Thursday, November 18, 2010 - 11:15 AMIMPORTANT CHANGE OF TERMS IN PENFED's YEAR-END CD SPECIAL
Pentagon Federal Credit Union 
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4 stars)
PENFED IS RUNNING A 10-YEAR, 5% APR CD & IRA CD SPECIAL FOR THOSE MEMBERS HAVING MATURING CDS IN OCTOBER. I RESERVED FUNDS FOR THIS OFFER AFTER HAVING ASKED SEVERAL QUESTIONS AND GETTING SATISFACTORY ANSWERS. THAT WAS A MONTH AGO; ALL IS NOT WELL IN RIVER CITY.
TODAY I RECEIVED A NEW MONEY MARKET AND IRA SHARE CERTIFICATE DISCLOSURE (FORM 687) FROM PENFED. UNDER THE SECTION TITLED EARLY REDEMPTION PENALTIES, KEY LANGUAGE HAS BEEN STRUCK FROM THEIR PREVIOUS DISCLOSURE (FORM 686). UNDER SECTION h.4c, THE WORDS :"IF THE OWNER HAS REACHED THE AGE OF 59 1/2" IS STRUCK FROM THE NEW DISCLOSURE. THIS MEANS THAT ALL EARLY WITHDRAWALS FROM PENFED IRA CDS WILL BE FULLY PENALIZED UNLESS THE CERTIFICATE OWNER IS FULLY DISABLED.
WOW! THE ANSWERS I GOT A MONTH AGO ARE INVALID. THE ONE YEAR'S INTEREST PENALTY FOR EARLY WITHDRAWAL SEEMS EXCESSIVE. I PLAN TO STOP THE PURCHASE OF THIS CD IN ITS TRACKS UNLESS I GET SOME BETTER ANSWERS.
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1. Thursday, November 18, 2010 - 3:37 PMDo you know if that change in the penalty applies to existing CDs as well, not only to new ones?
That change to those people over 59 1/2 who are affected is very substantial, from zero penalty to a full one-year-of-interest penalty. Your CD might be maturing in the nick of time, but what about people whose CDs don't mature for another year, two years, five years, whatever?
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me1004235 posts since
Jan 16, 2010
Rep Points: 1,430
2. Thursday, November 18, 2010 - 5:09 PMI am assuming that your referring to IRA CD's. If they have eliminated the 59.5 year old exception for the early withdrawal penalty, I would think it would be for new IRA certificates. A number of years ago, PenFed changed this penalty for people 59.5 years old, but did not do it retroactively. I agree with me1004, we need to know that PenFed is continuing their policy of applying any changes in this area proactively and not retroactively.
2
lou196 posts since
Aug 3, 2010
Rep Points: 1,171
3. Thursday, November 18, 2010 - 5:16 PMKen maxwell, since my last post I checked my disclosures and I think you are looking at the wrong document. The disclosure governing IRA accounts is Form 742. The 59.5 age exception is spelled out there. The disclosure you are looking at is for non-IRA accounts.
2
lou196 posts since
Aug 3, 2010
Rep Points: 1,171
4. Thursday, November 18, 2010 - 9:27 PMOh! Well, Ken Maxwell, please confirm. There has been a big discussion of late about whether banks can change CD terms in mid-CD, with it looking like they probably can, but we still had some questions. Please let us know whether this is one of those situations.
2
me1004235 posts since
Jan 16, 2010
Rep Points: 1,430
