In 2018, a small number of clients helped us test a beta version of our cash account before we launched it to the public.
Here are the primary differences:
- Insurance: For the Cash Beta Account, we held your funds in a money market fund (TIMXX) protected with SIPC Insurance. With our current cash account, your funds are held in cash at various unaffiliated banks and protected with FDIC insurance up to $1 million. Learn more here.
- Interest rate: For 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: For the Cash Beta which used a money market fund, interest earned was reported as dividends and included on a tax form 1099-DIV. With our current cash account, the interest earned is reported on a 1099-INT. You should consult your tax advisor for additional information.
Note: If you were part of the Cash Beta, you’ll have two different tax documents for 2019 related to your cash account. You’ll have a 1099-Div for the beginning of the year while you were still in the Beta, and a 1099-INT that for your interest earned in the current cash account.
The Cash Account Annual Percentage Yield (APY) is as of September 20, 2019. The APY may change at any time, before or after the Cash Account is opened.
Cash Account is offered by Wealthfront Brokerage LLC (“Wealthfront Brokerage”), a member of FINRA/SIPC. Neither Wealthfront Brokerage nor its affiliates is a bank. The cash balance in the Cash Account is swept to one or more 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. FDIC insurance coverage is limited to $250,000 per qualified customer account per banking institution. Wealthfront Brokerage uses more than one program bank to ensure FDIC coverage of up to $1 million for your cash deposits. 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.
Investment management and advisory services are provided by Wealthfront Advisers LLC (“Wealthfront Advisers”), an SEC registered investment adviser, and financial planning tools are provided by Wealthfront Software LLC (“Wealthfront”).
Nothing in this communication should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any security.
Wealthfront Advisers and Wealthfront Brokerage are wholly owned subsidiaries of Wealthfront Corporation.
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