First Foundation Cuts From 4.40 To 4.25

denki | May 22, 2025 | 156 posts since 2019

Seconding what others have said, cuts in daily savings accounts like this = greed, as no change in fed's rates for the banks.

First Foundation cuts from 4.40 to 4.25 today for online savings & MM.

In a bad sign their email advertises even a super short 4 month cd for just 4.15.

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RZ | May 22, 2025 | 383 posts since 2017

Will transfer funds to Vanguard after May’s interest is posted. Buh-Bye FF, it was nice knowing you!

denki | May 22, 2025 | 156 posts since 2019

where at van? The sweep mm only pays 3.xx % and vmfxx is 4.21 but maybe they don't lower it for no reason

RZ | May 23, 2025 | 383 posts since 2017

VRMXX is at 4.22% 7 day SEC yield. The equivalent APY is closer to 4.35%
I prefer having hassle free and consolidated liquidity and to minimize bank accounts that are no longer competitive

deplorable_1 | May 23, 2025 | 2,217 posts since 2020

Yes this seems to be a trend all over. Someone needs to clue the banks in that there has been no FED cuts all year. This is the reason I use the corporate debt accounts. They don't cut rates until the FED does. Still paying 4.5% APR 4.59% APY

racecar | May 23, 2025 | 598 posts since 2014

OK, so would taxes on $5k at VMFXX be: the same/higher/lower than $5k put in a bank savings account at the same rate? And how is it taxed for VRMXX? (Ordinary income? Capital Gains? Qualified/non-qualified? etc).

If I put $5k in a bank savings acct I know the interest/gain will be taxed as ordinary income at whatever my tax bracket rate is for the IRS (forget state for now).

But what about with VRMXX? Are gains/dividends from VRMXX treated as ordinary income too? Or Capital Gains? Qualified/non-qualified?

If a taxable account (NOT retirement funds), how are gains taxed with VRMXX vs. Bank Savings Acct? And would it typically be the same/higher/lower taxes?

RichardW | May 23, 2025 | 787 posts since 2019

A portion of Vanguard money market fund ordinary dividend income is typically taxed as ordinary income and another portion is typically exempt from state and local income taxes. It depends upon the specific money market fund and the tax year. In tax year 2024, VUSXX had 100% of its dividends exempt from state and local income taxes. In tax year 2024, VMFXX had 59.87% of its dividends exempt from state and local income taxes. In tax year 2024, VMRXX had 63.61% of its dividends exempt from state and local income taxes. These articles provide more information regarding this topic for Vanguard money market funds:

https://www.depositaccounts.com/community/misc/60141-money-market-fund-dividend-income-tax-year-2024...

https://investor.vanguard.com/content/dam/retail/publicsite/en/documents/taxes/USGO_012025.pdf

https://www.mymoneyblog.com/vanguard-federal-money-market-fund-claim-state-income-tax-exemption.html

racecar | May 23, 2025 | 598 posts since 2014

Thanks for that info.
A couple questions about VUSXX which may sound stupid, but I've never dealt with these kinds of funds before.

(1) I know these aren't FDIC insured, and are generally low risk, but what might the risk be like? Could the principal value ever fluctuate if something bad happened, or is it basically either "everything's fine" or "everything's lost"?
(2) How liquid are the funds?:
-How easy/fast is it to have access to the funds, to withdraw and deposit?
-Other than the $3k min, could I withdraw or deposit say $50 if I wanted to, or must it be over a certain amount?
(3) Are dividends paid on a monthly or weekly basis? And if you take out some $ before the end of the cycle will you lose the gain from whatever you take out? (Say you take out $ on the 20th of the month, will you lose the gains on those funds from the 1-19th?)
(4) Is the VUSXX yield usually similar to a HYSA yield or can it vary wildly and it only happens to be about the same now due to coincidence?
(5) And this was discussed before, but I believe people said if it dips below Vanguard's $3k min for a while they don't close it automatically... is that still the case?

I'm thinking of moving part of my liquid funds to something like VUSXX so I appreciate the help.

Thanks!

RZ | May 23, 2025 | 383 posts since 2017

I’m from WA so local taxes are not relevant to me. Generally Vanguards MMA are quite liquid (after what I believe is an excessive hold period on new deposits). You can push and pull via ACH or push with free wires to your linked accounts. The assets are short term paper and although not insured are likely no less safe than having to rely on FDIC should the SHTF

RichardW | May 24, 2025 | 787 posts since 2019

The current composition of VUSXX consists of 96.70% Treasury Bills which are considered a very low risk asset. Many of the Treasury Bills which comprise VUSXX are 1-month and 1.5-month T-Bills and consequently VUSXX’s yield typically follows the yield of the 1-month and 1.5-month T-Bills. Dividends are paid monthly (last day of every month) and accrue daily. The daily accruals are distributed if shares are sold during the month. Although the prospectus for VUSXX states that the minimum investment amount required to open and maintain the account for Investor Shares is $3,000, I did have my balance drop below $3000 and my VUSXX account was not closed.

Here is a link to the VUSXX prospectus:

https://personal1.vanguard.com/pub/Pdf/p030.pdf?2210217640

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