Ask Terry Questions Online CDs…

Online CDs…

By Terry Savage on February 28, 2019 | Chicken Money

Heard you on Chicago’s WGN today and always try to catch the broadcast. I checked with an online bank in the state of Minnesota about opening a CD and they had a great rate beating all others. However, I found out they do not have a way of naming beneficiaries. I asked what one of my inheritors would have to do to withdraw the money in the unfortunate event I had passed on. They said you’d have to go to court and get “papers.” Wow! This sounds like lot of trouble going to probate just to get a little bit more interest. It would be better to stick the money in a mutual fund or something with beneficiaries where only the death certificate is needed for distribution. What can you recommend?

Terry Says

Wait — I think you’re getting a bit confused. Only retirement accounts and insurance policies have beneficiaries!  But most financial institutions will issue CDs in the POD format — payable on death to the named person.   And in that case you would definitely need a death certificate and “papers” to prove you are the person named as POD.  So whether you are a named beneficiary of say an IRA CD or just a POD recipient, you’d need the same papers.  You’d just have different options on what to do with the money (IRA beneficiaries may be able to roll over and stretch out withdrawals, leaving some money to continue to grow tax deferred).

I’m guessing these “papers” — required in every bank — are what this bank is saying.  Double check.



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