IRA CD Monthly Distribution?

July2022 | Sep 8, 2018 | 41 posts since 2018

Hi Folks,

( some back ground first)

I will be retiring in July 2022

Ive had IRA Cd's in the past; during the good times and rode them many years in the 6.67% and the 5%+ range. Then got away from them when interest rates were pitiful and rolled over to a brokerage CD IRA and did the utility play for minimized risk exposure

However with interest rates finally creeping back up and wanting a safer haven for my retirement income savings, I am wondering is is possible to go back to the CD IRA game and withdraw the monthly income interest from it without touching the principle?

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Answers

Bozo | Sep 9, 2018 | 1,375 posts since 2011

The "IRA Retirement Age" is 59 1/2. Accordingly, any interest payments on an IRA CD harvested after age 59 1/2 are not subject to the 10% IRS penalty. Most, if not all, financial institutions will allow you to harvest IRA CD interest as interest is posted. So, it's a two-step process: (1) make sure your financial institution allows you to withdraw interest as it is posted, then (2) wait until you turn 59 1/2.

Ally6770 | Sep 8, 2018 | 4,294 posts since 2010

Depends on your age. After 70 1/2 no, younger than 591/2 you will pay penalty and tax. Other than that it is up to where you put your CD and their rules.

Confused1 | Sep 8, 2018 | 87 posts since 2018

Yes, you normally get that option when you open a CD

July2022 | Sep 9, 2018 | 41 posts since 2018

Thanks folks! I was looking at that attractive 4.2% from Achevia CU. (Since I will be retiring before the 5 Year IRA CD fully matures. I would not be tapping into the interest earned until after 62 when I retire.)
My ill conceived plan is to take my 401K plus my IRA and eventually combine them on retirement and go back to the secure haven of CD IRA's while drawing the interest from it while leaving the principle alone... hopefully interest rates will be back around 5% by then...my next hurdle will be the RMD tax man at 70-1/2

Confused1 | Sep 9, 2018 | 87 posts since 2018

I already have most of my funds in that Achieva IRA account at the amazing rate and am in the process of rolling over the rest of my ex employer pension plan into it. I talked to them on Friday to make sure the rate is still good and it is but she said it may not be after the end of this so be aware. Call them with any questions, they are really great over there.

July2022 | Sep 9, 2018 | 41 posts since 2018

Hi Confused,
Did the say how long the rate might be available?

Confused1 | Sep 9, 2018 | 87 posts since 2018

She said rate should be good all of this month but may not be available next month. The problem with transferring/rolling over IRA funds it's a lengthier process than a regular CD, it took me about three weeks to open the account with Achieva and have my ex employer transfer the funds so if interested, I'd get the ball rolling with them right away. They've been running this deal since May, I'm surprised it's gone so long already.

July2022 | Sep 9, 2018 | 41 posts since 2018

Thanks Confused,
Ive got the ball rolling, I signed up for the membership, did what I could online. I will probably contact them tomorrow for the IRA paper work ( doing what I can on my end while awaiting an account from them).
Whew, I hope I get in at the 4.2%...its about time interest rates started climbing again! It seems like everything was intentionally made stagnant on interest rates so as to force everyone into the market to bolster the economy...I wonder when the bubble pops will it make the housing bubble look like childs play?

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