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No EWP For IRA's If You Are 59.5

SamFam
  |     |   34 posts since 2020

I learned something new today:

Some credit unions will waive the early withdraw penalty on IRA/ROTH IRA CD's if the owner has reached the age of 59.5.

Northwest Federal Credit Union and Department of Commerce Federal Credit Union are the two I checked and confirmed but I am sure there are others!

Northwest has a 5 year CD at 4.85%. Not a bad deal in case rates fall. And if they go up, you can always break it, if you are 59.5, without penalty.

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racecar
  |     |   628 posts since 2014
Unfortunately history has shown that a place can change their "terms" any time, and since that provision is not part of the actual CD (as the CD's rate and length are) but just the place's general terms -- which can change at any time -- it's not guaranteed, and it'd be up to the place if they want to grandfather someone in or not if the terms change; many will not. So I wouldn't choose a substantially lower rate CD just because of that clause since it's not guaranteed (nor would I choose a place with a severe "regular" EWP in case the terms change), but if rates are pretty equal, then sure.

Most of the large CUs (Navy, Alliant, US Senate, etc) don't allow it at all.
Some places will allow it at a higher age (usually 70 or 72).
But there are indeed others that allow it at 59.5 as well -- at least for now.

Here are some other places that (at least currently) have the "59.5 if it's an IRA" clause in their CD Disclosures. These are places I found while just randomly looking at a bunch of places to see what their disclosures said. As always, best to call to verify. Phone CSRs often think you're asking about the IRS's tax penalty (waived after 59.5) rather than their own Credit Union early withdrawal penalty, so be aware of that, and be clear when asking.

Credit Human
Unity Financial
American Heritage
Farmers FCU
San Fransisco FCU
Communitywide CU
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SamFam
  |     |   34 posts since 2020
I got it in writing, from the two that I mentioned, so I am good. :-)
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racecar
  |     |   628 posts since 2014
Remember, just because it's in writing doesn't guarantee they won't change their terms next month or next year. Those are their current terms. If you look at their complete account disclosure just about every place says they can change their terms at any time. It's good to have that 59.5 clause, but don't sacrifice too much just to get it, as they CAN change their terms if they want, and they do not have to grandfather you (they may, but they don't have to if they don't want to).

For me, once someone is 59.5 it's a good clause to have for emergencies more than rate-chasing (many places also charge a fee to transfer IRA funds to another FI). If another place has a much better rate with a mild EWP I'll take that over the 59.5 clause place. If their rates are similar and the 59.5 place also has a mild "regular" EWP (in case they suddenly change their terms), I'll choose the 59.5 place.
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SamFam
  |     |   34 posts since 2020
Yes, I agree. Northwest currently has a 5 year ROTH IRA at 4.85 APY. I was ok with that, considering it's a ROTH and I don't have to pay taxes on the interest. I would have done it even if they did not have that clause. They volunteered the information and I was happy to know, I have the flexibility to break it.
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decades
  |     |   124 posts since 2010
I've never actually used the over 59.5 clause to break a CD. Good information to know though.
A couple others not mentioned yet.
INOVA FCU
Great River FCU
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Ally6770
  |     |   4,307 posts since 2010
Achieva in Florida also does it. I did it a year or two ago when I was going over the insurance limit. Actually was able to get a higher rate.
Also I believe they may still insure their IRA's to $350,000 with an extra $100,000 private  insurance that some credit unions do.
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SamFam
  |     |   34 posts since 2020
Do you know which credit unions insure IRA's to $350K?
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enduser
  |     |   711 posts since 2015
I was wondering if Andrews CU allows this. I could not find any document from them with this info.
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Zemo999
  |     |   103 posts since 2017
Spoke with a rep at Northwest, and she affirmed that the 5 yr. IRA CD had that 59.5 age provision, making it essentially a NP CD. I asked if the bank could change that feature post facto and she said no, not if it was there when you opened the account. Of course, one might ask for that in writing if need be.
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Ally6770
  |     |   4,307 posts since 2010
They have had that rate (4.85%) since last June that I am aware of.
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Zemo999
  |     |   103 posts since 2017
Update: I called NW FCU today to verify what the rep told me yesterday about the no EWP being inviolable, once you had the account open. The new rep I spoke with today just read me the 'official' language which has been cited in this thread before, which amounts to 'at our discretion (we may deny an early withdrawal without penalty). So it's the opposite of what the first rep told me. I asked her to escalate it, but could get no immediate clarity. Asked her to ahve someone with authority to give me a call about this. We'll see.
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racecar
  |     |   628 posts since 2014
Zemo,
Don't push too hard, or they might just revoke it and be done with it, which they can legally do. Just about every place has "at our discretion" buried in their Account Agreement, and nwfcu's 59.5 perk is part of their current Terms, not part of your actual CD, so they can legally delete it at any time -- so best not to make a fuss about it, or the easiest thing for them would be just to get rid of it.

No matter what a CSR says, when you join a CU, every member agrees to the terms of the Account Agreement, which states they can change their terms at any time. It's in the terms now, and most other places don't offer the 59.5 clause -- and if people start making a fuss or ask for a written guarantee (which they won't give, as they CAN change the terms), they might just delete the clause like most other places and be done with it -- then it's gone for sure.

My advice is to just let it be. If they don't call you back, don't follow up. If they do call you back, then simply tell them you appreciate the 59.5 clause and hope they keep it, as that's why you moved your funds there, thank them, and leave it at that.
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SamFam
  |     |   34 posts since 2020
Precisely! Zemo999 is just being ridiculous...
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Zemo999
  |     |   103 posts since 2017
And SamFam is just being.....ignorant, and probably lazy, to put it politely.
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Zemo999
  |     |   103 posts since 2017
racecar - Too late. I did get a callback today from a rep who handles IRAs. Very knowledgeable woman. We discussed the 59.5 EWP issue, and she said it was policy, the 'at our discretion' language was applicable to situations irrelevant to my interests. Asked if she might put that in writing, and she asked how I wanted to receive it. We agreed email would be fine, and 10 minutes later I had an email stating that policy essentially as non-revocable. I respect your viewpoint, but mine is if I inquire, I just might find out.
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SamFam
  |     |   34 posts since 2020
Zemo999, if there is anyone ignorant here, it's you. You wasted your time and got nothing more to say to us, other than what I wrote originally on this post. If I were lazy, I would not have taken the time to post for all to benefit. You made calls and poked and poked, and at the end you are telling us, what I said: That I got it in writing.

Get a life.
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