Ask Terry Questions Traditional IRA Renewal

Traditional IRA Renewal

By Terry Savage on September 29, 2013 | Financial Planning / Retirement

I have a traditional bank IRA CD maturing in a few weeks ($120,000).

Because of the unstable & low interest rates, I am confused as to where to reinvest this IRA. The bank that it is held in is convincing me to reinvest in another 5 yr. IRA at a rate of 1.00%. They are telling me that because I am over 80 Y.O. I would not need to pay to close this IRA before mature date should rates increase drastically & I choose to renew/reopen another IRA.

They will waive the close & reopen fees.

I am also thinking of renewing/transfer the IRA when matures to open a Internet bank CD which is now paying 1.10%.

(I’m just having a hard time believing that I can close & reopen without any fees )

I am a very conservative investor & at my age would not want to gamble & also read your advice that little interest is better than losing entire acct. If I believe that the bank that is now holding the IRA is truthful & I can withdraw at anytime, for any reason at age 80), I would prefer to keep it there.

I would appreciate your thoughts to going forward.

Many, many thanks!

SAVAGE SAYS: This is very similar to another question I just posted — so I’m wondering if you wrote twice (sorry for the delay in responding, I was on vacation) — or if there is an epidemic of concerned seniors. First, I would NOT open another 5-year CD. Second, you might consider breaking this into two CDs, a one-year, and a 2-year — as I think rates will rise in the future so you don’t want to be locked in for 5 years. Yes, you can break a CD without penalty to take a required minimum distribution – but NOT to roll it to another institution!

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