Money Market Rates 10/15

Here are the latest money market interest rates of the banks that I've been tracking on my blog. Note that these rates are sorted by APY, and represent institutions that I have accounts at, or have otherwise mentioned in my blog:

1.05% GE Capital Bank Online Savings
1.00% Ally Bank Online Savings
0.95% Discover Bank Online Savings
0.90% American Express High Yield Savings
0.75% FNBO Direct Online Savings
0.75% Capital One 360 Savings
0.25% Western FCU Money Market
0.05% Citibank Savings Plus
0.03% Chase Plus Savings

In some cases, MMA interest rates are tiered. If this is the case, I usually report the interest rate at the $10,000 tier in these updates. Rates are believed to be accurate as of 10/26/15. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list. I have included one credit union in the list so that readers have a comparison point with banks. I recently added GE Capital Bank to the list, and GE has announced plans to sell their online deposit accounts to Goldman Sachs Bank. By a small margin, GE Capital Bank Online Savings retains the top position on this list yielding 1.05% APY.

The frequent changes show how variable the money market is. Because this is a constantly moving target, it has been very hard to keep track of the rates that I've been getting in my various money market accounts, and this is the main reason I've decided to compile a list of these annual percentage yields.

So, that is the latest list of money market rates. Please let me know if you know of any higher interest rates.

DC

FSAs: Clean Them Out

This post is a follow up to my FSA Use It or Lose It Maybe post. As we all know by now, the "use it or lose it" provision of an FSA applies if you voluntarily terminate (quit) your employment, or are terminated without cause (i.e., laid off).

Earlier this year, my company announced the planned acquisition of a competitor. At the same time they announced millions of dollars in "identified synergies" related to the acquisition. I took this to mean that layoffs would be coming. I decided to be proactive about my career, and sought a (better) opportunity with another employer.

One thing that I did before leaving my old employer was to "clean out" my flexible spending account (FSA). If you are in a similar situation, you may want to do the same so that you don't leave any money on the table. Note that whatever FSA money you don't use, your old employer gets to keep. I wasn't about to leave a single penny to my old employer.

Here is a list of FSA eligible medical items that DO NOT require a Doctor's Prescription:

• Athletic Braces & Supports
• Bandages
• Baby Sunscreen
• Baby Thermometers
• Breast Pumps and Accessories
• Blood Glucose Monitors & Test Strips
• Blood Pressure Monitors
• Children's First Aid
• Children's Sunscreen
• Condoms
• Contact Lens Solution
• Denture Cream and Cleansers
• Diabetes Care Accessories
• Eye Glass & Lens Accessories
• First Aid Kits
• First Aid Treatments and Supplies
• Glucosamine Supplements
• Glucose Tablets
• Hearing Aid Batteries
• Home Medical Equipment
• Heating Pads and Wraps
• Hot and Cold Packs
• Incontinence Products
• Lip Balm
• Medical Monitoring and Testing Devices
• Motion Sickness Aids
• Nasal Spray
• Orthopedic and Surgical Supports
• Pregnancy and Fertility Tests
• Prenatal Vitamins
• Reading Glasses and Magnifiers
• Shoe Insoles and Inserts
• Sunscreen
• Thermometers
• Vaporizers and Inhalers
• Walking Aids
• Wheelchairs and Accessories

Note: I don't warrant the accuracy or completeness of this list as I just copied it from somewhere on the Internet.

Epilogue: Two weeks after I parted ways with my old employer, They laid off 180 people. While I am pretty certain that I wouldn't have been laid off, I think that another of my co-workers would have been if I did not already leave. In that case, I would have been expected to do his job in addition to my own...

PFS

Credit Card Bonus Categories Q4 2015

Save money on purchases and get cash back with the following coupon codes and credit cards:

Citi Dividend Card

• 5% cash back 10/1/15 - 12/31/15: Best Buy & Department Stores
• 1% on everything else.

Discover Card

• 5% cash back 10/1/15 - 12/31/15: Online Shopping & Department Stores purchases
• up to 1% on everything else.

Barclaycard Arrival World MasterCard (Travel Rewards)

• 2.2% on travel and dining
• 1.1% on everything else.
• No annual fee.

Costco TrueEarnings Card from American Express

• 3% cash back at gas stations
• 2% cash back on restaurants, and travel
• 1% on everything else.

Barclaycard Arrival Plus World MasterCard (Travel Rewards)

• 2.2% on travel and dining
• 2.2% on everything else.
• ($89 annual fee after first year)

Also see the complete collection of PFStock Money Tips:
PF Stock Money Tips #1: Use Coupons
PF Stock Money Tips #2: Credit Cards
PF Stock Money Tips #3: Taxes
PF Stock Money Tips #4: Shopping
PF Stock Money Tips #5: Organize Your Purchases
PF Stock Money Tips #6: Reduce Wasteful Spending
PF Stock Money Tips #7: Live Below Your Means
PF Stock Money Tips #8: Plan Your Finances

DC

Get Cash Back at Supermarkets Using Discover

I have written before about getting cash back when using a Discover card at the supermarket, but same information still applies. I am not referring to the Discover Card Cashback bonus that you earn for making purchases on a Discover Card. Rather, I'm talking about using the Discover Card in a supermarket, and then choosing cash back as a option during checkout. Discover card refers to this checkout option as "cash over". In Silicon Valley, California, I usually get my cash back from Safeway. While Discover Card limits you to $120 in "cash over" per day, Safeway only allows you get up to $60 per transaction.

This cashover works out to be a nice interest free loan since I pay off the card every month. It also saves me a trip to the ATM. It used to be that you would also earn cashback on the cash over amount. But now, Discover Card separates out the "cash over" part from the "purchases" part of your transaction, and you no longer earn a cashback bonus on the cash over amount.

Warning: I do not recommend this strategy to people who run a balance on their credit card, and end up paying interest charges on the money.

PFS

Credit Card Bonus Categories Q3 2015

Save money on purchases and get cash back with the following coupon codes and credit cards:

Citi Dividend Card

• 5% cash back 7/1/15 - 9/30/15: Hilton Hotels & Airlines
• 1% on everything else.

Discover Card

• 5% cash back 7/1/15 - 9/30/15: Home Improvement Stores, Department Stores, and Amazon.com
• up to 1% on everything else.

Barclaycard Arrival World MasterCard (Travel Rewards)

• 2.2% on travel and dining
• 1.1% on everything else.
• No annual fee.

Costco TrueEarnings Card from American Express

• 3% cash back at gas stations
• 2% cash back on restaurants, and travel
• 1% on everything else.

Barclaycard Arrival Plus World MasterCard (Travel Rewards)

• 2.2% on travel and dining
• 2.2% on everything else.
• ($89 annual fee after first year)

Also see the complete collection of PFStock Money Tips:
PF Stock Money Tips #1: Use Coupons
PF Stock Money Tips #2: Credit Cards
PF Stock Money Tips #3: Taxes
PF Stock Money Tips #4: Shopping
PF Stock Money Tips #5: Organize Your Purchases
PF Stock Money Tips #6: Reduce Wasteful Spending
PF Stock Money Tips #7: Live Below Your Means
PF Stock Money Tips #8: Plan Your Finances

DC

FSA Use It or Lose It Maybe

My last post, concerning Flexible Spending Accounts Flexible Spending Accounts (also known as FSAs) concerned the fact that any balance you have in the account at the end of the calendar year is forfeited to your employer. This is called the "Use It or Lose It" rule. However, things have changed a little bit since my last post.

The IRS now allows the employer to either offer a grace period, or allow funds to be rolled over to the following year.

• Under the grace period rule, a FSA plan can permit an employee to use amounts remaining from the previous year to pay expenses incurred for certain qualified benefits during the period of up to two and a half months into the following plan year.
• Or an FSA can allow up to $500 of unused amounts remaining at the end of a plan year in a health FSA to be used toward qualified medical expenses incurred during the following plan year (rollover), provided that the plan does not also incorporate the grace period rule.

Having said this, it is the choice of the employer (NOT the employee) to offer either of these options. This IRS Document has more information. Also, the "use it or lose it" provision still applies if you voluntarily terminate (quit) your employment, or are terminated without cause (i.e., laid off).

My current employer does not offer either a grace period or rollover option. I plan to discuss the possibility of the company offering one of these options with human resources, sometime before open enrollment. After all, it is your own money (not your employer's); shouldn't you have the say on what to do with it?

Does your employer offer an FSA grace period, rollover, or nothing? I would be curious to know.

PFS

Disclaimer
PFStock.com does not provide specific tax advice. If you have questions about FSAs and taxes, please contact a qualified tax advisor.

What is a Non-dividend Distribution?

A couple of the stocks that I own made what are called a non-dividend distributions in 2014. This was reported to me on Form 1099-DIV in box 3 (Nondividend distributions). These distributions are not treated the same as ordinary (Box 1a) or qualified dividends (Box 1b). So this begs the question what is a non-dividend distribution?

I found the answer, on the website of one of the stocks that made a non -dividend distribution in 2014: Mattel, Inc. (Nasdaq: MAT). The third question in their FAQ is "What is a non-dividend distribution?"

A non-dividend distribution represents a return of a portion of the shareholder’s original investment in the stock of a corporation. Generally, for U.S. federal income tax purposes, a non-dividend distribution is first treated as a reduction in the shareholder’s tax basis in the stock held, and when the basis in the stock is reduced to zero, a non-dividend distribution is then treated as a capital gain to the shareholder.

Further down the page, Mattel has an example of how a non-dividend distribution works for tax purposes:

Non-dividend distribution Example

An individual who is a citizen of the United States owns one share of Company A, Inc. stock. This share was purchased on December 31, 2013 for $50.00. During 2014, the shareholder receives total dividends of $5.00 on his single share of stock. Assume that Company A, Inc. determines that for U.S. federal income tax purposes, 60% of the 2014 dividend should be treated as a non-dividend distribution and 40% should be treated as a dividend. Therefore for U.S. federal income tax reporting, this shareholder should treat $3.00 of the $5.00 distribution as a non-dividend distribution and $2.00 of the $5.00 distribution as a dividend.

The portion of the distribution which is treated as a dividend for U.S. tax purposes is taxable to the shareholder in 2014. Accordingly, this shareholder should report $2.00 of dividend income on his 2014 U.S. Federal Income Tax Return.

The portion of the distribution which is treated as a non-dividend distribution for U.S. federal income tax purposes will likely first reduce the shareholder’s basis in his stock.  Therefore, in 2014, the $3.00 of non-dividend distribution will likely reduce the shareholders basis in his stock from $50.00 to $47.00.  The reduction in basis should not be taxable in 2014 but may impact the amount of the taxable gain or loss recognized by the shareholder when the single share of Company A stock is sold.

Assume this shareholder sells his single share of Company A stock for $65.00 on June 1, 2015.  The shareholder’s gain from the sale of the single share of Company A stock for 2015 will likely be calculated as follows:

Original basis                                                                $50.00
Less: non-dividend distribution                                       ($ 3.00)
Adjusted basis                                                              $47.00

Sale proceeds                                                               $65.00
Less: Adjusted basis (above)                                         ($47.00)
Capital gain                                                                   $18.00

I hope this information is helpful to people wanting to know more about non-dividend distributions.

Disclaimer: This example is not intended to be tax advice. Please consult your tax advisor for advice specific to your situation.

PFS