Navy Federal Adds 37-Month IRA Certificate Special, 3.00% APY
In the past, I’ve written a couple “good news Monday” blog posts about Navy Federal Credit Union (Navy Fed). The latest good news Monday offering is a 37-month IRA/ESA Certificate Special, earning 3.00% APY. This limited-time Special can be opened with as little at $50 and is capped at $150k. Additional deposits are allowed throughout the term, subject to the $150k balance cap.
| APY | MIN | MAX | INSTITUTION | PRODUCT | DETAILS |
|---|---|---|---|---|---|
| 3.00% | $50 | $150k | Navy Federal Credit Union | 37 Month IRA Special (Traditional, Roth, SEP) | |
| 3.00% | $50 | $150k | Navy Federal Credit Union | 37 Month ESA Special |
DA readers who follow Navy Fed may recall the 40-month IRA/ESA Certificate Special (3.75% APY) that was unveiled in December 2018. That Special lasted through the end of April 2019.
As stated in Navy Fed’s Certificates brochure, the Early Withdrawal Penalty reads as follows:
Certificates with a term greater than one year: Forfeiture of all dividends on the amount withdrawn for 180 days or since the date of purchase or renewal (whichever is less).
Accrued interest can always be withdrawn without any penalty. According to Navy Fed’s Certificate Brochure,
Dividends on Navy Federal certificates are compounded daily and credited monthly. They’re posted to the account on both the last business day in the period in which they are earned and at maturity. Dividends that have been credited are available for withdrawal anytime without penalty.
Many thanks to DA reader, CapitalClimate, for the “good news Monday” Forum post.
$50 IRA Bonus
Members who open their first IRA and deposit at least $50 in the new IRA no later than 45 days after account opening will earn a $50 bonus. The bonus will be credited into the IRA account within 30 days of funding. The $50 bonus will be classified as a dividend and “will not be reportable as a contribution."
Funding and Accessing Maturing Funds
The easiest way to fund a Certificate online is probably through a transfer from an existing Navy Fed checking, savings, or Money Market Savings account. An ACH transfer initiated by another institution may be the quickest way to get the funds into your Navy Fed liquid account. Once the funds are received, a Certificate can be opened using the online application, which allows you to specify that funds be pulled from that Navy Fed account.
A straightforward way to access maturing funds is to transfer the funds into any existing Navy Fed checking, savings or Money Market Savings account. There is a 21-day grace period following maturity before the IRA Certificate automatically renews.
Note – Navy Fed has restrictions on ACH debits from its savings account. Navy Fed’s Electronic Funds Transfer Agreement and Disclosure reads in part,
When you originate an ACH transfer at another financial institution, please note that your Navy Federal savings account may only receive ACH credits. Checking accounts may receive ACH credits and debits. MMSAs may receive ACH credits and debits in accordance with the limitations set forth in the MMSA agreement.
If you plan to pull funds from Navy Fed using the ACH service of another institution, you should consider opening either the Money Market Savings account or one of Navy Fed’s checking accounts.
Beneficiaries and Trust Accounts
Unlimited beneficiaries (with assigned percentages) can be named, with name, address, DOB, and Social Security numbers required for each beneficiary. To designate beneficiaries, refer to Navy Fed’s Payable on Death (POD) and Deposit Trust Accounts Form. This form can also be used to open accounts under a legal trust; Navy Fed calls that type of account a “Deposit Trust Account.”
Availability
Unlike PenFed's nearly universal membership eligibility, Navy Fed’s field of membership (FOM) is restricted to individuals who have a military connection, regardless of residency status.
As I discussed in a 2017 blog post, Navy Fed’s FOM has expanded and, while a military connection is still required, many more people are now eligible to join. The most recent group added are individuals with family members who were affiliated with the military at any time.
Navy Fed’s "Member Eligibility" page lists the various ways to qualify for membership.
Active Duty, Retired and Veterans – Service members in all branches of the armed forces are membership-eligible, including:
- Active Duty members of the Army, Marine Corps, Navy, Air Force, Coast Guard, and Ait National Guard.
- Delayed Entry Program (DEP)
- DoD Officer Candidate/ROTC
- DoD Reservists
- Veterans, retirees, and annuitants
Family Members – Individuals with parents, grandparents, spouses, siblings, children (adopted and step), grandchildren, or household members who at any time were affiliated with the military or are already Navy Fed members are also eligible to join.
Department of Defense (DoD) Civilians – Any DoD civilian employee, U.S. government employees/contractors assigned to DoD installations, and DoD retiree/annuitants are welcome to apply.
Joining Navy Fed and/or opening a Special IRA Certificate can be done online or at any of 337 branches located in 30 different states and the District of Columbia.
A Basic Savings account (minimum $5 deposit) comes with your Navy
Federal membership and opens the door to our suite of saving products.
Credit Union Overview
Navy Federal Credit Union has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 5.65% (excellent) based on June 30, 2019 data. In the past year, Navy Fed has increased its total non-brokered deposits by $11.63 billion, an excellent annual growth rate of 17.06%. Please refer to our financial overview of Navy Federal Credit Union (NCUA Charter # 5536) for more details.
Headquartered in Vienna, Virginia, Navy Federal Credit Union is considered the largest credit union in the world. Founded in 1933 as the Navy Department Employees’ Credit Union of the District of Columbia, Navy Federal has grown from its initial seven members to more than 8,850,000 members and assets in excess of $110 billion.
How the IRA Certificate Compares
When compared to 158 similar length-of-term IRA Certificates tracked by DepositAccounts.com that are available nationwide, Navy Federal Credit Union’s 37-month IRA Certificate Special APY currently ranks first, regardless of deposit limitations.
The above rates are accurate as of 12/11/2019.
To search for the best IRA Certificate rates, both nationwide and in state specific, please refer to our IRA Certificate Rates Table page.
That's over a point spread versus this CD special from Navy.
Which works out to over 10K a year lost interest on a million bucks.
That's why I don't have any CD's with them anymore.
Even my 96 year old father-in-law veteran of WWll has his (DD Form 214s were issued in 1950, replacing the older "WD AGO" (War Department Adjutant General's Office) Forms and the NAVPERS (Naval Personnel) discharge documents. These documents had existed since 1941.
He passed away at 97 a few months ago and the records we had were good enough for the Navy to give him military honors at his funeral, and they were also good enough for the VA, so I assume they're good enough for NFCU.
If they have a deal that fits for me in the future, I plan to give it a try with the documents that I have. Based on my original conversation with them I'm pretty sure it's more than enough.
NFCU is the largest credit union in the USA. I have made JPEG submissions to really small banks and credit unions without ever so much as a wrinkle. NFCU IT needs work. It's not up to speed.
Which gets us to the main glitch in these C-to-C transfers. What happens if the funds are "in transit" and the rate and/or term goes "poof".
Some financial institutions (INOVA and StateFarmBank come to mind) will "lock" the rate and term upon application. Not at all clear if NFCU will do the same. Generally, unless otherwise agreed by the receiving custodian, the rate and term are dictated by the rate and term upon receipt of the funds. As a general rule, folks considering a C-to-C transfer to avail themselves of a "hot" IRA special should ask a few questions about rate/term lock, or lack thereof.
Worst case scenario: your funds are in transit, the rate/term goes "poof", and you want to retrieve the funds and unwind the deal.
1. Do you allow wires and how much time will it save? Some FIs do and it can significantly reduce the transit time although it still takes too long even in the best cases.
2. What happens if the rate is no longer available? Typically FIs will not guarantee the rate. It's a crap shoot. Some will give you a certain period of time.
3. Remember to complain about the process to both ends. I always tell them this is a ridiculous process in the 21st century. Why should it take weeks for something that should take seconds? I mean one bank sending a check through the mail to another bank in the age of instant transfers? Give me a break! And it potentially costs depositors a lot of money in lost interest and missed opportunities. I ask them if they can bring this up at a meeting and pass it up the line. Although I suspect the reason this system is so antiquated is that FIs like the fact that you are hesitant to move your IRA around. They have you captive with the high transaction cost of changing FIs. It's undoubtedly a conspiracy between FIs and regulators. The FIs tell you "sorry, we have no choice... it's regulations." while they contribute to political candidates who ensure them the regulations never change. It's a political problem. The C2C IRA system has to be changed! It sucks.
Query: did you get the rate lock in writing, or was it just "verbal"? Also, does your "upon processing" mean "upon application" for the transfer?
Navy has been the best over the years that I have dealt with them!
they could join and then pass on the membership.
And the 3-yr regular cd pays 2.25%. (100k min.)
And the 7-yr regular cd pays 2.45%. (100k min.)
Life is good.
Anchors Away!
Observations: (1) If you do not have an IRA established at NFCU, you must open one. That's paperwork step one. The funds to be transferred from another custodian need a "vessel" in which to be placed. (2) The funds being transferred must go through what is, in my mind, a needlessly complicated procedure. You first need to open an NFCU IRA (see above); then you need to fill out a transfer request (NFCU form) and send it to NFCU; then, NFCU needs to send it to your current custodian; then, your current custodian needs to crank out a check and send it snail-mail to NFCU. NFCU estimates this could take 4-6 weeks. If the stated rate and term for what you want (e.g., the 37-mo @ 3%) goes "poof" while all this is in progress, you're SOL Then, you get to try to unwind.
Folks, there must be an easier way.
I already have the 3.75% add-on special so I had to think for a little bit for what purpose I would use the 3% CD. I concluded that this 3% CD will provide me with useful rate insurance for about 9 months beyond the maturity date of the 3.75% CD. So in case rates keep dropping until 2022 (I hope not, but it is very possible), I can roll my 3.75% funds into this 3% CD and keep the funds at NFCU through early 2023 rather than going through the headache of transferring the IRA elsewhere to the next best rate in 2022.
But of course I'm hoping for more add-on CD options at NFCU to come before 2023 so I can keep transferring the matured CDs to some good long-term rates seamlessly ...