar Bank makes it easier to plan for the future. Starting small today can create a foundation for future financial stability, helping children be better prepared for the responsibilities of adulthood. 6. Local Support You Can Count On As an actual Texas bank with 105 years of experience in our communities, SouthStar Bank is dedicated to serving families with Southern hospitality and a personal touch. Our team makes it easy for parents to open an account, explain savings to their children, and keep the process stress-free. We take pride in being more than just a bank; we’re your partner in building a brighter financial future for your family! Opening a child savings account with SouthStar Bank is more than a financial step—it’s an investment in your child’s future. From building strong money habits to providing a safe place for savings to grow, the benefits are lifelong. Visit your nearest SouthStar Bank branch today to get started and give your child the gift of financial confidence.

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Posted in Retirement, Savings
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Retirement Plans for Your Small Business: SEP and SIMPLE IRAs

Running a small business means wearing many hats—managing operations, building client relationships, and keeping your team motivated. One of the most important responsibilities is finding the right retirement plan for your small business. While large corporations often offer 401(k) plans, small business owners may find SEP and SIMPLE IRAs to be cost-effective, flexible retirement solutions. At SouthStar Bank, we’re committed to helping Texas business owners build strong financial futures. Here’s what you need to know about SEP and SIMPLE IRA options for small business owners. What Is a SEP IRA? A Simplified Employee Pension (SEP) IRA is designed for self-employed individuals and small businesses. It’s one of the easiest retirement plans to set up and maintain, offering high contribution limits and tax advantages. Key Benefits of a SEP IRA: High contribution limits: For 2025, you can contribute the lesser of either 25% of the first $350,000 of an eligible employee’s compensation or $70,000. Employer-funded: Only the employer makes contributions, which can vary each year depending on cash flow. Tax advantages: Contributions are tax-deductible, reducing taxable income for your business. Easy setup and administration: Minimal paperwork and no annual IRS filings make SEPs highly suitable for small businesses. A SEP IRA is a wise choice for solo entrepreneurs or business owners who want flexibility in contributions while keeping administrative costs low. What Is a SIMPLE IRA? A Savings Incentive Match Plan for Employees (SIMPLE) IRA is another excellent retirement option for small businesses, especially those with fewer than 100 employees. Unlike SEP IRAs, SIMPLE IRAs allow both employers and employees to contribute. Key Benefits of a SIMPLE IRA: Employee participation: Employees can make salary deferral contributions, encouraging them to save for retirement. Employer match or contribution: Employers must either match up to 3% of employee compensation or make a 2% non-elective contribution. Lower contribution limits than SEPs: For 2025, employees can contribute up to $16,500, with an additional $3,500 catch-up contribution for those 50-59 and 64 or older. Catch-up contributions for those ages 60-63 are $5,250. Tax savings: Employer contributions are tax-deductible, and employee contributions are made pre-tax. SIMPLE IRAs are ideal for small businesses that want to offer retirement benefits as a tool to attract and retain talent. Which IRA Is Right for Your Business? Choosing between a SEP IRA and a SIMPLE IRA depends on your business size, goals, and budget. If you’re self-employed or have just a few employees, a SEP IRA offers flexibility and higher contribution limits. If you want to encourage employees to contribute to their own retirement while providing a company match, a SIMPLE IRA may be the better fit. Partner with SouthStar Bank At SouthStar Bank, we understand that small business owners need retirement solutions that are both practical and rewarding. Our IRA experts are happy to help you explore IRA options and determine the best retirement plan for your business and employees. Ready to take the next step? Have any questions? Contact your SouthStar Bank IRA experts today at 512.384.3948 or IRA@southstarbank.com.

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Posted in Retirement, Savings, Self-Directed IRA
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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 […]

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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 […]

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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 […]

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Posted in Retirement, Savings, Self-Directed IRA
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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 […]

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Posted in Retirement, Savings
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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, […]

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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.

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