Heads Up On Statefarmbank

Bozo | Aug 29, 2017 | 1,375 posts since 2011

Just received a letter from the home office that local StateFarm representatives (i.e., your local agents) would no longer be able to sell CDs. Talk about a debby-downer. For years, I have been able to motor on down the street to my local StateFarm office and buy or renew CDs (IRA and otherwise). The local agent could lock in the rate and term, fill out all the paperwork*, and that was that.

Appears that now has changed, and all transactions must go through the home office.

Having been on hold with the StateFarmBank's toll-free number for quite some time in years past**, I always appreciated being able to get through my local StateFarm rep, make an appointment, and conduct a transaction.

I must say, I have no idea why folks are making it harder for us savers to deposit money.

*No small issue. Anybody over a certain age appreciates.

**Our State Farm agent actually had a super-secret number to by-pass to StateFarmBank, no longer available to us mere mortals.

6

Answers

Anon456 | Aug 30, 2017 | 249 posts since 2011

.... I don't get it! With rates like they have, .... why do you care?

4

Kaight | Aug 31, 2017 | 1,192 posts since 2011

Agreed. I stopped doing business with State Farm Bank many years ago. They rank right up there with FNBO.

1

Bozo | Aug 31, 2017 | 1,375 posts since 2011

Kaight, StateFarmBank (along with PenFed) offers that no EWP for partial withdrawals from IRA CDs for folks over 59 1/2. Handy for RMDs as well. While many financial institutions tout a waiver of EWP for RMDs, when you drill down, they limit the amount of the waiver to the particular IRA CD on deposit therein times your RMD percentage. While the IRS allows you to satisfy your RMD from any IRA, financial institutions can make it tricky to do so. Accordingly, I keep StateFarmBank and PenFed IRA CDs for RMDs.

4

Bozo | Aug 31, 2017 | 1,375 posts since 2011

Example: Let's assume you have a RMD of $50,000 for 2018. You want to satisfy it from an IRA CD. You have a $200,000 IRA CD at Patelco, and a $200,000 IRA CD at StateFarmBank. Patelco's Members Handbook clearly states that EWPs are waived both for folks over 59 1/2 and for RMDs. What it doesn't say is that partial withdrawls in excess of your particular RMD percentage times the Patelco IRA CD are not allowed. Partial withdrawals are allowed at StateFarmBank (with no EWP).

Lesson learned: When my Patelco IRA CD matures, I will renew in "chunks", with each chunk approximating an RMD in the future. Each chunk is a separate IRA CD, and the EWP is waived when the chunk is cashed out. Just a bit of trivia.

2

Anon456 | Aug 31, 2017 | 249 posts since 2011

good point. I am not yet doing RMDs, but will soon. I will earmark any of my CDs that allow for RMD distributions from the CDs.

1

Bozo | Aug 31, 2017 | 1,375 posts since 2011

Anon456, as I noted, it gets tricky. Most (all?) financial institutions will permit a RMD with no EWP. The trick is to be able to harvest what you need in one transaction. For example, in your first year of RMD, you'll need to harvest .0364 X your entire IRA balance as of December 31 of the year prior. You could, of course, harvest .0364 from each IRA account, but (in my opinion) that's a pain. It's ever so much easier to harvest from one IRA CD. For folks with IRAs at Vanguard, Fidelity or Schwab (stocks and bonds), EWPs are not an issue. But if you want to tap an IRA CD, with one transaction, it can get tricky.

1

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