Required Minimum Distribution on 5 year CD IRA... (pay, rates, financing)

[CptnRn]

I have a 5 year CD IRA that is due for renewal next week. However I will be required to start making Required Minimum Distributions on it in 2.5 years. Does that mean I won't be able to invest it in 5 year CD's without penalty if an RMD is due every year in the future?

[jiminnm]

Talk to the CD issuer. I think they will take your RMD out of the CD without penalty. That's what happened when I inherited my mother's IRA in a CD.

[jrkliny]

You will need to take the RMDs regardless of how the money is invested. So do not tie all of it up in CDs where you will need to pay a penalty or taking the money early.

[reed303]

Bankrate article here re RMDs and CDs:

https://www.bankrate.com/financing/c...d-from-ira-cd/

[rjm1cc]

I would invest the RMD for each year in a separate CD.

[CptnRn]

Originally Posted by jiminnm

Talk to the CD issuer. I think they will take your RMD out of the CD without penalty. That's what happened when I inherited my mother's IRA in a CD.

Thanks, its good to know there may be options. I will go talk to the issuer Monday. Reading the paperwork that comes with the IRA CD that does not appear to be an option. But I will verify that.

Originally Posted by jrkliny

You will need to take the RMDs regardless of how the money is invested. So do not tie all of it up in CDs where you will need to pay a penalty or taking the money early.

Good idea, I could keep enough in savings to cover the RMD's for 5 years and keep the rest in a 5 year CD. Thanks!

Originally Posted by reed303

Bankrate article here re RMDs and CDs:

https://www.bankrate.com/financing/c...d-from-ira-cd/

Good article, it seems to cover all of the options.

Originally Posted by rjm1cc

I would invest the RMD for each year in a separate CD.

Again, a great idea, thank you all for responding.

[reed303]

Originally Posted by CptnRn

Thanks, its good to know there may be options. I will go talk to the issuer Monday. Reading the paperwork that comes with the IRA CD that does not appear to be an option. But I will verify that.



Good idea, I could keep enough in savings to cover the RMD's for 5 years and keep the rest in a 5 year CD. Thanks!

Be careful with that idea. The RMD withdrawal must come from an IRA, not a regular savings account. That's the whole point of RMDs.

If the "savings" account (money market, mutual fund, etc) is within the same IRA account as the CD, then that's OK.

[mathjak107]

yes , very important , the money must come out of the ira

[CptnRn]

The credit union assured me that as long as all I take out is the RMD there would be no early withdrawal penalty. Since that was not stated clearly in the "Account Disclosures" they added a note to that effect on my account and gave me a printed copy of that note for my records.