PFCU IRA & Early Withdrawal Penalty

[MJ]

I just learned something very interesting.

I was thinking of getting either a 4 or 5 year IRA CD at PFCU and possible withdraw with a penalty within 2 to 3 years. They just informed me that you can withdraw any or all your IRA funds after 59 1/2 without an early withdrawal penalty. I will be able to earn 5.50% on the 7 year CD for under 3 years.

Anybody have any 100% guaranteed investments that will earn 5.50% for 3 years? I am assuming that the same rule would apply if you are already over 59 1/2 and are applying for these CDs today.

MJ

 

[naturegal]

Re: PFCU IRA  & Early Withdrawal Penalty

Mj,

Better check on that... the rep you spoke with may have misunderstood your question. Early withdrawal penalties can refer to 2 different things:

1) penalties for terminating a CD before it is due (6-month penalty at PFCU)

2) penalties from the IRS for withdrawing funds from your IRA before age 59 1/2,

I am guessing that the rep thought you were asking about (2), not (1).

 

[MJ]

Thanks but I spoke to 2 people and asked for written confirmation. They pointed to their Disclosure Statement on their IRA CD application. There is an exception clause where the EWP would not be applied for several reasons one being
"If the owner has reached 59 1/2 or is permanently disabled...."
I don't know if this applies to someone who is already is 59 1/2 when they apply for a CD. But if you are 59 when you apply for 7 year CD @ 5.50% APY, you could withdraw your money 6 months later. Not bad for a short term no risk investment.

I couldn't believe that they would be that flexible though they are a CU.

I still had planned to call them a third time just to reconfirm the fact that I can remove all of it without incurring EWP.

MJ

 

[MJ]

I just confirmed 2 issues with PFCU.

1) No EWP will applied after reaching 59 1/2 years "period".
2) If you are over 59 1/2 at the time you apply for a CD, no EWP will ever be applied.

So for any one over 59 1/2 wanting to park some short time money, get the 7 year CD @ 5.5% and withdraw your money any time after.

Of course, as always, do your own due diligence.

As Martha would say, "it's a good thing".

MJ

 

[naturegal]

Re: PFCU IRA  & Early Withdrawal Penalty

What a deal! Maybe I'll buy some CDs in my mom's name

 

[charlie]

Re: PFCU IRA  & Early Withdrawal Penalty

Lord, I wish I could believe what PFCU is telling
you, MJ ........ but I am an old poop. Anything
sounding too good to be true, etc. has always
been my mantra. Maybe Santa is in the military?

Cheers,

Charlie

 

[MJ]

Charlie,

I'm with you as far as someone telling me information that is hard to believe. Remember, they are not a bank but a CU.

Here is the link to their IRA application pdf form.
Go to page 15, section XIII, 4, g, 3

and

read for yourself if you think there is value.

https://www.penfed.org/pdf/accountsforms/IRAweb.pdf

Gee this thread was a lot more work then I intended for it to be but I hope it was worth it.

MJ

 

[charlie]

Re: PFCU IRA  & Early Withdrawal Penalty

MJ,

Thank you! You have done this board a great
service.

Cheers,

Charlie

 

[charlie]

Re: PFCU IRA  & Early Withdrawal Penalty

P.S. It just came to mind that to avoid paying income
tax on the withdrawal you would need to do an IRA
transfer. Well duh ........

Charlie

 

[charlie]

Re: PFCU IRA  & Early Withdrawal Penalty

P.S. It just came to mind that to avoid paying income
tax on the withdrawal you would need to transfer
the money to another IRA. Well duh! ......

Charlie

 

[MJ]

Thank you! You have done this board a great service.

Yeh, yeh yeh

All kidding aside, I'm more than happy to share tips with you guys (gals) as I know you are as well.

MJ