I’m still waiting on Navy Federal Credit Union to offer CD and IRA CD rates comparable to PenFed’s latest rates. Navy Federal does currently have two special offerings, but they’re nothing like what PenFed is offering. One is a 3-year CD with yields ranging from 1.45% for a $1K minimum to 1.55% for a $100K minimum. The other is a 9-month CD with yields ranging from 0.75% for a $1K minimum to 0.85% for a $100K minimum. These rates are listed in Navy Federal’s certificates page as of 1/6/2014.
Even though Navy Federal doesn’t have the best rates, there are still reasons why you may want an IRA CD with Navy Federal. IRA CDs at Navy Federal have two nice features. These features are not mentioned on Navy Federal’s website, but they have been mentioned many times by several readers. I just confirmed with a Navy Federal rep this morning that these features are still in place. Unfortunately, these features only apply to IRA CDs (CDs held inside an IRA or other retirement-type account.)
First, Navy Federal allows deposit additions to any IRA CD from the start of January through April 30th. This allows you to get the same rate as an existing IRA CD which can be very nice in today’s interest rate environment. Minimum additional deposit is $500. The additional funds may be IRA rollover funds, new IRA contributions or funds from another account already in your IRA.
Second, in the year when an IRA CD holder reaches age 70.5, funds may be withdrawn from any IRA CD with no early withdrawal penalty. In addition to withdrawing more than the Minimum Required Distributions (MRD) without penalty, this allows one to consolidate funds in one Navy Federal IRA CD into another Navy Federal IRA CD without an early withdrawal penalty. This can allow you to take advantage of a higher-rate IRA CD. It’s important to note that IRS rules can take effect and taxes may be owed if funds are withdrawn from the IRA. If funds remain inside the IRA (like if IRA CD funds are withdrawn into an IRA savings account) and there is no MRD issue, you shouldn’t have to worry about taxes.
PenFed doesn’t allow add-on deposits to IRA CDs, but it does have a nice early withdrawal feature on IRA CDs. PenFed allows partial withdrawals without penalties as long as $1,000 remains in the original IRA CD and you’re over 59.5. This allows you to transfer funds from a low-rate IRA CD to a higher-rate IRA CD. I have more details in this PenFed post.
Unlike PenFed, there's no association that can be joined to qualify for Navy Federal membership. To be eligible to join Navy Fed, you must have some connection with the military. This includes Navy, Army, Marine Corps and Air Force. Please refer to their Eligibility Checklist for the full details.
Navy Federal Overview
Navy Federal Credit Union branches are located around the US and the world.
Navy Federal is the largest credit union in the nation with $55 billion in assets and $40 billion in deposits. It has an overall health grade at DepositAccounts.com of an A+ with a Texas Ratio of 5.43% (excellent) based on September 2013 data. Please refer to our financial overview of Navy Federal Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 5536).