Early Withdrawal Penalty on a CD Held in an IRA

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Part of the video series: Finance & Investment Tips

Summary: Early withdrawal of a CD held in an IRA could induce a double penalty by garnering a non-tax deductible penalty from the bank on the CD and penalty from the IRS on the IRA. Avoid getting hit with a penalty by withdrawing from an IRA, even in an emergency, with advice from a registered financial consultant in this free video on finance and investment.

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By Patrick Munro
eHow Presenter

Contact: www.northstarnavigator.com

Patrick Munro's affinity for investing and financial matters began more than 20 years ago with business education and service throughout the ranks of the banking, insurance and...read more

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meotch said

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on 11/12/2008 very helpful, thank you!

Video Transcript

"This is financial advisor Patrick Munro, answering a question, can I deduct early withdrawal penalty on my CD/IRA? The answer is, if you take money out of a CD, number one, from a bank, they will charge you an early withdrawal penalty, it is not tax deductible, if you take the money out, and it's in an IRA, you get hit with a penalty from the IRS, that's a double whammy in that particular case. So, as I say earlier in my transgressions here, we want to make sure that an individual putting money into a qualified tax account, such as an IRA, never takes that money out as an emergency measure before retirement, it's not an acceptable way, and if you do that, you will suffer fees as a result. That being said, many Americans just face no other choice, they no they've got that money there and they tap their IRA's, it's regret-able, and it happens every day. Try to ween yourself off of doing that, it's very, very key. So it answers the question, no you cannot receive tax deductibility if you take your money out of a CD early if it's based in an IRA. This is financial advisor, Patrick Munro."