Jimmyzmac Non-Interest Bearing Account - Why? Hello all! I think I understand the purpose of a NIB account to hold large sums of $ after the RV:
NIB account so that the bank cannot leverage and loan your funds out.
What I don't understand, is that you could live very comfortably off the interest...VERY COMFORTABLY!
So, why not do this? It doesn't make sense on the surface.... Anyone have any insight? ~JimmyZmac
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Cricket007 Re: Non-Interest Bearing Account - Why? so you can put your tax money in it. hold at least 50%, minimum, for that purpose. More if you live in CA/NY.
Xpersol Re: Non-Interest Bearing Account - Why? The NIB plan is only temporary. It is your initial account until you are ready to execute your long-term strategy. Hire pros and follow a sound financial plan. Make sense?
Skiracer Re: Non-Interest Bearing Account - Why? IT does not make sense to me. A Chase private banker told me it is all rumor that a NIB protects you in any way from the bank using your funds. IT is a wonderful thing for Chase because they get to use all your money for FREE. SO I think it is an odd move for the depositor.
And if you use a CD to hold it the CD is only FDIC insured to $100K. YOu must use CDARS if you want to insure it without going to private insurance sources. The internet says CDARS are T-bill competitive.
Not so according to 2 diff banks. Their dynamo rates are from .2% all the way to .45% !!! WOo HOOO!! So if you are worried about paying tax on that extra money, then worry. IT is ALL more money. I say, "pay the tax and smile all the way to the bank"!! LOL
RAJAF Re: Non-Interest Bearing Account - Why? - A NIB account should not trigger a taxable event or reporting due to no reportable interest being accrued possibly providing additional time to develop better tax strategies.
It is also the recommended or suggested method to provide a slightly higher level of privacy and security and.... maybe even insurance coverage for those deposits.
My understanding was that the NIB account is backed by UST as compared to FRN and therefore of more value. NIB is a parking garage along with being a non-taxable (bank producing interest) event.
So less scrutiny from the IRS. A NIB account gives one some time to get the diversification plan in order. I was going to set up 6 NIB accounts ( each for each currency). Put all funds from VNN/IQN into two separate 1st accounts.. sweep to 2nd account - close 1st account.
Sweep 55% for tax set aside into 3rd set of accounts until I know how to safely earn some "tax-free" interest income that get's a higher rate then the bank can provide. Use 2nd accounts for investments.
NIB account for the IQN is backed by UST and gold. The VNN/dong is not so could go into an interest-bearing account or into an Agency "Shelf" CUSTODIAL Trust Account [link to www.thecitizensbank.net]
-- Citizens Bank provides accounting, record keeping, account execution, bill paying, and safekeeping services, but does not provide investment management advice.
It is probably a temporary measure and more suitable to some than others. It takes 15 minutes to set it up and it's free. Its not under the depositors SS# but the banks FEIN#, under custodial fiduciary care,
You retain full control, funds are private and safe from bank commingling and there are reports it may defer tax assessment.. check with a pro - this is new information.
Its a vehicle found on the private side of wealth management in the trust department. Its a "shelf trust" available to customers to accept incoming capital assets, its like a trust account. Its in the bank, funds are and can be distributed...even to your other accounts. You own and control the money...you direct your manager custodian as to what to do with those funds.
RAJAF Re: Non-Interest Bearing Account - Why? NIB Accoung: The reason you are doing this is that the bank is required to report the opening of Account #1 to the federal government and that information can find its way into the public domain;
however, the bank is NOT required to report intra-bank transfers between accounts. What this does is effectively eliminate your digital trail so that nobody outside of the bank knows how much money you have on deposit and, more importantly, whether or not you are a good target for computer hijacking of your deposited funds
theGraceMan Re: Non-Interest Bearing Account - Why? RAJAF, thank you thank you.for the Custodial Trust account info.
I was hoping for a way to exchange my VNN and IQN and put the majority of funds somewhere that would not incur any personal gains until I have held the majority of funds for more than a year.
Then I can pay the lower (long term) cap gains rate taxes. There's a 16% savings tween long and short term gains. It would be difficult to invest that much $ and get 16% return.
Ozark 76 Re: Non-Interest Bearing Account This is where the original idea of needing a NIB came from:
NOTICE OF CHANGES IN TEMPORARY FDIC INSURANCE COVERAGE FOR TRANSACTION ACCOUNTS
All funds in a “noninterest-bearing transaction account” are insured in full by the Federal Deposit Insurance Corporation from December 31, 2010, through December 31, 2012.
This temporary unlimited coverage is in addition to, and separate from, the coverage of at least $250,000 available to depositors under the FDIC’s general deposit insurance rules.
The term “noninterest-bearing transaction account” includes a traditional checking account or demand deposit account on which the insured depository institution pays no interest. It also includes Interest on Lawyers Trust Accounts (“IOLTAs”).
It does not include other accounts, such as traditional checking or demand deposit accounts that may earn interest, NOW accounts and money-market deposit accounts.
For more information about temporary FDIC insurance coverage of transaction accounts, visit www.fdic.gov.
)))))))))))))))))))))))))) That was then, this is now: (((((((((((((((((((((((((((((((((
Changes in FDIC Deposit Insurance Coverage: December 31, 2012
As scheduled, the unlimited insurance coverage for noninterest-bearing transaction accounts provided under the Dodd-Frank Wall Street Reform and Consumer Protection Act expired on December 31, 2012. Deposits held in noninterest-bearing transaction account are now aggregated with any interest-bearing deposits the owner may hold in the same ownership category, and the combined total insured up to at least $250,000.
)))))))))))))))))))))))))))))) Notice what FDIC has said: ((((((((((((((((((((((((((((((((
Ozark 76: Deposits held in noninterest-bearing transaction account are now aggregated with any interest-bearing deposits the owner may hold in the same ownership category, and the combined total insured up to at least $250,000.
)))))))))))))))) Is there some other benefit to the Dinarian with a NIB? ((((((((((((((
It may be a smart idea having the NIB for just temporary until you get your official accounts setup. If there is an interest bearing account, and there is some backup withholding requirement, it could just muddle things up at the end of the year with taxes, but again not really a big deal.
This piece sheds a little light, especially for Canadians who may open U.S. accounts possibly, because it alludes to aliens without TINs
What other benefits?? Good Question.
VortexFun: Re: Non-Interest Bearing Account - Why? Ozark 76, I AGREE! I think before end of last year people thought it was a good idea because they accounts were insured in full.
That has changed and accounts are back to the standard FDIC insurance terms. Remember, FDIC insurance only covers up to $250,000 per account holder not per account anyway.
Also Money Market accounts and certain (not all) other interest bearing accounts that are tied to the market are not FDIC insured. They are more like brokerage accounts and do carry SIPC insurance.
This insurance only protects you againt fraud on the bank or brokerage's part. No asset protecton.
FDIC supposedly protects up to 250k if there is a bank failure. How long it would actually take to get that money owed is another story.
I am not terribly worried about these scenarios, at least with some of the major banks and stable local banks, but we should always keep our eyes open and ears to the ground regarding the whole industry.
I may take some investment risks in the market and in real estate and financing, but I plan protect the majority of money through buying TIPS and insurance products like Equity indexed annuities and enjoy living on the interest. Can't wait to get sarted! Deciding what to do with all my money is a problem I will ENJOY!
)))))))))))) UPDATE ON POSSIBLE BENEFIT TO NIB ACCOUNTS (((((((((((((((
This may be of importance if it does not apply to NIB accounts, especially this December:
fujimama wrote: Savings Transfer Limits We want to make sure you understand an existing federal rule (Regulation D) limiting certain types of transfers from your savings account to a total of six (6) per monthly statement period*. To help you stay within the limit, please keep in mind the following:
The limit of six (6) transfers per monthly statement period from your savings account includes transfers through the following:
Online, Mobile, and Text Banking
Phone transfers - Using Wells Fargo's automated banking service or speaking with a banker on the phone
Overdraft Protection - Transfers to a checking account for overdraft coverage also counts
Third-party payments - Includes checks, wires, and ACH transfers (recurring and one-time)
There are no limits on the number of transfers or withdrawals made in person at ATMs or Wells Fargo banking locations or on any type of deposit.
If the six (6) transfers per monthly statement period are exceeded, an excess activity fee (currently $15) will be assessed for transactions that exceed the limit. If the limit is exceeded on more than an occasional basis, the savings account must be converted to a checking account (which doesn't have any transaction limits) or closed.
Beginning December 11, 2013
If the federal transfer limit of six (6) is reached or exceeded, additional transfers from savings accounts through online banking (including mobile and text) or the telephone may be declined for the remainder of the monthly statement period. We are taking this step to help our customers stay within the federal limit.
Easy ways to stay within the transfer limit: Keep track of your transfers (especially recurring transfers)
Make transfers in person at an ATM or a Wells Fargo banking location
Maybe there is some benefit in this regard. This needs to be investigated. As my plan is outlined above, moving funds out of the 50-25-25 accounts more than 6 times in a month shouldn't be limited if this federal reg only applies to "savings" accounts. -ozark76
Member Comments With Q & A
Bigox Re: EXCHANGE PROCESS I Thought I would share my security plan for CE day. I'm a single woman going to CE alone. Since I'm not made of money YET, I am unable to hire private security, rent a car, etc.
So.....When I find out where my CE location is I will find a public building that has multiple entrances and exits like a mall, hospital, office complex in the area of the Currency Exchange Location. I plan to drive my car there and park close to an exit. Then call a cab to pick me up and take me to the Exchange Center Location.
Do the exchange and then call another different cab to pick me up and drive me back to the main entrance of the public building where I'm parked. Enter the building at the main entrance but exit at another door to the parking lot where my car awaits.
If your really paranoid I supose you could use the rest room to change your clothes and appearance before you exit to your car. Remember parking lots are notorious for purse snatchings so don't carry one. Happy, Safe CE day !!!!!
usnavy55 wrote: Re: EXCHANGE PROCESS I must have missed it, but why do we need to transfer our money from the original account we open to a second account in the same bank? And why do we need a NIB account? Seems like we're giving up a lot of interest. Thanks.
ozark76: The initial account opening used for the initial deposit gets reported to the Federal Government, intra-bank transfers between accounts do not. Closing the initial account sweeps your tracks in case that info finds its way to the public domain, it's a security measure.
ozark76 Re: EXCHANGE PROCESS -- Man, after today's call, it looks like some people need to look at this chart. I've never heard so much confusion over something so simple.
We are just waiting on the 800 numbers, period.
There is nothing else to do other than having your papers in order and your plan written down. I think a lot of people would find it good therapy to just pull out a blank sheet of paper and write down the steps they are going to take so that it settles in.
Do you have your social security card, drivers license, passport, state ID, and other forms of identification ready to go?
Do you have a couple of good pens and a notebook for taking notes at your meetings.
Do you have a calculator and know how to use it?
Do you have several empty file folders to label, categorize, and protect your copies of signed paperwork as they give them to you? Or were you just going to fold it up and wad it in your pocket?
Do you have your list of cashiers checks written or printed out on a separate piece of paper?
This is a business transaction (a little out of the ordinary) and you should conduct yourself in a polite, courteous, calm and collected attitude.
You should remember the salesman mantra, to borrow a concept: "act as if." Act as if you are going to get the sale, as if the customer has already decide they want to buy. Act as if you are already a millionaire. Act as if you have done this several times. Act as if you have total confidence and know what your doing. Act as if you are friendly, polite and calm, even if normally you are not.
If you project an aura to the bank personnel that you are a nervous schizophrenic, babble talking basket case you are going make the bank people wig out.
ozark76 Re: EXCHANGE PROCESS -- See my edit above to the original post. Here might be a benefit to keeping the NIB accounts for the 50-25-25 accounts if you plan on making transfers out of these accounts to various investment accounts/brokers, etc.
"Things should be made as simple as possible.....But no simpler." --Albert Einstein
Cricket007: ozark76, Now I am a bit kornfuzed ( i took that from a cartoon of two crows in a field), confused now that you mentioned to "dump" your IQN in that one account you just opened for the purpose of them running you in and out of the bank. In a recent thread, RAJAF indicated that we do the "accounts", the one you mentioned the 50-25-25 right then and there. I was all for it and then this thread comes edited.
So, I am under the notion that I will be opening up "one" account to dump my money in and leave out of there. Is this a/the plan/recommendation? Thanks. Cricket007 GO RV!!
ozark76: Cricket007, Well, during the exchange at the location they send you on the 800 number, I don't think they will have time on that visit to do all that stuff.
I plan on setting those accounts up (the 50-25-25 accounts) on THE SECOND visit so the private banker/wealth manager can assist me in a non-rushed atmosphere. Maybe they can do it on the first visit.
I would still prefer the single "dump" account to exchange into (IQN & VNN separate, in each of their own accounts, of course) as a temporary means.
RAJAF indicated this initial account creation gets reported to the U.S. govt. That account information COULD be compromised or fall into public hands. That's why I will "sweep" those funds to my 50-25-25 accounts, which is a non-reportable INTERNAL transfer and creation.
I think I can forgo the minuscule interest, red tape, and strings attached to having an interest bearing account by using NIB accounts for the 50-25-25 accounts, which are also temporary themselves.
I need to move funds from those accounts to the interest-generating investment places they will be ultimately going. Since this new federal regulation going into effect in 5 weeks or so is going to limit bank transfers to only six per month for "savings" accounts, I am going to try to circumvent that with NIB accounts.
The initial exchange account, which I call the "dump" account is just to act as a temporary clearinghouse to get all my foreign currency into the bank. Then as a security measure those funds will be transferred to the next level, with each prior level before it being deleted to provide protection.
If my CE appointment is at 3am, I don't want to have to do a bunch of heavy thinking anyway; Ill do that with clear mind on a relaxed different day.
RAJAF Re: EXCHANGE PROCESS - Have an itemized list typed out to give to the banker to expedite the process: Example:
* please waive all bank fees including bank spread fees.
* open 1st NIB (non-interest bearing) account in name of _____________________ (your name is the name on the gift letter so create the account in your name for tax purposes) (A NIB account is a transition account & the bank CANNOT use your funds to make $ for themselves)
* open 2nd bank account in name of _____________________ (your name or Trust)
* sweep funds from 1st account into 2nd NIB _____________________ (your name or Trust) close 1st account
* open 3rd “Tax Escrow” Acct - sweep 55% from 2nd acct into 3rd account to pay Fed/State taxes
* flagged all accounts as "Access Restricted" and tagged as Non-test/Non-Training” Accounts
* provide list of Cashiers Check to be written out (pay off all your bills):
* obtain extra insurance for Accounts
* book of checks (usually 10) to have with me when I leave
* Centurion credit card (Black card/ optional)
* $10,000 cash in $50 bills
* gold/silver coins/bars if available
* “Proof of Funds Letter” from the bank and/or 10-20 CCCs
Dinar Recaps offers this information for the readers education and contemplation ONLY - Dinar Recaps recommends that everyone do adequate research on your own and seek trustworthy licensed professionals in the particular fields to assist in your financial decisions – We accept no responsibility for the accuracy or validity of the information provided