Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
PenFed CD Interest Reporting
Old 04-16-2015, 08:20 PM   #1
Recycles dryer sheets
 
Join Date: Oct 2013
Posts: 148
PenFed CD Interest Reporting

I bought a $100,000 PenFed CD on one of the last few days of 2013 at 3% interest. For 2014, the form I got from them for tax reporting purposes showed an amount a few dollars less than $3000 in interest. I called and asked why the interest earned was less than $3000 since 0.03 X 100,000 = $3000. They agreed with my math but couldn't explain the amount reported. They turned this over to their resolution department and in a few weeks got a form letter from them stating that they reviewed my account and the interest shown was correct with no other explanation. At that point, I just dropped the whole thing since I was extremely busy at the time. Since I can't gen an answer from PenFed, can anyone here explain the discrepancy?
__________________

__________________
freedomatlast is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

PenFed CD Interest Reporting
Old 04-16-2015, 08:41 PM   #2
Recycles dryer sheets
Newventurer's Avatar
 
Join Date: Sep 2012
Location: in the sticks
Posts: 238
PenFed CD Interest Reporting

Due to end of the year Holidays do you suppose they didn't actually establish it prior to some date in 2014 which might explain the difference? I haven't looked to make sure but I seem to recall that there were multiple dates to my transactions with them. I'll check now though.
__________________

__________________
Newventurer is offline   Reply With Quote
Old 04-16-2015, 08:42 PM   #3
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,124
Quote:
Originally Posted by freedomatlast View Post
Since I can't gen an answer from PenFed, can anyone here explain the discrepancy?
No, but my CD interest at the end of 12 months reflected the same "few dollars short of 3%" like yours. I didn't pursue it since it was such a small amount, but it isn't clear to me why it was less than the advertised interest amount.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 04-16-2015, 08:47 PM   #4
Thinks s/he gets paid by the post
powerplay's Avatar
 
Join Date: Oct 2008
Posts: 1,380
Take a look at your latest statement from Pen Fed and check out the dates. I think that may be your answer.

I also opened several smaller CD's during the 3% five year offering. When I look at my last statement it is from 10/19/2014 to 1/19/2015 so I don't expect my interest to be 3% for a given calendar year since it's paid on the 19th of the month. All my CD's pay interest on the 19th of the month yet they were not opened on the same day.
__________________
powerplay is offline   Reply With Quote
Old 04-16-2015, 08:50 PM   #5
Recycles dryer sheets
 
Join Date: Oct 2013
Posts: 148
Quote:
Originally Posted by Newventurer View Post
Due to end of the year Holidays do you suppose they didn't actually establish it prior to some date in 2014 which might explain the difference? I haven't looked to make sure but I seem to recall that there were multiple dates to my transactions with them. I'll check now though.
I just checked the specifics.

The CD was issued on 12/26/13 with a "dividend rate" of 3% and an "annual percentage yield" of 3.04%
__________________
freedomatlast is online now   Reply With Quote
Old 04-16-2015, 08:52 PM   #6
Recycles dryer sheets
thefinancebuff's Avatar
 
Join Date: Dec 2008
Posts: 262
Quote:
Originally Posted by freedomatlast View Post
Since I can't gen an answer from PenFed, can anyone here explain the discrepancy?
I'm surprised they couldn't explain this simple matter. They just pick a random day for interest payment. Say you bought on the 25th. They may pick the 19th as the date for paying interest. The first month you will get interest from the 25th to the 19th. The second month you will get interest from the 20th of last month to the 19th. Over a year, you will get 12 payments but because the first payment was for a short month you will get less than just a straight 100k x 3% calcuation.
__________________
thefinancebuff is offline   Reply With Quote
Old 04-16-2015, 09:32 PM   #7
Recycles dryer sheets
 
Join Date: Oct 2013
Posts: 148
Ok, that makes sense. That's basically what powerplay explained also. Thank you. As long as the IRS is ok with the reporting of the interest when it was paid rather than when it was accrued, all is good.
__________________
freedomatlast is online now   Reply With Quote
Old 04-17-2015, 07:21 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,450
How does the amount reported on 1099 compare to the amount of interest that you were credited during 2014 according to your statements? I would think it should be the same and the answer may lie there.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 04-17-2015, 08:28 AM   #9
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,932
My 1099s agree w/ the interest credited on the statements. Also the year end valuations for IRA CDs seem to be the valuation on the statement date in December.......rather than the last day in December.......so interest ,accrued but not yet declared , is ignored for those purposes.

The discrepancy for the 1099 should only occur for the first year. The close but not quite right result is a result of the close to year end initial date. If you start the CD in mid year (or any other time), things wouldn't even be close for the first year.
__________________
kaneohe is offline   Reply With Quote
Old 04-17-2015, 08:35 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,502
I just assumed it was due to the date they picked to pay the interest (which wasn't in the CD month anniversary) and that it would resolve when the CD matured.

My 1099 matched exactly what was paid last year.
__________________

__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Reporting Mortgage interest to IRS JOHNNIE36 Other topics 3 12-21-2011 06:55 PM
Tax Reporting Reinvested Dividends km4hr FIRE and Money 24 03-23-2006 04:17 PM
Expense Ratio Reporting TromboneAl FIRE and Money 8 12-01-2005 11:04 AM
Reporting in from the Other Side REWahoo Other topics 18 06-03-2005 10:39 PM
Young Dreamer Reporting for Duty PennyThoughts Young Dreamers 12 08-29-2003 11:48 AM

 

 
All times are GMT -6. The time now is 02:36 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.