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What’s So Special About an IRA CD?

One of the products gaining in popularity right now is the IRA CD. As some savers become wary of the stock market, they are turning to cash products that might provide a little more safety and security. Banks, credit unions and other financial institutions can market CDs as being especially appropriate for IRAs, but the truth is that an IRA CD really isn’t so special; it’s just a CD that financial institutions market as being ideal for inclusion in an IRA.

What Can You Put Into an IRA?

First of all, it is important to realize what an IRA is. An Individual Retirement Account is not an investment itself. It is an investment account. You can use your money to purchase different investments, which are held in your IRA. An IRA comes with tax advantages, and is meant to help provide you with income during retirement. You can use the money in your IRA to invest in almost anything you would like from stocks to funds to bonds to real estate. You can also use the money in your IRA to invest in CDs. However, you can invest that money into any CD you would like. It does not have to be a “special” IRA CD in order to be held in your retirement account.

What is an IRA CD?

In reality, IRA CDs are just plain old CDs. Financial institutions might label them as “IRA CDs”, but they have the same characteristics as other CDs. You agree to let the financial institution use your money however it would like for a set period of time. Early withdrawal penalties apply. (With CDs held in your IRA taking that money out of your IRA as part of your withdrawal can trigger penalties related to your retirement account.) Because the institution is using your money, you are paid interest. There are CDs with variable rates, but most CDs come with fixed yields.

Some financial institutions do try to make IRA CDs more attractive by offering higher yields, especially since many CDs marketed as good choices for an IRA have longer terms, usually between three and seven years. There are IRA CDs that have terms as long as 10 years. Many minimum deposits vary from $500 to $10,000, although you can almost always find CDs that allow you to put in more or less. As with any other CD, you are more likely to get higher yields with an IRA CD that has a longer term and a higher deposit.

When your IRA CD matures, the financial institution may automatically renew the CD, putting your money into a new CD of the same maturity at the prevailing interest rate, or the same rate as before. Make sure you understand what your bank will do if you do not direct that the money from your mature IRA CD be used elsewhere. Many financial institutions will notify you seven to 14 days before a CD matures, so that you can decide what you want done with your money. You can put the money from a mature CD into another investment in your IRA, but, unless you meet eligibility requirements for withdrawal from your IRA, you cannot take the money out of your retirement account. You can use the money to purchase bonds to be held in your IRA, or into stocks, or into any number of other investments in your IRA. You can even hold the money in an IRA savings account while you figure out what to do with it.

Whether or not you get a CD labeled as “IRA”, you will receive tax advantages by putting a CD in an IRA. With a traditional IRA, your contribution to the account is tax deductible, lowering your taxable income. If you have a Roth IRA, you won’t get a tax deduction, but your earnings from the CD will be tax free, as long as you follow the rules involved in withdrawal. Additionally, a CD that you put into your IRA is usually protected by FDIC insurance. This means your CD is insured for up to $250,000. (Double check to make sure you get your CD from an FDIC-insured institution.) Knowing that a portion of your IRA is FDIC-insured can provide comfort for those looking for a little more security in a retirement portfolio.

Choosing a CD for your IRA

Before you decide to put your money into an IRA CD, it is a good idea to consider your options. Realize that you do not need a CD to open an IRA. Also, you can put any CD you want into an IRA; it does not need a special label.

When deciding on a CD to put into your IRA, you should compare CDs marketed as ideal for IRAs with other CD options. Compare CD rates from a number of sources to determine what will work best for your situation. In some cases, financial institutions do offer IRA CDs with better terms than many of their “regular” CDs. In some cases, though, you might be better off simply getting a “regular” CD and holding it in your IRA.

Understand, though, that a CD in your IRA is not going to offer great returns. Like most cash products, the low risk associated with a CD means that the yields are going to be low as well. You will probably get a better return than you would with a high yield savings account, but you will still be getting a fairly low yield. Having a portion of your retirement account in cash products like CDs can add security, but you are unlikely to build wealth fast enough to meet your retirement goals if the only holdings in your IRA are CDs.

Another risk you run with adding CDs to your IRA is missing out on higher yields down the road. If you get a seven year IRA CD at 3.49% (Pentagon Federal Credit Union), and interest rates head higher during those seven years, you could be missing out on the possibility of higher yields. It is possible to build a CD ladder within your IRA, using shorter-term CDs so that you have the option of putting the money elsewhere as the CDs mature.

Bottom line: An IRA CD can be a helpful part of your retirement portfolio, depending on your situation. However, you can put any CD in your IRA; it does not need to be designated as an “IRA” CD.

Related Pages: CD rates

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Previous Comments
  |     |   Comment #1
If you have an Inherited IRA, make sure it is titled correctly (the original owner's name, date of death and FBO you) so there is no doubt it is not your personal IRA!  Otherwise, if you have two IRA accounts at the same institution, one personal and one inherited (but not titled correctly); for FDIC insurance purposes they will be considered as one account--not two, seperately insured for $250,000!  Also, for some arbitrary reason, even if you can find a bank or credit union that handles IRA's; they do not automatically also handle an Inherited IRA--making your investment options much more challenging, particularly in this atmosphere of absurdly low interest yields.
  |     |   Comment #2
The question I've always wondered about IRA CDs in this....

If you open an IRA CD with a bank or credit union, by doing so, is that institution opening a new separate IRA account for you with them to hold the CD??

Or, the bank or CU is just opening a CD, and you need to have your own IRA account somewhere to put the IRA CD into??

If the latter, just by way of example, how exactly would one move a Bank of America IRA CD into an IRA account with Fidelity or Vanguard or Schwab, etc???
  |     |   Comment #3
Not sure what you mean "You can put any CD into an IRA it does not need a special label." You cannot put a CD that you have into an IRA. IRA CD's are documented differently at banks and credit unions. If they weren't you would pay income tax on them and receive a 1099 at year end. On another note I love IRA CD's and would not use anything else. Thanks to this site it is much easier to shop for the highest rates.

  |     |   Comment #4
What I mean is that you can open a "regular" CD and put it in your IRA. It does not have to be a CD the bank is marketing as an "IRA" CD. Banks market "IRA CDs", but you can put other CDs in your IRA. It does not have to have that label. Once the CD is in the IRA, it follows IRA rules. As far as opening the CD, I believe it's your choice. You can choose to open an IRA with the institution offering the "IRA" CD, or you can hold the CD in your own IRA account.
  |     |   Comment #5
I don't think that you're allowed to put assets into an IRA.
  |     |   Comment #6
Another question to ask is whether or not the bank charges an IRA maintenance fee.  Some do & some don't.  In response to #2,  you can open an account at Fidelity or Vanguard & have them to a trustee-to-trustee transfer from B of A.  If you transfer this way versus a rollover, you will not trigger a 1099.
  |     |   Comment #7
I have a IRA Share Certificate Account in Randolph-Brooks Federal Credit Union paying 5.17% APY that is maturing this November. I plan to move it first into their IRA Money Market Account, before deciding where to move the funds from there. I'm eligible to withdraw funds from the IRA, as I'm over 59 1/2 years of age, but don't intend to at this time.
  |     |   Comment #8
Another weird article.

IRA CDs are handled as a separate class of account -- the titling is different, the forms are different, the government reporting is different. The terms are slightly different because of the required minimum distribution issue.

At some institutions, IRA CDs even have a different rate structure - either to encourage members to buy them or to take into account the extra admin cost for the credit union or bank.

  |     |   Comment #9
At First Community Credit Union in Michigan IRA CD's pay 10 basis points more than their regular CD's.  CD's can be purchased from the bank or credit union side or from the investment side of the instituion. Both can do a transfer to another institution when the CD matures. If it is a local institution I quite often will pick it up and take it to another place myself if close because IRA transfers are done my mail and you will lose interest on those days. If you fill out the papers and request the instituion to do the transfer they sometimes will back date the IRA CD to the date of maturity at the other bank. This past March my husband had a large IRA CD mature in New York but they had a branch about 60 miles away from our home in Michigan. They wanted $25 for each check for the transfer and the transfer is by mail. I drove down with my disabled husband had a nice lunch picked up 2 checks invested one in our home town that afternoon which had higher rates and converted it into a Roth and sent the larger one by over night mail to a bank in Texas because they rates were just 10 basis points lower but they also allow you to take money out if you are over 59 1/2 with no penalty to get a higher rate if rates go up or to convert to a Roth with no penalty as long as you left $1000 in the original CD. I had the papers already filled out and in their possession and they also back dated it to the day I mailed it. They did not get to making the CD out for a few days but still backdated the CD. There are some banks and credit unions that still do this. Pentagon Credit Union used to do this and their highest rates for the year quite regularly would go up around Dec 28 and you could just call them on the phone if you were 59 1/2 and they would convert the IRA CD to the higher rate with no penalty for as long as you wanted. We still have several CD's at 6.25% that will mature the end of 2013 and early 2014. They discontinued this in Sept of 2007 but if had not done this to an IRA CD for that year you could do it one more time before the CD matures. Don't think the rates will go that high before 2014. I usually go out as long as I can on the highest rate I can get. Try to have at least one IRA that allow us to take our RMD out for all the CD's at all institutions for each of us cuz my husband will have to start next year and I will have to do this in 3 years or have CD's laddered so you can take all of your RMD out of that CD before getting another CD especially if rates are lower than your other CD's. You cannot move an IRA to another instituion without  taking your RMD if required so that is why it is nice to try to have all CD's mature in DEC. That is why I really like to have the CD's mature in DEC or have a CD someplace that I can take it all out of. The CD in Texas is 3.9% and the lowest earning CD so it will be nice to take it all of there next year in DEC with no penalty, if rates start to go up.
  |     |   Comment #10
To poster # 9  Would you mind identifying the bank in Texas that has IRA cd's at 3.9%. If you did this four weeks ago, I would bet it was USAA Bank. If not, please let us know.
  |     |   Comment #11
This article raises more questions than it answers....
  |     |   Comment #12
3. Is Everything in Place?

Take nothing for granted when it comes to your IRA. "Before year end, double check on all IRA funds that moved during the year," DeVeny said. "Make sure that IRA funds went into IRA accounts, not non-IRA accounts or Roth IRAs and be sure that Roth IRA funds went into Roth IRA accounts. Look for any unexplained distributions during the year."


  |     |   Comment #13
Misinformation Miranda is back!
  |     |   Comment #15
I think that I'd rather have an incoherent expert than an articulate idiot.

Good information that you can't understand is better than bad information.
  |     |   Comment #16
I'm 23 years old and beneficiary of IRA from my mother who passed away. I changed my IRA to cd by advise of my bank's financial adviser. I read to many differences about it. Did I do right?
  |     |   Comment #17
#16  I think you may be confused about what an IRA is.   I don't think the bank's financial adviser meant for you to "change the IRA into a CD".  He may have meant for you to put whatever funds were in it into CDs and keep it like that.   You are young to have inherited someone's IRA so I would suggest you read some information about IRAS so you will know how to handle it without having to pay extra taxes on it because you might do the wrong thing.  I would suggest you read Miranda's article on this thread about IRAs.  It has some important info in it that you should know.  I don't think she included info on "inherited" IRAs but you can do a google search on it to educate yourself.
  |     |   Comment #18
#16  This is an article on Inherited IRAs you might want to read:


The second page of the article is important because it pertains to people who inherit who are not spouses or children of the original owner.  The IRS has a special publication just on IRAS but you might want to read this until you can get their info. 
  |     |   Comment #19
I continue to read that some, that are required to take a RMD from an IRA, do a couple of "questionable" (to some) things.  For example, why take the RMD early in the year...unless rates really move up in order to reinvest/lock in the funds?  Also, individuals "still" make est. tax return/voucher filings on a quarterly basis...why do that when, e.g. RMD taken at the end of calendar year can have taxes withheld (or from any IRA distribution for that matter) and the withhold is treated as having been withheld over the entire year, i.e. no need to file est tax vouchers!

What am I missing...as to the early RMD people and/or filing est tax vouchers???
  |     |   Comment #20
Convenience.  I do the early RMDs and use some of the money to pay the once a year payments for our Federal and State estimated taxes.  I use the rest for emergency or unexpected bills the rest of the year.  With interest rates this low one can't pay everything with social  security and interest income during retirement.  We are past the age where I am concerned about grabbing every tiny bit of interest all year.  I have a set amount I know I need so as long as I can keep that coming in, I do the rest as conveniently as possible for myself so I can concentrate on everything else that pops up the rest of the year that I have to take care of for my family.  The CDs I take the IRA RMDs out of are not making me enough interest to be concerned about waiting until the end of the year to do it.  Like I always say, one does what is best for one's own purposes. 
  |     |   Comment #21
But, there is no need to pay estimated taxes by quarterly vouchers...have them deducted from any IRA distribution, and, to repeat, it is treated by IRS as if taken over the year. 
  |     |   Comment #22
#21  You are missing the point.  I don't pay quarterly vouchers.  I just send in the "one" voucher when I file my taxes (to a different address) but pay what I owe for the entire year.  The IRS doesn't penalize us if we pay basically what we owed in taxes for that year.  If I overpay, the next year I just put it towards that years Estimated taxes due.  It's the way "I" prefer to do it but I am not stating it is the only way to do it.  I have never done the quarterly voucher thing.
  |     |   Comment #23
Most people pay taxes on interest and dividends at the end of the year when they receive 1099's. Very large sums may change the process but, in general, that's the way it works. Estimating taxes without knowing losses/gains, etc. can be a waste of time and energy.

Taxes should be deducted from taxable retirement accounts as distributions are made. Again, very large accounts require some planning. Pensioners pay as they go and the IRS expects taxes on IRA/401K distributions. It's not exactly rocket science.

I pay $150 a year to my "basement accountant". That covers several incomes, dividends, multiple interest streams and a few local investments. It's the best deal I get every year.
  |     |   Comment #24
Who gets 1099's at end of the year?  It's always the end of January.  Why should anyone pay taxes on interest and dividends except on their tax forms?  I have a great plan working or us for upteen years and I don't have to pay any kind of accountant for it. It works for me and that is what is most important.  Everyone cannot use my method but as long as I know what will work for me that is what is most important.  I have done taxes for us for over 50 years and the only time I was contacted by the IRS it was for "their" error.  I had done the taxes correctly.
  |     |   Comment #25
I generally have an idea on amount of "income" needed for a year.  Have QCDs late in the year...depending upon what Congress does on the topic.  Take "extra" IRA distributions (based primarily on what tax bracket I would want to fall in), have fed taxes withheld from distributions (also to cover part of SocSec...for the second time!  Paid first when taken out of paycheck years ago!  :-)  ), and have an extra few $s (over) withheld for taxes to use to buy hardcopy US Bonds with the tax refund...all the latter part of Dec.
  |     |   Comment #26
If you do not pay in estimated quarterly taxes at least up to 90% of what you owe in yearly taxes or 100% of the amount of what you owed in taxes the previous year (whichever is less) and the amount owed is over $1K, then the IRS will penalize you.  If you have not been paying estimated taxes but owe a penalty, evidently the IRS has not caught onto you  yet, but when they do, most likely they will penalize you plus charging you back interest and also maybe for some of the previous years that you failed paying quarterly taxes.
  |     |   Comment #27
You can avoid all these concerns just by paying them the amount in the previous year's tax due.  If you overpay by a bit you can just put it towards next year's Estimated Tax.  Saves a lot of figuring and having to pay a professional to do it for you.  One payment for the entire amount with the 1st Voucher and you are done for that year. 
  |     |   Comment #29
If that works for you then that is all that matters.  In lieu of earning interest on this money for a year, you are giving it to the IRS to use for a full year.
  |     |   Comment #30
Let me provide some "articles" on the use of an IRA for tax withholding...




Hopefully, this may change the periodic payment of taxes such that one can do what is in their best interests...and by the "rules".

Everyone have a Super weekend!
  |     |   Comment #31
Both of your articles in your links are very misleading unless the tax laws for paying Estimated Taxes has changed very recently.  I have a relative who spent his life as an Enrolled Tax Agent and he is retired recently but still does a few taxes for the elderly.  He first advised me about being able to avoid the Quarterly payments by paying it out in one lump sum at the same time of the year when I send in my taxes. I spoke to reps at the IRS about this and was told this is the way they prefer it done as long as I pay the correct amount for the entire year. No one has ever stated to me that it "must" be paid in quarterly payments.  The IRS just wants the amount of money for the year that is due. 

Using the prior year's taxes is my Safe Harbor.  I have been doing this for umpteen years and never once been sent a notice from the IRS that it was not allowed.  Yet both of the articles completely ignore this method unless I missed it in the writeups.  The pitance of interest I could earn these days is not going to make the IRS rich or us poorer by my method of paying lumpsum estimated taxes.  The peace of mine of knowing I can put it behind me for another year is worth much more.  I also pay my State Estimated taxes this same way and never got a notice from them that it was not allowed.
  |     |   Comment #28
Go reread the regs on IRA withholds...works for state and federal taxes
  |     |   Comment #32
Copied from Ed Slott recent posting on his IRA forum...

Sat, 2015-02-07 17:54 — janeack2 Forums:  IRA Discussion Forum I have just turned 70 1/2 and will be taking my first RMD from my Rollover IRA by the end of this year. I assume it would be best to make estimated tax payments for my federal and state taxes starting in April, so I would not be charged any penalties for not having had enough money withheld this year. Or is there a better way to do this?
Alan-iracritic - Sat, 2015-02-07 18:55.
  • There are "safe harbors", one of which is paying quarterly estimates of 25% of your 2014 tax liability (27.5 for higher incomes). Then no matter how much you owe there will be no penalty.
  • Another frequently used method that avoid quarterly estimates is to withhold from the RMD the amount needed to meet the safe harbor. You can even take the RMD in December and the withholding is treated as if it was paid in quarterly estimates for all 4 quarters.
  |     |   Comment #33
This will only work if you are an employee for a company that withholds taxes from your paycheck. If you are self-employed or retired, you must pay the tax quarterly to avoid underpayment penalties.
  |     |   Comment #34
Lou:  I enjoy your posts because rarely you are incorrect but on this I think you are.  I have had professionals and the IRS agree that as long as I pay in exactly what I owe for the entire year in one payment voucher usually #1, I cannot be penalized.  It has worked for us for upteen years and never a note from IRS that it was wrong to do like this.  I have a relative who is an Enrolled Agent and he has the facts to back me up if they ever do contact me about it.  How can there be underpayment penalties if I give them every cent that is due for the entire next year ahead of time?  I was told they prefer it this way but most people don't want to or can't pay the lump sum ahead of time.  I do and I can so it's done that way.
  |     |   Comment #35
Works for distributions withheld from an IRA...that would rarely be the case of employee.  Retiree/selfemployed is the one that can have withheld in Dec and it is treated as if made equally over the entire year.  Pay early if you want!  But not required by using the IRA route.
  |     |   Comment #36
Paoli, of course the IRS is delighted if you want to pay all your taxes in the first quarter of the years. I am referring to the scenario where you receive the IRS distribution at the end of the year and don't make estimated quarterly estimated taxes

Because this latter situation is somewhat complicated, I am not going to attempt to explain the various options available in this post. I will say this: If you are retired, have significant CD interest income or dividends that you receive year-round and income from IRA distributions received in Dec., in my view you will have to make quarterly tax payments. The only question is whether you would use the annualized installment method or the normal calculation where you evenly divide the income for each of the four quarters.

Now if you are an employee or own a business that is incorporated, you could adjust your withholding (which is handled differently than estimated quarterly tax payments) at the end of the year and avoid the underpayment penalty tax.
  |     |   Comment #37
Ed and others would say otherwise...have fun!
  |     |   Comment #38
If this Ed is the guy in the IRA forum to which you linked, I don't think he said what you are suggesting. Provide me a citation from the IRS regulations which contradicts what I said. If I did everything that so-called others said were perfectly legal, I probably would have had my return flagged by the IRS a long time ago.
  |     |   Comment #40
There have been several articles posted on this thread...all by different authors.  Ed is the purported guru on the IRA topic...with the same conclusion.  If this is of interest to you (or others for that matter), go do whatever other research you want.  To repeat...I have been taking IRA distributions out every year for 7 years and have some "retained" by the trustee enough for taxes for the year...and more for hardcopy of US Savings bonds (with refund of over payment)...for grandkids, etc.....and all done in the last couple of months of the year with most in Dec.  The IRS treats the amount as being paid equally over the year and so long as the amount paid/withheld is enough,..no harm, no foul!
  |     |   Comment #42
Are you saying that if the amount of taxes withheld out of your IRA distribution in December totals enough to cover your taxable amount on your RMD and all other taxable income for that year, that the IRS does not penalize you for not making quarterly estimated taxes for that year?
  |     |   Comment #47
Congrats!  You are thinking right!  There is no penalty for paying in "full" late in the year out of the IRA, i.e. it is withheld by the trustee as I request for taxes for that current year.  Enjoy or pay quarterly!
  |     |   Comment #49
I think this would be correct if you have the trustee withhold a sufficient amount from your IRA distribution to cover 90% of your total tax liability for all your other taxable income, and the trustee sends you a 1099R documenting the withholding.

It only works if the IRA trustee withholds the taxes for you.
  |     |   Comment #50
It also works if you request a financial institution to withhold enough taxes from your CD interest income to cover 90% of your total tax liability from all sources, and it is documented on a 1099. Doesn't matter if it is an IRA or a taxable account.
  |     |   Comment #51
Wouldn't there be a difference though in when the tax payments would be made?

Withholding taxes out of your CD interest income would occur all during the times of the year when interest is paid.

According to the method described by commenter #47, a 90% tax liability would be withheld only once and it can be done at the end of the year in December  from an RMD from an IRA.  From my understanding of commenter #47, using this method takes the place of any required quarterly estimated tax payments and delays paying any taxes until the end of the year. 
  |     |   Comment #52
Never saw anything on only having 90% withheld in any of the articles...Lou, where did you see that "as it relates to withholds for taxes from an IRA distribution?"  Thanks
  |     |   Comment #53
#52  Pub 550 should answer any questions you still have.  The only 10% rule I have read is in reference to avoiding Penalties on Estimated Taxes:
The tax balance due on your 2014 return is
no more than 10% of your total 2014 tax,
and you paid all required estimated tax
payments on time.
  |     |   Comment #54
That is what I too was aware of...perhaps it also applies to withholds from IRA distributions, i.e. at least 90%...but I didn't see it in the articles.
  |     |   Comment #39
Lou:  You are missing the point.  As long as I put on my Psychic hat and can know penny to penny how much I will owe the IRS for the next year and can send it all in to them on ONE estimated tax voucher before April 15th of "this" year, that is my SAFE HARBOR.  Having given up being a psychic years ago, I just send them a bit more than what my taxes are this year and by their own rules they can't penalize me for not doing those stinky quarterly vouchers.   If I had time I would copy and paste their own rules to prove it to you but I am off this early morning to do important banking and need to be there when they open.  Thanks for trying to help me but I assure you I am correct on this one.  BTW, I am retired from what sporatic jobs I did do and DP has been retired for years.  That is not the issue.
  |     |   Comment #41
Lou is not missing any point.  What he knows is good financial business is to pay the IRS what you owe but only when you owe it and not paying more than you owe all at one time and letting the IRS have a yearly lump sum interest free loan.

I know the interest rates are low, but it still makes since to pay when you owe it and not all at one time. 

Anyway, if you have it to give away, I cannot know anyone more desperate to get your money than the IRS.
  |     |   Comment #43
"Anyway, if you have it to give away,"
#41  I am not "giving away" anything.  This is money which we owe to the IRS and we just prefer doing it in this way.  If you don't consider my way "good financial business" that is your call.  I probably would not want to do business your way but that is what makes the world go round.  We all do have to think alike. 
  |     |   Comment #44
I am just calling it how it is.  A free one year interest loan to the IRS.
  |     |   Comment #45
Look #44, you can call it whatever you want but why does what I do with my money seem to bother "you" so much.  Are you concerned you will be left wit nothing in my Will??  Guess what?  You can just get your missed inheritance from the IRS!  This is money I OWE them and if it suits my lifestyle to pay it in a lump sum why don't you worry about what you are paying to the IRS and keep your nose out of my business?  Since when are you an Enrolled Agent or even a professional tax advisor.  Have a good evening stewing over Paoli's interest free "loans" to IRS.
  |     |   Comment #46
I could care less about your money and what you give away to the IRS.
  |     |   Comment #48
Then why don't you quit posting about it to me?  Please change the subject if you "could care less".  Thank you.
  |     |   Comment #55
I very much approve of your doing things your way, as you have explained.  Far from criticizing you, I hope you will accept my personal thanks for your unvarnished generosity.  I wish millions of additional Americans would do things your way.  When you make an interest-free loan to Uncle Sam, all other Americans, including myself, benefit.  Kudos, thanks, and God bless you!    
  |     |   Comment #56
#55  I can take a joke as well (or even better than most) but you should always remember "You REAP what you SOW" and "To whom much is given, much more is expected".  It is with much joy that I am able to plan my life in such a generous way that those like yourself can "Bless" me.  Go with whatever God you are blessed by just becareful about mocking those you know knowing about.    Aren't you blessed that Ken allows you to post Anonymously so I can never know who is truly "blessing" me.   My thanks to you dear unknown stranger.
  |     |   Comment #57
Sorry you took that as mocking, paoli2.  I apologize for not having written in a more lucid manner.  I really do appreciate your kind generosity.  There are few Americans like yourself.  I dearly wish there were more . . . many, many more.
  |     |   Comment #58
Hey #57, I'm sorry I took it all wrong.  I sure can use all the blessings I can get these days so I sure don't want to make an enemy of anyone who sends me a blessing.  Some days I am more touchy than most especially when I had just spent the time before I read your post planning how to take our future RMDs out to 2022!  I need to have a CD for both our brokerages maturing for each year so I'll have the money available.  I got it done but was real tired when I read your post and wasn't my "usual" cheerful Paoli. ::)  No need for you to apologize.  Just remember.  Anytime you have spare blessings, please send them my way.   Thanks for being so kind. 
  |     |   Comment #59
The banks should allow earlier withdrawal of RMDs in a long term IRA CD.  I take it (or any amount for that matter) out of IRA CDs before maturity at two different financial institutions each year....I'm not concerned about having each IRA CD mature each year.  May want to recheck their withdrawal w/o penalty provisions...most allow anything after 591/2
  |     |   Comment #60
#59  The banks will all (so far) allow me to take my RMD for my IRA out without breaking the CD or paying an EWP.  However, our brokerages don't allow withdrawing the RMDs needed unless we sell the certificate on the secondary market and put the money in their cash reserves to withdraw for any necessary RMD needed.  I have spoken to them about this but they say buying CDs from a bank is quite different than from a brokerage.  Banks don't have to break the CDs or sell them on the secondary market in order to give us what we need.  They just deduct it from the CD as needed.  I had my small IRA in a brokerage but changed it back to a bank because of this difference.  It would not be best to do that with DP's after all these years with the brokerages and the amounts involved.  Sooooo I have come up with this method of making sure I buy CDs maturing each year for the amounts I figure we will need to withdraw.  It has worked smoothly so far but it's not something everyone would want to do in order to withdraw RMD from their brokerages.  The brokerages explained another set up they have for RMDs but I liked my way better.  BTW,  the  brokerages abide by the withdrawal w/o penalty provision after 59 1/2 but you still have to sell the CD on the secondary market (usually at a lost) in order to get the amount you want to withdraw.  They do follow basically the same rules as the  banks but it's the way one has to get the money which can be costly.  When you lose money due to selling the CD on the secondary market, it is not considered a penalty from the brokerage.  It is a choice one has to make if they really need to get their RMD money.  I did check into all our options and ended back with the one I have come up with where I don't have to sell any CDs at a lost just to get the RMD money.
  |     |   Comment #61
Got it!  Neat!
  |     |   Comment #62
On your other credit/debit post, i.e. question.  I rarely do any ebanking.  Use a credit cards (with rewards) extensively and pay off all each month...I like the max liability associated with cc but do not like have someone having access to my checking account.  I'm reminded, from the PenFed site, a menu item to contest an unauthorized ach transaction...which begs the question, "what is an authorized ach transaction?"

However, I do realize the focus "today" is more echecking and debit cards but I'm still holding out....good luck!
  |     |   Comment #63
Thanks for the input.  I think I will hold fast to my "old fashion ways" and continue doing what I am doing.  Using the debit card for some reason gives me the "willies".
  |     |   Comment #71
Paoli, on your other post today on stop payments.  By regulation and bank policy, a bank should only clear/honor a check within a limited amount of time.  As I recall, something like 60 days is the norm.  As the bank as to its policy and the fed bank regulation on the topic...just like a stop payment.   Of course if the bank didn't tell you this alternative, I'd be thinking hard about their interest in serving you OR receiving fees! 

And, the most sure fire way is to instruct the bank not to honor any overdraft and then close the account (after all other checks have cleared) and open a new one. 
  |     |   Comment #72
#71  re my stop payments post:  I did some research and discovered most stop payments are only good for 6 months and the customer has to pay another fee to continue it.  Chase gives 365 days so I have decided to quicken my decision to close the account as soon as everything clears.  I was on the phone concerning this today.  Once the account is closed, that check is kaput.  It must have gotten lost in the mail.  It went to my State's Dept. of Revenue and if it ever shows up there, they would have to notice the date on the check and what it was for.  I was planning on closing the Chase account since that will end my financial relationship completely with Chase.  This lost check just has gotten me to do it quicker.  Thanks for the reply and the helpful info.
  |     |   Comment #73
My pleasure!
  |     |   Comment #64
I was at a seminar yesterday where they discussed various (legal) ways to qualify for Mediaid/Medi-Cal nursing home care at state/fed expense including all of the various aspects of calculating eligibility, e.g. home, car, IRA, etc. are generally exempt for assets/income.  At the end of the day, the comment was made that the (well) stay at home spouse could have close to $3K of monthly income and the state/fed would not attribute any of that to the nursing home spouse...idea is to keep the family together...and then they mentioned that given the low CD interest rates one could "possibly" have more in a CD in order to take that interest (and any other income) to the $3K a month level.  Question: has anyone looked at having a long term CD whereby the interest was used to fund that $3K to the stay at home spouse AND therefore that CD would not disqualify the nursing home spouse for state/fed assistance, i.e. it would be deemed exempt like the home, IRAs, etc.?
  |     |   Comment #65
Sounds like an interesting seminar but since when are IRAs exempt in calculating nursing home Medicaid qualifications etc.  That is new to me.  Maybe they figure by the time one needs a nursing home, you will have used up all or most of any IRA savings anyway so there won't be much to exempt.
  |     |   Comment #66
IRAs as long as they are paying interest and principal are, as I understand it, exempt, i.e. the RMD does it, as far as the entire amount being subject to use, ie. the RMD must be used for the support of the institutional person but the principal does not come into the calculation and remains for the beneficiary.  No different than other pensions.

How about the next question...any idea of an answer on using a CD?
  |     |   Comment #67
So one step farther down the road.  How do you plan, later after death, when Medicaid, under the Medicaid Estate Recovery Act  takes your home and most other assets to recover the expenses paid for the nursing home care, possibly leaving nothing or very little left for inheritance?
  |     |   Comment #68
Want to use personal funds from the get-go?  Go do it and leave nothing for inheritance!

Anyone heard anything on the CD approach in #64 for fund/income to the stay at home spouse?
  |     |   Comment #69
So I have to wonder, if you do not want to leave anything for inheritance, why do you care if your assets are used to pay for your nursing home care and possibly to a spend down point that Medicaid pays for the remaining expenses?
  |     |   Comment #70
Your premise is, to some, incorrect.  The basic concept is...is it better to spend someone else's money first if one can (according to what I reading in your messages) and use your own money later or used to reimburse the state?   Interest free loans are also nice, to some.  That is what I see you are saying.  I do suggest you do a little more research on how to approach "nursing home" care.  :-) 

I gather you have no info on the CD question
  |     |   Comment #77
It is my understanding that there is certain dollar amount that the stay at home spouse is entitled to (depends on state) and monthly income for that spouse.  If those are exceeded, I do not know of any other exemption for a non-IRA CD.  And, the home is only "initially" exempt, unless "properly structured" the state may enforce the lien a state has for the amount expended after both spouses pass (and no minor children, etc. at home)...the home is the sleeper in the equation.
  |     |   Comment #74
Do I have to start taking minimum distributions out of my IRA CD at age 79 1/2
  |     |   Comment #75
In reference to the above question it should read age 70 1/2
  |     |   Comment #76
If your IRA CD is in a bank, they usually handle this for you without any disruption of the remaining portion of your IRA CD. Check with your bank on how they handle RMDs.
  |     |   Comment #83
I am almost sure you do. the bank should have the info available and you tell them what date you want the rmd
  |     |   Comment #78
How does minimum requirement distribution be deducted from a 3 year CD?
  |     |   Comment #79
I understand that regular traditional IRA can rollover within 60days, but I don’t know when” IRA CD” move to another financial institution. Because CD has mature date and can’t deposit to regular account....so when is the good time to transfer? My local bank IRA CD 5yer 1.25% very low interest??
  |     |   Comment #80
can i add to my IRA if I'm retired and don't have taxable income??
  |     |   Comment #81
my father passed away with an ira holding a 10.25% 30 year cd. the bank refused to let the beneficiarys continue the rate ( it expired in 2015) he passed in 2009. other bank let us continue other cds to maturity. is this normal business with different banks.
  |     |   Comment #82
forgot to ad that the surviving spouse was also denied the 10.25% rate. the "new rate " was only .05 %!!
  |     |   Comment #84
Any advise on how RMD's are handled on an IRA CD account?
  |     |   Comment #85
QCDs and targeting year end taxes and taxable Soc Sec income
  |     |   Comment #86
Andy, It depends upon the financial institution. The CU I have an IRA account with allows for annual RMDs to be taken from CDs in the IRA account without EWPs. As an option, they will even calculate the RMD and automatically withdraw it in any month of the year that you specify. This is a common practice at many banks and CUs.
  |     |   Comment #87
my parents died in 2009 and 2010. they left the 4 children an ira with a 10.25% 30 year cd that was good till 2015. (purchased in 1985). the bank REFUSED to honor the terms of the agreement stating "the agreement was made with my father and the original terms ended when he died." because of irs beneficiary we had to close acct and we're offered a pathetic .5% interest rate. the other banks with ira cds honored the original terms (4%). is this normal? when atty was contacted, he just stated that he's heard of that. the cd was generating $1,000/month of interest and we lost out on 60 months!! any thoughts on this would be helpful. it was 5th 3rd bank
  |     |   Comment #88
I'm just looking at my post and it looks like I posted this in august also
  |     |   Comment #89
does opening a CD IRA give you a tax credit for that year?
  |     |   Comment #90
How do I calculate the mrd for a CD that has not matured by December 31

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