IRA CD
Hello Terry,
My traditional IRA CD is maturing soon.
My bank is trying to convince me that I should renew for another 5 yrs.
Because of my elder age, I don’t think this is wise & don’t want to lock in for this amt. of time , especially if rates do increase.
They are telling me that over 59 1/2 , I can withdraw this money at any time even though it is in a 5 yr.CD without any bank penalties.
Is this true & can I rollover to a different bank if the rates do increase ?
I do know that I can take any amt. out but will need to pay federal taxes.
This isn’t clear to me, can you please help me to understand this in a better way ?
Thanks much for your kind wisdom.
SAVAGE SAYS:This is a tricky situation. Most banks allow you to withdraw to take your Minimum Required Contribution — but may not let you break an IRA CD and withdraw more than the MRD, just to move it to another bank. You should get their rules in writing!
I wouldn’t lock up money in a 5-year CD right now. You don’t get paid enough for that kind of illiquidity. And you might want to split your CD –if it has a lot of your IRA money in it — into two CDs of different, shorter maturities.