Can You Transfer an IRA CD More Than Once a Year?
If you want to move the money in your IRA, you have two choices: a rollover or a transfer. A rollover is a process where you take receipt of the funds you want to move. You perform the transaction yourself. With a transfer, you allow your IRA custodian to do the transaction. You may make unlimited numbers of transfers in any given year, but you may want to understand how this could negatively affect your IRA CD.
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Types
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Two types of IRA CDs are eligible for a direct transfer. Many IRA CDs are with banks, but an insurance company selling a brokered CD (a partnership with a bank) may also offer an IRA CD. Traditional IRA CDs accept tax-deductible contributions into the account, but it taxes distributions. Roth IRA CDs accept only non-deductible contributions and do not tax distributions.
Process
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The process for transferring your IRA CD involves obtaining a transfer request form from your new IRA custodian (a financial institution of your choosing). You must fill out the form completely. Include your personal information, such as your name, address and account number, for the account you wish your transfer to go to. You must also include the dollar amount you want to transfer. Sign and date the form and return it to your new IRA custodian.
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Disadvantage
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The disadvantage of transferring an IRA CD is that CDs are timed deposits, which means that they must be held for a set period of time. If you transfer these assets to a new IRA, they must be liquidated prematurely, which results in a penalty that is normally three months worth of interest.
Considerations
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If you want to transfer your IRA CD, wait until your CD matures. Once your CD no longer carries any penalties and must be renewed, you can transfer your account to another bank or life insurance company without paying a penalty on the transfer.
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