Hedgeable for Investors with Multiple Accounts
As our clients’ needs expand, the number of accounts they have with Hedgeable often grows as well. There are many different types of accounts that clients can open (listed below) to serve various goals and objectives: retirement, general wealth accumulation, gifting to a minor, and more.
Benefits of Having More than One Account
Multiple accounts can be hard to keep track of. How is one account being managed versus the other? Is one hand washing the other? Many of our clients open up all of their accounts with Hedgeable to ensure that strategies and investment holdings aren’t duplicated across their overall financial picture. By doing this, they allow us to manage their full financial picture and to lower risk across all account types.
Beyond that, it’s helpful to have all accounts on one platform. Instead of needing to login to separate sites to view account analytics, Hedgeable brings everything into one simple picture. You can even manage recurring contributions into each of your accounts, to be taken out of your checking at a frequency of your choosing.
Types of Accounts
Individual — Taxable
Your bread and butter for a first investment account at Hedgeable. Do you have some excess cash earning 0% interest in your savings account? Do you only have a couple bucks to spare until you win the Mega Millions? Either way, we have you covered. With no account minimum, you can open up a regular taxable account to grow and preserve your nest egg.
Joint Account — Taxable
Sometimes, it might be appropriate to open up an account with more than one person. Some spouses decide to open up joint accounts once they get married and family members own certain accounts in joint title. These joint accounts can be formed in different ways: Joint Tenant with Rights of Survivorship, Joint Tenants in Common, Joint Tenants with Community Property, and Joint Tenants by Entirety. Please consult with your legal advisor to determine which of these is appropriate for your circumstances and if each account type is allowed in your state of residence.
Traditional IRA
Traditional IRA’s have become as ubiquitous as commercials with older balding gentlemen telling you how important it is to save for retirement. Through our platform, you can easily start saving for retirement by making contributions from your checking account. Per the IRS, you can contribute $5,500 to your account per year (or $6,500 if you are older than 50). The funds that you put into the account are tax-deductible; so, the IRS will grant a credit to you, making your IRA contributions effectively before-tax. Your account will grow tax-deferred–that is, you will not pay taxes on any earnings. Once you make a retirement withdrawal after age 591/2, they are taxed as ordinary income without penalty.
Rollover IRA
Do you have 401(k)’s scattered across previous employers? Rollover IRA’s allow you to combine 401(k)’s that you may have had at previous employers into one account. By doing this, it allows you to maintain the tax-deferred status from your 401(k), without a penalty. In addition, as your continue to save for retirement and your account size grows, you can take advantage of our fee breakpoints. From an account management and logistics standpoint, the Rollover IRA is essentially the same thing as a Traditional IRA.
ROTH IRA
Many Hedgeable clients take advantage of a ROTH IRA, in addition to a Traditional IRA. Unlike a Traditional IRA, contributions to ROTH IRA’s go in after-tax, and are withdrawn tax-free (as long as they are a qualified retirement distributions after age 591/2). This tax-free growth can be compelling for younger clients that want to take advantage of longer time horizons for their retirement. In addition, many clients utilize ROTH conversions, a strategy that recognizes taxes in a Traditional IRA immediately and moves the proceeds to a ROTH IRA. Please consult your tax advisor to determine if ROTH conversions are appropriate for you.
Solo 401(k)
Did you know that you don’t have to work for a large company to have a 401(k) plan? It is true. Called a Solo or Individual 401(k), this account type allows you and a spouse to take advantage of the same 401(k) rules that employees of large organizations can. In fact, it is one of the most popular Hedgeable account types, and Hedgeable remains the only major digital wealth manager that offers these account types. There are only about 750,000 401(k) plans in America, yet there are over 25 Million sole proprietorships and single member LLCs in America. You can be a young doctor, dentist, lawyer, accountant, painter, landscaper, consultant, recruiter, and dozens of other occupations and get a Solo 401(k) setup. Regardless of professional title, if you are a “1099 employee” or if you own your own business, you may be eligible to open up a Solo 401(k). Unlike SEP IRA’s, Solo 401(k)’s can be set up to allow loans from the plan.
For these plans, contributions are made by the employee and the employer (even though you are effectively both, since you own your own business). Just like traditional 401(k)’s, employee contributions are limited to $18,000 (or $24,000 if you are older than 50). Employer’s can make non-elective contributions up to 25% or compensation, or as defined by your plan. Please consult your tax advisor to determine what is most suitable when setting up a plan, and how much you can contribute each tax year.
ROTH Solo 401(k)
Hedgeable allows its clients to participate in a ROTH Solo 401(k) for qualifying small business owners or “1099 employees”! These follow the same contribution rules and procedures, the contributions are after-tax instead of pre-tax, akin to ROTH IRA’s compared to Traditional IRA’s.
SEP IRA
SEP IRA’s are a useful type of account for self-employed or “1099″ individuals and have a higher contribution limit than Traditional IRA’s. For 2016, contributions cannot exceed the lesser of 25% of compensation, or $53,000, whichever is smaller.Since there are no employee contributions, it is most useful for a small business owner with no employees. Also, unlike a Solo 401(k), you cannot take advantage of the ROTH option. Historically, SEP IRA’s have been a useful tools for self-employed individuals looking for higher contribution plans to save for retirement. Please consult your tax advisor to determine how much you can contribute to your plan each year.
SIMPLE IRA
A SIMPLE IRA has been used as a low-cost alternative to 401(k)’s for small businesses. This option allows employees to make contributions, while usually requiring employers to pitch in with employer contributions. Unlike a traditional company 401(k), SIMPLE IRA’s do not require the complexity of third-party-administrators or annual safe-harbor testing. For 2016, employees can contribute up to $12,500 (or $15,500 if they are older than 50). It is common for employer’s to contribute 3% of employees salary with immediate vesting, but this depends on how the plan is set up. SIMPLE IRA’s can not be set up for more than 100 employees at any time during the preceding year. Please note, at this time, the IRS does not allow for a SIMPLE IRA to be a ROTH IRA.
Custodial Account (UGMA/UTMA)
Custodial accounts are a great way to gift cash or securities to minors. In most states, minors are not allowed to own stocks outright or open an investment account for themselves. Under the Uniform Gift of Minors Actor the Uniform Transfer of Minors Act, minors can receive cash or securities while an appointed person (who cannot be a minor) manages the account until the minor reaches the age of majority. You can contribute as much as you want to this account, as long as it complies with the requirements of the gifting limits imposed by the IRS ($14,000 or $28,000 for married couples).
Personal & Business Trust Accounts
Hedgeable accepts personal trust accounts that are “revocable.”
Trust accounts can be opened for a variety of reasons: planned giving strategies to charities, to give part of an inheritance to someone while abiding by certain rules and stipulations, or to care for a disabled person, among other reasons. Please consult with a trust and estate attorney for future guidance on which trust is most appropriate for you.
Businesses can open trust accounts as well, to hold money on behalf of clients, the company, or to met certain regulation requirements. In some cases, it may be appropriate to invest the cash instead of letting it sit in a bank account earning next to nothing in interest.
LLC, C-Corp, S-Corp, General Partnership, Limited Partnership
Hedgeable also accepts business accounts — small, medium, and large. Many businesses have cash they want to invest outside of the business to potentially grow over a long time period. You also might be a foreign investor with a US based LLC or Partnership. As long as there is a US Tax ID number and a US based person acting as a trustee on the account, you are allowed to open these account types with us. Corporate accounts get the same exact feature set and access to products that all of our individual customers get.
What We Do Not Accept
We are working to support more 401(k) plan participant accounts. For example, you might be an employee at Apple, and want to use Hedgeable to manage your 401(k). That is something we currently can’t support.
Although our clients have multiple accounts with us at Hedgeable, this may not capture their full financial picture. Homes, credit card debt, and mortgages are all examples of assets/liabilities that can not be held at our custodian. To get around this issue, we now provide account aggregation services, so you can view all of your assets and liabilities on our platform.
