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EWP On IRA Cds?

bwk1954
  |     |   25 posts since 2011

Having followed the discussion of removing funds from IRA CDs (under a recent PenFed thread) and not incurring an early withdrawal penalty, I have a number of questions. From what I gather, all banks/CUs must allow it according to IRS rules. I realize that only one rollover per year is allowed. However, does anyone have experience doing multiple transfers out of a single CD in a single year? Perhaps for a RMD, then later for a Roth conversion. Or, in your experience, does your bank/CU limit you to one rollover/transfer per year? Does your bank/CU understand the rules, or is it a hassle to withdraw and not encounter an EWP? If you have institutions who are easy to work with, please list them. Thanks in advance for any input.

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Answers
Bozo
  |     |   1,375 posts since 2011
bwk1954: the short answer is, it's complicated. (1) Certain financial institutions allow partial/total withdrawals from IRA CDs at age 59 1/2 or greater without EWP. The list is short: PenFed, StateFarmBank, NWFCU and Patelco. (2) RMDs, well that a whole 'nuther issue. All (to my knowledge) allow RMDs without EWP "to the extent" of your RMD "in that institution". For example, if your RMD in XYZ Bank is $3000, you can withdraw $3000 without penalty for your RMD "in that institution". But if you seek to withdraw, say, $30,000 from your IRA CD account, you might well be dinged an EWP, even if the $30,000 was to satisfy an overall RMD. Confused? Feel free to PM me.
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aaflygirl
  |     |   87 posts since 2016
Bozo, Kemba manager in Blue Ash OH (kemba.com) said they do not charge an EWP, but they DO treat it as a rollover and won't do it as a direct transfer.
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Ally6770
  |     |   4,294 posts since 2010
Last year the credit union forgot to do the conversion when they did my RMD. I called them and they did it. Then for some reason they did it again. I did not notice it until after the first of the year but they were able to reverse it OK. On another occasion another credit union charged me for my RMD on a 5 year CD. I showed them the IRS rules and I now have a letter in my file stating that there will be no EWP for my RMD. I have not received a EWP for my Roth conversions that I have done for the last few years from any of the credit unions that I have done this with. In a few of the years I have done it at Navy credit union because they let you add your conversion to an existing Roth IRA and I have done that because the rate was higher than what was offered. I usually do both of them at the same time in Dec. I know that some people have a monthly check that is bigger than their normal RMD would be and are not charged an EWP. All of my IRA's are in CD's so I let them gain more interest and take my RMD out in Dec. I also was told by 3 of my credit unions that I could fill out all the papers for each year and not mail the papers to them to convert all of the traditional IRA's and convert them to a Roth so my beneficiaries could do it in the year that I die if they so choose. This way I would not have to worry about a higher Medicare premium.
I believe this $85,000 limit will start changing with the rate of inflation in a couple of years. I believe it starts in 2020 but will have to look it up.
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bwk1954
  |     |   25 posts since 2011
Ally6770, can you point me to the appropriate IRS rules about no EWPs on IRA CDs? Most articles I read over the internet seem to indicate that banks/CUs are at liberty to charge an EWP.
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Ally6770
  |     |   4,294 posts since 2010
I will try to look for it Sunday. I have my grandkids tomorrow and Saturday a pool party after I take the grandkids home. It should be in my file with the credit union that tried to charge me.
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Ally6770
  |     |   4,294 posts since 2010
I could not find it this morning. I know my sister-in-law saw it and I called her this morning. She said it was from NCUA and not IRS. She said she took it home and no longer has it. I emailed NCUA just now and I will let you know what the reply is. They said up to 2 weeks. It may have been an email before that I printed out and that is why I said letter. It had nothing to do with banks. It was with credit unions. I have no IRA money in banks and have not for years. I only have one 10 regular CD in a bank that will retire in 2021 and no longer have any checking or savings accounts in banks. All the disclosures I have with the credit unions dealing with IRA's state that after 59 1/2 no penalties on withdrawals. Like I have stated in the past I have done conversions also at the same time I have taken my RMD for many years and have never been charged a EWP. The last few years they have been done at Navy Credit Union. I have done some at Pentagon, and 2 other credit unions and one was at a bank that I no longer have any accounts with and no charges ever. One did try to charge me and then did not after I showed them the information.  
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Bozo
  |     |   1,375 posts since 2011
bwk1954, the devil's in the details. Patelco, for example, seems to suggest in its Members Handbook that folks over 59 1/2 can withdraw from IRA CDs with no EWP. Well, that's partly true. I called the home office in Pleasanton. The Member Handbook fails to note that in order to withdraw from your IRA CD with no EWP, you must close the IRA CD. So, that's a huge difference from, say, PenFed, which allows partial withdrawals.
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Confused1
  |     |   87 posts since 2018
Ally can I ask what the higher medicare premium would have to do with your traditional or Roth IRA. I'm a newbie here trying to learn all I can. to learn all I can, thanks
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Ally6770
  |     |   4,294 posts since 2010
If your MAGI is over $85,000 if single or $170,000 if married your medicare premium will go up for you and for both of you if married and both on Medicare until your MAGI is reduced. This includes ALL INCOME even conversions.
At what income level does Medicare Part B increase?
For 2018
If your yearly income in 2016 (for what you pay in 2018) was

File individual tax return             File joint tax return        You pay each month (in2018)
$85,000 or less                           $170,000 or less                                $134
above $85,000 up to $107,000   above $170,000 up to $214,000        $187.50
above $107,000 up to $133,500 above $214,000 up to $267,000        $267.90It can go up to over $400 a month for each person. 
It also will be more expensive for Part D. You have to take Medicare if you take SS. Dick Armory from Texas took it to the Supreme Court. He wanted SS but wanted to be self insured for healthcare. He was a representative from Texas in the 90's. Each year that you wait (under most circumstances) and do not take Medicare you pay a penalty for each month for the rest of your life)
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Confused1
  |     |   87 posts since 2018
I understand perfectly now, thanks so much
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Bozo
  |     |   1,375 posts since 2011
ally6770, it's called Hurricane IRMAA. Sort of a good news/bad news situation. The good news: you're making a whole lot more in retirement than others. The bad news: be prepared to cough up. On balance, I'd prefer to make a whole lot more.
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Ally6770
  |     |   4,294 posts since 2010
I don't need the money. I want to leave it to my kids tax free. I already disclaimed my husband's IRA's and 401K and they are paying taxes on that. I kept his Roth's (which I funded) to let them grow with mine and I also convert as much as I can each year. The children are in a higher tax bracket than I am. One is a doctor and one is now an analytical financial planner for a large worldwide medical supply company. I have done this for many years. We also have gifted the maximum to them each year and now I do.
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