Will Taking RMD from an IRA CD be subject to CD Early Withdrawal Penalties

I have some TIRA funds in fixed term CDs at banks and credit unions. In order to make my RMD, if I choose to have the RMD amount taken from each account, will the banks and credit unions consider this an early withdrawal from the CD causing penalties in terms of lost interest – or are mandatory RMD withdrawals not considered an early CD withdrawal/termination?

Thanks.

Gary_C



That is a policy that is set by each bank or credit union.  If you recieved a CD account disclosure along with your IRA Application at account opening and that disclosure states that CDs are subject to an interest penalty for early withdrawal then there is no reason there would be a separate policy for IRA accounts invested in a CD, unless it is explicitly stated on the disclosure that IRAs invested in CDs are not subject to an early withdrawal interest penalty. 



It will be much simpler for you to stagger your maturity dates so that at least one CD matures each year. You can then take the full RMD for all your TIRA accounts at maturity of that one CD and purchase another CD with the remainder. That way you will not have to worry about CD penalties at all or dealing with several different rules for each institution and possibly not getting a clear answer from a teller or from the documents.



Thanks for the responses.  I have been setting up staggering maturities so that each year I have at least one CD maturing sufficient to cover my RMD .  I just got to wondering if that was really necessary, i.e., if there were some general exemption for RMD withdrawals.  As I suspected, there is not, so I will continue to structure staggering maturities.  Thanks again.



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