INVESTING IRA CONTRIBUTION IN A CD

Submitted by Ira Birnbaum on Thu, 2012-01-26 16:41

IF I PUT MY IRA MONEY INTO A CD IS IT TRUE THAT ANY OR ALL OF THIS MONEY CAN BE WITHDRAWN AT ANY TIME WITHOUT PAYING THE EARLY WITHDRAWAL PENALTY PROVIDED I AM OVER A CERTAIN AGE?



Submitted by Jose Morales on Thu, 2012-01-26 16:46

There are two seperate issues here. One is the IRS imposed tax penalty for early withdrawal, which you would not be subject to if you have reached the age of 59 1/2 when you take the distribution. The other issue is the possible interest penalty for breaking the term of a CD, which is a Bank policy and not dictated by the IRS. Yes, you can be assessed an interest penalty for breaking the term of the CD regardless of your age. The IRS does not force banks to allow people to break the contracts that they have agreed to with no fee or penalty. To be safe, make sure that you clarify the bank’s interest penalty policy regarding IRA CDs and make sure that you look closely at the disclosures provided. If the disclosures do not state that IRA CDs have a different interest penalty policy than regular CDs then you would be subject to the bank’s normal interest penalty policy.

Submitted by Ira Birnbaum on Sat, 2012-01-28 04:20

Thanks for your most helpful information

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