g. Exceptions. The penalties described above will not be applied if the withdrawal is made:
(i) Subsequent to the death of any holder of the Certificate.
(ii) As a result of the voluntary or involuntary liquidation of the credit union.
(iii) If the owner is permanently disabled, as defined in the Internal Revenue Code Section 72(m).
(iv) If the owner has reached age 59½ and takes a partial withdrawal.
I highlighted the unique exception. I also confirmed this with a PenFed representative. Here is what he stated:
On certificates issued after September 2007, if you're 59 1/2 or older and you only take a partial withdrawal that doesn't bring the certificate below $1,000, there is no penalty. Redemption triggers the early withdrawal penalty for any IRA certificate issued after September 2007.
So if you open their 4.00% APY 7-year IRA CD with $20,000, and then after 2 years, interest rates shoot up. You should be able to withdraw $19,000 plus accrued interest without the early withdrawal penalty (assuming you're 59½ or over). This is a major feature especially for the 7-year CD which has an early withdrawal penalty that equals 365 days of interest (or all interest if redeemed within 365 days).
PenFed often changes their CD rates at the start of each month, so this 4% APY 7-year CD may not last much longer.
Please refer to my last PenFed review for more details of PenFed CDs, IRA CDs and membership. People in any state can qualify via an association membership. The association membership and credit union membership can be done online.
PenFed is one of the largest credit unions in the US with $13.4 billion in assets and 889,874 members. It's federally insured by the NCUA (Charter # 227).
Thanks to the reader who emailed me info on this feature.
