Here are the primary differences:
- For the Cash Beta Account, we held your funds in a money market fund (TIMXX). This was protected with SIPC Insurance. With our current cash account, your funds are held in cash at various unaffiliated banks and is protected with FDIC insurance of up to $1 million. Learn more here.
- In the Cash Beta, the interest rate fluctuated with any changes in TIMXX, which could be pretty frequent. With our current cash account, your interest rate should not change as frequently.
- Tax implications are slightly different. For the Cash Beta that used a money market fund, the interest earned is reported as dividends and included on a tax form 1099-DIV. However, for our current cash account, the interest earned is reported on a 1099-INT.
Note: You will have two different tax documents for 2019 related to your cash account. You’ll have a 1099-Div for the beginning of year while you were still in the Beta, and then a 1099-INT that reflects interest you earned as part of our current cash account.
Cash Account is offered by Wealthfront Brokerage LLC (“Wealthfront Brokerage”), a member of FINRA/SIPC. The cash balance in the Cash Account is swept to one or more unaffiliated program banks where it earns a variable rate of interest and is eligible for FDIC insurance. FDIC insurance is not provided until the funds arrive at the program banks. For more information on FDIC insurance coverage, please visit www.FDIC.gov. Customers are responsible for monitoring their total assets at each of the program banks to determine the extent of available FDIC insurance coverage in accordance with FDIC rules. The deposits at program banks are not covered by SIPC.
Wealthfront Software LLC offers a software-based financial advice engine that delivers automated financial planning tools to help users achieve better outcomes. Investment management and advisory services are provided by Wealthfront Advisers LLC, an SEC registered investment adviser, and brokerage related products are provided by Wealthfront Brokerage LLC, a member of FINRA/SIPC. Wealthfront Software LLC, Wealthfront Advisers LLC and Wealthfront Brokerage LLC are wholly owned subsidiaries of Wealthfront Corporation.