where to put ira money from cd

mare_wbpaOctober 15, 2013

On Oct 1, I had an IRA CD muture. It was paying 5%. That money comprises approx 1/2 of my assets. With interest rates so low on everything, and the economy in an uproar, I'm at a loss as to where to put these funds. The financial guy at the bank where I had the CD, tells me that an annuity with a 5 yr lock in paying 2.3% is my most secure move right now. Any other input on this matter will be greatly appreciated.,

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I don't know your age and that always helps when someone asks. If you are a younger person you might want to invest some of your money. I am a senior and I think the most important thing I can do is to take care of the principle and not worry about the interest. My money is just in a savings account because I want my money handy so I can draw on it for travel or whatever new toy I want. I have an income and am insured well so I am enjoying my savings. I am selfish enough to want to enjoy the money instead of letting an heir enjoy it.

    Bookmark   October 15, 2013 at 8:29PM
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Forgot to mention that my age is 67. I agree that preserving the principle is key. I was hoping that someone would have an idea that would keep my principle safe, yet give me something better than a savings rate.

    Bookmark   October 15, 2013 at 8:41PM
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CDs are safe. I don't know what the insured amount is anymore, used to be $100,000. Find out and spread the money out at different banks if you have more than the limit. I like Credit Unions and I use my husband's company. It has gone Global and anyone can join it. Last time the banks had problems CUs were reported to be safer. Where ever you go they will all try to talk you into investing or getting locked in on a CD. I don't do that.

Another thing I did was to put my heir on my accounts as POD, payment on death. I put TOD on my home and car, transfer on death. All the heirs have to do is take death certificate in and it's theirs. If you have more than one heir, list them all and different checks will be issued. Then I had a $50 will made to cover the contents of the house and any other major buy I made.

    Bookmark   October 15, 2013 at 11:31PM
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At age 67, I'd be skeptical of annuities. Very often the financial guy at the bank has a specific product to sell for which he will get a nice commission.

Emma, the FDIC insured amount is $250k in any one bank... and that 250k can be in combination of savings and checking accounts and CDs.

Today's economy is a quandary for investing. I've spent a long time building up a well balanced portfolio of stocks, municipal bonds, limited partnerships, etc. all of which pay interest and/or dividends regardless of the whims of the market. I also sit on cash - which isn't an entirely bad position right now. If and when things turn around and there's an investment worth buying, I'll use some of that cash.

If you don't need to jump into buying something, I wouldn't. People will argue that you're losing interest, but you could lose a lot more by being hasty. No one can tell you what to buy with a matured CD - maybe another short term (13 months?) CD is the best bet at whatever the going rate might be. You won't get a lot out of it, but the principle is secure while waiting for something better.

    Bookmark   October 16, 2013 at 12:33AM
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duluth, thank you. I thank you because I am half afraid to mention CDs because of the comments I get, but I don't want anyone to loose their life savings. My friend used the top money man in this city and getting money out of him was like pulling teeth without anesthetics. I told her "you want a new car. it's your money, you have to be forceful'. He wanted her to get a loan on the car. She finally told him, "you are not my husband, I want some money". She got it.

    Bookmark   October 16, 2013 at 9:26AM
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Thanks everyone. Considering the political climate right now I'm inclined to agree that it might be in my best interest (no pun intended) to just park the money in something safe for now, and wait for things to go one way or the other. I'd rather have my nest egg safe than loose it looking for higher interest.

    Bookmark   October 16, 2013 at 6:29PM
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One thing to remember about IRA's unless it is a Roth IRA is that at 70 1/2 you will have to start drawing the required minimum. No annuity at this time since the rate of return is so low. The person at the bank was doing you no favor to suggest it.

Most CD's have a time limit to do something then they either renew or the money is sent to you minus taxes. In this state you will have passed that limit.

    Bookmark   October 16, 2013 at 11:35PM
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I don't like IRAs. Our only IRA was a $2,000. one that we bought to get a one time tax break. When we started drawing on it, the bank missed sending us a check one year. I caught it after the deadline and called the bank. My penalty would have been almost the entire withdrawal amount. The bank took care of it by post dating. It was years ago. My husband had an account with his company that was known as a VIP account same as an IRA. When he retired we cashed it in and bought a CD with part of it.

    Bookmark   October 17, 2013 at 7:05AM
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Just a couple of things to consider--with your IRA, don't you have to start withdrawing at a certain age? If so, what happens if that money is tied up in a CD? Do the penalties apply?

As to POD. That may or may not help your heirs. When my mom died, yes--we 'kids' just took the CD's to the bank, with the death certificate, signed off that we were direct heirs, and walked out with the $$$ (well, a check for the others, and I just deposited mine, since I banked at the same establishment). HOWEVER , when my aunt died, those POD's meant nothing--because of it not being a direct descendant, they became part of the TAXABLE estate. Also, the annuity she had, that she left me?--both my accountant and the annuity company said it was NOT part of the estate. Guess what? The STATE would NOT release the estate funds until I paid the tax on the entire $40,000+ that I'm getting (in $100/month installments, mind you)!!! I won't live long enough to get the entire thing, so that means my heirs, may end up paying tax on top of tax!

Look, we're mostly amateurs here. And mostly probably don't live in your jurisdiction. Best advice anyone can give you is to sit down with your accountant and follow his/her advice--after double checking that they're right with whatever govt entities might be involved down the road. Laws and practices vary greatly from state to state--you really need to know what applies where you live. Good luck.

    Bookmark   November 5, 2013 at 10:21AM
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I will asked that question the next time I go to the bank and post the answer here. It does make sense that the taxes would have to be paid up front, like winning the lottery or a lot of money at the casinos.

I sat down with my lawyer, he knew what I was doing and my heir is my accountant. Of course she will have to pay taxes, she is not a direct descendant. People worry about taxes far to much. If I have an estate of say.... $200, 000., she will pay a lot of taxes, a whole lot, but it will be more money than she would have had if I had not made her my heir. I don't think she is going to be to upset.

I had a neighbor who said he was selling his rental because he had to pay $5,000. in taxes. My reply to him was "I wish I had to pay $50,000. in taxes look how much money I would have made to owe that much".

    Bookmark   November 5, 2013 at 6:45PM
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