Does anyone know if MACU allows penalty-free withdrawals of dividends? I thought they did but the rep said no.
Answers
Early Withdrawal Penalties. You have agreed to leave the principal of this account on deposit for the full term stated in your certificate agreement. Dividends deposited to the certificate account become part of the principal balance and are not eligible for withdrawal prior to the maturity date. If all or part of the principal balance is withdrawn before the maturity date, the Credit Union may charge you a penalty. Penalties for early withdrawal will be provided to you in the certificate agreement given at the initiation of the certificate and are as follows:
• If your certificate has an original maturity of 12 months or less, the penalty may equal 90 days’ dividends on the amount withdrawn.
• If your certificate has an original maturity of more than 12 months and less than 48 months, the penalty may equal 180 days’ dividends on the amount withdrawn.
• If your certificate has an original maturity of 48 months or greater, the penalty may equal 365 days’ dividends on the amount withdrawn.
The penalty may be calculated at the rate paid on the certificate. The penalty will, if necessary, be taken from the principal amount of the certificate. The Credit Union may grant a premature withdrawal request without penalty or with a reduced penalty in the event of the Owner’s death or legal incompetence, or if your account is an IRA account and the account is revoked within seven days after the IRA Disclosure Statement is received, or when the account is an IRA account and the Owner qualifies pursuant to applicable law.
(bold in original; italics added)
see p. 26 of PDF at https://www.macu.com/media/pdf/membership-agreement.pdf
"Certificates -
For standard, growth, Christmas Club, bump option, youth and IRA certificate accounts, the following conditions apply:
Compounding and Crediting. Dividends may be credited to the certificate account monthly, becoming part of the principal balance, and are not eligible for withdrawal. Alternatively, at the time of opening, you may request to have dividends paid to you in the form of a transfer to another non-certificate share on the same account, rather than credited to this certificate account. Choosing to have dividends paid to you monthly will reduce earnings. The APY is based on the assumption that dividends will remain in the certificate account until maturity. If you close your account or make a withdrawal before dividends are credited, you will not receive uncredited or unpaid dividends."
Speaks of the Powers of the Community.
it appears now that MACU has two versions of "Truth-In-Savings?" Disclosures!
One is standalone as you linked.
And Another that integrated into Membership "Agreement?"https://www.macu.com/media/pdf/membership-agreement.pdf
And they are materially different!
That is not going to cut for MACU! That is not going to cut for ANY CU.
Once the issue is out the Mountain of America is a Bareback Mountain.
Again, currently i have no wasted personal interest in that(though i could be a part of this, since i have CD accounts there)
But... anybody who has a problem there(I'm not a lawyer) should employ the powers of NCUA.
Those bureaucrats are dreaming about taking regulatory actions their subordinates, if not for the benefit of CU Members, but to shield themselves from being suffocated under relentless wave of complaints about discrimination and non-disclosure.
Very good 111, very, very good.
Just a threat of the complaint to NCUA, could probably lend you better CD Term.
I'm still not a lawyer, nor yet the part of the actionable issue. that is my disclosure, as clear as I can get it out.
CSR answer is consistent with TiS and Membership Agreement, but the agreement itself has inconsistences.
I think it meant to say "Additional Principal Deposited" because otherwise there is a conflict with Preceding sentence where it does say that "your certificate agreement" with CU is about Principal and Term.
Where in most instances "Dividends" are available for transactional withdrawal as "Verified on-us items" the exception is made when CU interprets "Dividends deposited to the certificate account become part of the principal balance". Then later are not Dividends, but some sort of IOY payable at the maturity date of the certificate?
I personally don't care, but if the issue is important to others, I would suggest getting NCUA involved.
Ask NCUA if such Penalty is consistent with National Policy when Member bears responsibility for on-CU items all the while carrying tax liability.
Ask how The dividends would be reported to you on 1099-INT, if in line with "the doctrine is embodied in section 1.451-1(a) of the Income Tax Regulations", Such Dividends falls into the category of "income is not constructively received if the taxpayer’s control
over its receipt is subject to substantial limitations or restrictions."