Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
PenFed IRA change
Old 07-13-2007, 04:46 PM   #1
Recycles dryer sheets
 
Join Date: Aug 2005
Posts: 480
PenFed IRA change

The latest email from PenFed says, among other things, that starting September 1 members over 59 1/2 can not longer redeem IRA certificates without penalty, unless the distribution is a RMD.

That's too bad, their certificates have been a "win-win" deal for those of us over 59 1/2: if rates went down, you had a lock on the original high rate. If rates went up, you could turn in the certificate for one with the new higher rate, no penalty.

Existing IRA certificates will be grandfathered to maturity for one trade, after that you pay the penalty.

Does anyone know of another institution that still allows the "redemption without penalty" on their IRA certificates?
__________________

__________________
Gearhead Jim is offline   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!

Old 07-13-2007, 08:06 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,954
how much is the penalty?
__________________

__________________
jazz4cash is online now   Reply With Quote
Old 07-13-2007, 11:57 PM   #3
Recycles dryer sheets
 
Join Date: Aug 2005
Posts: 480
I'm sure it's on the website somewhere, I haven't looked it up yet.

Hopefully, not too large.
__________________
Gearhead Jim is offline   Reply With Quote
Old 07-14-2007, 07:16 PM   #4
Recycles dryer sheets
 
Join Date: Aug 2005
Posts: 480
Quote:
Originally Posted by Gearhead Jim View Post
I'm sure it's on the website somewhere, I haven't looked it up yet.

Hopefully, not too large.
Looking on the web IRA application, it looks like 0-5 yr certificates you lose six months interest, 7 yr certificates you lose twelve months interest. That's a pretty hefty penalty, one would need to carefully calculate any switching if the one "freebie" switch had already been used up.
__________________
Gearhead Jim is offline   Reply With Quote
Old 07-15-2007, 11:02 AM   #5
Thinks s/he gets paid by the post
OAG's Avatar
 
Join Date: Jun 2006
Location: Central, Ohio, USA
Posts: 2,598
Term of 6 months all interest unless older than 90 days in which case in is the latest 60 days of interest.

Term greater than 6 months up to 5 years the all interest unless older than 6 months in which case it is latest 180 days of interest.

Term of 7 years if within 365 days of issue it is all interest otherwise it will be latest 365 days of interest.

Penalties do not apply if the holder dies or the CU is liquidated. Also, as they mention, if the cause is an RMD.

I do not fully understand the statement regarding the IRA and will wait until tomorrow to call them as we are very close to RMD (within the current term of CD's). Since we recently moved ALL IRA (both Traditional and ROTH) to the 6.25% levels for 7 year terms the impact of this change is minimal on us but, I am wondering about the Grandfather Claus they mention.

I am unaware of any other institution that was as liberal with IRA CDs as PFCU.
__________________
Vietnam Veteran, CW4 USA, Retired 1979
OAG is offline   Reply With Quote
Old 07-15-2007, 11:12 AM   #6
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,620
Quote:
Originally Posted by R Wood View Post
I am unaware of any other institution that was as liberal with IRA CDs as PFCU.
It's true that frequent-switching CD IRA investors could take advantage of PenFed's policy, but I wonder how much PenFed really loses to that arbitrage.

Their policy could be its own best advertising and save a lot of marketing expenses, but I guess it's difficult to nail down the exact amount.
__________________

__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Reply

Tags
ira


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
Help! SEP IRA was transferred into a Traditional IRA...bad? soupcxan FIRE and Money 5 12-19-2006 12:19 PM
Roth IRA & Timber Rights/Tree Farm terminator FIRE and Money 6 07-16-2006 04:09 PM
Possible to combine SEP IRA with standard IRA? soupcxan FIRE and Money 2 07-16-2006 12:08 PM
Oil Change (A Little Long) Wife Sent to me, she thought it was cute poboy Other topics 21 03-30-2006 08:15 PM
Not eligible for Roth IRA - conversion? Lusitan FIRE and Money 9 02-23-2006 11:00 AM

 

 
All times are GMT -6. The time now is 11:04 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.