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Old 08-18-2015, 09:40 AM   #21
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On the brokered CDs - my friend mentioned being told about a 5yr CD at 4%, but that didn't make sense to me as the best current 5yr CDs are in the 2.25 to 2.45% range. Does the buyer actually pay more for the brokered CD to make up the difference in interest paid?
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....On the other hand, buying brokered CDs within an existing IRA brokerage account seems like the costs would be higher since you are dealing with the secondary market and the brokerage would get some commission, but I'm not sure where the costs creep in.
My brokerage is offering a 3.9% CD maturing 9/3/2019. It's being sold at a premium of 106.65 making the YTM 2.17%. CUSIP 36160VLH2. One person's 3.9% CD is another person's 2.17% CD depending on your viewpoint.

My brokerage has no commission to purchase new issue CDs. The brokerage receives a 'placement fee' from the CD issuer. This makes it easy to compare the yield to individual bank CDs. For secondary market CDs, the commission is built into the price as a 'markup' and the YTM reflects this charge. IOW, the YTM would be higher if there were no commission/markup. Again, this makes it easy to compare their yields to new issue brokered CDs and individual bank CDs.

First, I screen out banks I've never heard of and callable CDs. Then yield is my only criteria since they are FDIC insured and the YTM includes the markup. This usually leads me to secondary market brokered CDs. My brokered CDs pay interest semi-annually like a bond.
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Old 08-18-2015, 01:42 PM   #22
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My brokerage is offering a 3.9% CD maturing 9/3/2019. It's being sold at a premium of 106.65 making the YTM 2.17%. CUSIP 36160VLH2. One person's 3.9% CD is another person's 2.17% CD depending on your viewpoint.
OK - that's what I was looking for. Buying it at a premium. I thought it must be something like that. What is important is finding out the yield to maturity. Thanks for the terminology.
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My brokerage has no commission to purchase new issue CDs. The brokerage receives a 'placement fee' from the CD issuer. This makes it easy to compare the yield to individual bank CDs. For secondary market CDs, the commission is built into the price as a 'markup' and the YTM reflects this charge. IOW, the YTM would be higher if there were no commission/markup. Again, this makes it easy to compare their yields to new issue brokered CDs and individual bank CDs.

First, I screen out banks I've never heard of and callable CDs. Then yield is my only criteria since they are FDIC insured and the YTM includes the markup. This usually leads me to secondary market brokered CDs. My brokered CDs pay interest semi-annually like a bond.
Thanks. Finding out whether the brokerage can buy new CDs is also important. Again - knowing YTM will cover all the cases including the commision for CDs bought on the secondary market.
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Old 08-18-2015, 02:52 PM   #23
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Thanks!

Did you have to instruct Vanguard to mail the check to PenFed, or did PenFed initiate the transaction for you?
I seem to recall PenFed providing the mailing instructions to me, which I then forwarded to Vanguard with a request to cut the check and mail it directly to PenFed. Vanguard needs to know that it is a transfer to another IRA so that it doesn't trigger a taxable transaction for reporting purposes.
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Old 08-18-2015, 03:58 PM   #24
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I seem to recall PenFed providing the mailing instructions to me, which I then forwarded to Vanguard with a request to cut the check and mail it directly to PenFed. Vanguard needs to know that it is a transfer to another IRA so that it doesn't trigger a taxable transaction for reporting purposes.
Thanks for those details.
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Old 08-18-2015, 07:23 PM   #25
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I did one a few months ago. Transferring IRA money from Etrade to a credit union. I filled out a form online at the credit union website to open an IRA. Then a form to transfer from Etrade at the credit union website. Then the credit union took care of it. I don't think I contacted Etrade at all.


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Old 08-18-2015, 07:30 PM   #26
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I did one a few months ago. Transferring IRA money from Etrade to a credit union. I filled out a form online at the credit union website to open an IRA. Then a form to transfer from Etrade at the credit union website. Then the credit union took care of it. I don't think I contacted Etrade at all.


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In that case were you transferring the entire amount in the IRA or just a portion?

Thanks!
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Old 08-18-2015, 07:38 PM   #27
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In that case were you transferring the entire amount in the IRA or just a portion?

Thanks!

Portion only.


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Old 08-19-2015, 12:02 PM   #28
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All of our IRA's (Traditional and then additional ROTH later) were initiated at PENFED (first CD was purchased about 1976). Each year we added the contributions to new CD's. In 2006 PENFED let us consolidate all of the CD's into a single CD for each type and we wound up with 2 Traditional IRA's and 2 ROTH IRA's. At that point we did not have any earned income so when we reached RMD ages it was very simple to calculate the annual RMD amounts (single CD each) - PFCU even paid the RMD's any way we wanted (Annually (start or end of year), Quarterly or Monthly}. When my DW passed her Traditional and ROTH was simply moved to my account and the RMD on the traditional amounts calculated by them and is now paid monthly. Very simple process, convenient for me and efficient on PFCU's part. I am sure all financial instructions that allow IRA with CD's could be the same.
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Old 08-19-2015, 05:54 PM   #29
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So, all of our IRA's have been in CD's with one bank... for as long as I can remember, maybe 35 years or when IRA's were first offered. That bank, which was Met Life at the time, became GE, and now (ugh) Synchrony or Optimizer which becomes confusing.
Historically the bank has paid the highest interest and has always been, # 1, 2 or 3.

Rollovers have been automatic, with a choice of one to five years. We keep a small savings account with the same bank, and if and when we decide to take money out, its a usually just a single page form to fill out and usually takes about 6 or 7 days to process. This time the withdrawal was a disaster. A long delay in processing, and then an error in my form, which they didn't inform me of ... then another form to make the transfe... nor fax or email or phone mail only. ... Five weeks to withdraw my money. Look at "Synchrony Bank Reviews on Yelp or Consumeraffairs or any rating website. Hmmm... what does a cumulative "one star" rating mean?

Anyway... decided to transfer my CD IRA's to another bank... pages of forms and explanations... Since I only had a month to rollover to another bank, and knowing what I know about money float and deliberate time delay... I just let the CD's roll over where they were. My anger with Synchrony turned into a long letter to the FDIC, which resulted in a three page letter of reply from the Synchrony risk management group. Twists and turns and lies.... I gave up... they're bigger than me. It was my "gotcha".

BTW... checking Bankrate, Synchrony is still on top of the national CD rates.

Until Synchrony, no problem... always nice people, and no one hour phone waits.
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Old 08-19-2015, 05:56 PM   #30
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Just wanted to add that it is my belief that these "trustee-to-trustee tansfers" can typically be initiated by either the current or new institution. I won't say one way is better than another, but it is easier for me to initiate the transfer at Fido. They even have a list of my credit unions on file and they mail the check to me payable to: My Credit Union, IRA Trustee FBO My Name. This way gives me more assurance that the correct funds are liquidated (e.g. income or bond fund vs. stock funds). I can verify with Fidelity that my 1099 will be coded "no penalty". If time is short, I can pay to have the check sent overnight. I have seen a number of the forms used by various credit unions and they are confusing ( even for the credit union employees). I believe the terms "rollover" and "transfer" are used interchangeably which can lead to confusion. Whenever I have walked into the credit union with a transfer check made out this way, the credit union rep is surprised and relieved that hardly any additional paperwork is required. I do have the luxury of being in driving distance of Penfed, Navy Federal and two other local credit unions that have great CD deals from time to time.
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Old 08-19-2015, 06:01 PM   #31
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In 2006 PENFED let us consolidate all of the CD's into a single CD for each type and we wound up with 2 Traditional IRA's and 2 ROTH IRA's.
That's good to know....I was thinking about asking PenFed if I could consolidate. I have at least 5 individual CDs with the same maturity date. Way back when I was worried about needing to break a CD and I thought splitting the deposit up would make it easier to use in case of an emergency. I remember how hard it was to sign up for a 10 yr term in 2011 but locking up 5% feels pretty good right now!
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Old 08-19-2015, 06:09 PM   #32
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So, all of our IRA's have been in CD's with one bank... for as long as I can remember, maybe 35 years or when IRA's were first offered. That bank, which was Met Life at the time, became GE, and now (ugh) Synchrony or Optimizer which becomes confusing.
Historically the bank has paid the highest interest and has always been, # 1, 2 or 3.
That's scary. With the acquisitions and name changes, I got confused between GE Capital Bank and GE Capital Retail Bank....they are not the same. I accidentally opened my account with GE Cap Retail Bank which does not offer IRAs but the rates are good and I have made exactly one transfer from this account so far and it went smoothly. GE Capital became Synchrony and GE Capital Retail was just bought by Goldman Sachs and I have zero faith that GS will embrace small consumer accounts like mine so I am already in the process of looking for an alternative (Ally?).
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Old 08-19-2015, 06:25 PM   #33
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Thanks for all the detailed replies folks. It really helped!!!

I haven't delved into the universe of brokered CDs myself yet, as I only own them in regular accounts, and I have simply transferred the funds to whichever bank was offering the CD.
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Old 08-19-2015, 08:48 PM   #34
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So, all of our IRA's have been in CD's with one bank... for as long as I can remember, maybe 35 years or when IRA's were first offered. That bank, which was Met Life at the time, became GE, and now (ugh) Synchrony or Optimizer which becomes confusing.
Historically the bank has paid the highest interest and has always been, # 1, 2 or 3.

Rollovers have been automatic, with a choice of one to five years. We keep a small savings account with the same bank, and if and when we decide to take money out, its a usually just a single page form to fill out and usually takes about 6 or 7 days to process. This time the withdrawal was a disaster. A long delay in processing, and then an error in my form, which they didn't inform me of ... then another form to make the transfe... nor fax or email or phone mail only. ... Five weeks to withdraw my money. Look at "Synchrony Bank Reviews on Yelp or Consumeraffairs or any rating website. Hmmm... what does a cumulative "one star" rating mean?

Anyway... decided to transfer my CD IRA's to another bank... pages of forms and explanations... Since I only had a month to rollover to another bank, and knowing what I know about money float and deliberate time delay... I just let the CD's roll over where they were. My anger with Synchrony turned into a long letter to the FDIC, which resulted in a three page letter of reply from the Synchrony risk management group. Twists and turns and lies.... I gave up... they're bigger than me. It was my "gotcha".

BTW... checking Bankrate, Synchrony is still on top of the national CD rates.

Until Synchrony, no problem... always nice people, and no one hour phone waits.

I feel your pain Older.... I made one rollover transfer and what a breeze...Went to well one more time in same 12 month period and was told I needed to do a trustee transfer. Got the paperwork sent to me and my eyes glazed over... I went to the bank that had my CD and said "Lets renew it for 12 months". So I am raking in a .35% rate for one year just so I can avoid the paperwork. When it matures again all I have to do is have the bank type VFTC on the check with my name on it and send it to Vanguard. No paperwork needed....


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Old 08-20-2015, 12:23 AM   #35
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That's scary. With the acquisitions and name changes, I got confused between GE Capital Bank and GE Capital Retail Bank....they are not the same. I accidentally opened my account with GE Cap Retail Bank which does not offer IRAs but the rates are good and I have made exactly one transfer from this account so far and it went smoothly. GE Capital became Synchrony and GE Capital Retail was just bought by Goldman Sachs and I have zero faith that GS will embrace small consumer accounts like mine so I am already in the process of looking for an alternative (Ally?).
I'm a bit confused bc the Retail Bank became Synchrony and does offer IRAs.
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Old 08-20-2015, 12:42 AM   #36
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.............................. Look at "Synchrony Bank Reviews on Yelp or Consumeraffairs or any rating website. Hmmm... what does a cumulative "one star" rating mean?

.................................................. ....
99+% of those reviews are for the credit card division which, I assume ,
is separate from the banking part.
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