Suggestions for CD transfer

[Gail]

We are trying to lock in some long term CD rates, but I'm having trouble getting anything done in the proper time period, especially with credit unions. First, you have to join and set up the account, then execute the paper work for a broker to broker transfer, and then wait for the current broker to actually fund the account. If you have rates that can change at any time, it's almost impossible to get the funds in before the rates change.

Does anyone have any suggestions as to how I can speed up this process?

[jazz4cash]

Hmmm......not sure I understand why the broker-to-broker piece is required.....are these IRA's? Can you put the funds into a money market with checkwriting?

[Gail]

Yes, the money we want to transfer is in an IRA and a SEP-IRA.

[jazz4cash]

I think you have two options to avoid witholding. I just went through this twice and it was fairly simple since we knew the funds were going to Vanguard, we had them issue a check mailed to us, but payable to Vanguard, FBO (for benefit of) account holder. So if you have identified the credit union you want to use, you could go that route. Second option is to initiate broker-to-broker rollover from the receiving institution, which I think could get messy as you indicated.

Opening an account with the credit union should be pretty simple......maybe you could ask them how often they adjust rates to at least make a guestimate of the time available to make the switch.

I guess a third choice is to have check made payable to you, but then you have to fund the amount witheld, but maybe worthwhile to get the rate locked.

[MooreBonds]

Originally Posted by Gail

We are trying to lock in some long term CD rates, but I'm having trouble getting anything done in the proper time period, especially with credit unions. First, you have to join and set up the account, then execute the paper work for a broker to broker transfer, and then wait for the current broker to actually fund the account. If you have rates that can change at any time, it's almost impossible to get the funds in before the rates change.

Does anyone have any suggestions as to how I can speed up this process?

Have you tried talking to the credit union/bank that offers the deals? If you sign the papers and at least turn them in, they will often (with my experience) honor the rate as of the day they receive the papers. If you fax them a copy in, it might help expedite it. Try talking to a customer service rep, and tell them you want to know their policy on transfering in an IRA account. I'm sure they'd be thrilled to add it to their deposits.

[OAG]

I believe you can get the full amount (without tax withholding) and you have (according to IRS Publication on the subject) 60 days to redeposit into a like account (Traditional IRA to Traditional IRA). You also can go the custodian to custodian transfer (not broker to broker) which in the case of PFCU is a single (in triplicate) piece of paper and they handle the transfer for you. It generally takes about 2 weeks to complete the transaction in the case of PFCU dependent on the maturity date of the CD at the losing custodian.

I did the first type last year (got money transfered from IRA to non-IRA MMA). Decided I did not need the money at that point and just had them redeposit it back into an IRA CD (had to get a NEW CD at a higher rate (Shucks!). They will report the withdrawal to the IRA on a IRS 1099-R but you just reflect it as an IRA Rollover on your tax return (just be sure it is within the 60 day limit).

I have been routinely been doing the second type (custodial transfers) over the past 4 years and it works just fine and quick; at least going into PFCU.

BTW generally PFCU announces rates for about a month and that usually gives you ample time to do it in thier case. Also you can just deposit the proceeds into an IRA-Share Account and wait out a rate change that is favorable to you and then call the institution and buy the CD. I know share accounts do not pay much but it does give you some breathing space if you think rates are going to go up soon (the sooner the better). Additionally, I believe, almost anyone can join PFCU (www.penfed.com) and they generally do have very good rates when compared to other banks and credit unions.

[d]

I believe, almost anyone can join PFCU (www.penfed.com) and they generally do have very good rates when compared to other banks and credit unions.

correct on both counts. do note that their best rates pop-up a couple of times a year.

[Gail]

Thanks to all who responded.

I'm actually looking at a custodian transfer from T Rowe to whichever credit union/bank we decide on. I think it might be quicker to get the funds sent directly to me and use the 60 day rule. We haven't done this with T Rowe before, so I don't know how much foot dragging they might do.

We joined Pentagon, but we missed out on the 6% CDs because we couldn't get the paperwork done in time. (By the way, Pentagon told me it oculd take up to three weeks to get it all done.) Now that I have a better idea of what's going to be involved, I think I can figure out the best thing to do.

I found some great CD rates at a couple of credit unions, but the rates change every Tuesday, and there was no guarantee. If I can find one who will let me lock, that seems to be the ideal situation.

[uncledrz]

One suggestion, take a look at the cd rates in fatwallet http://www.fatwallet.com/t/52/320690/

and keep an eye on the banks/cu's that consistent are highest in the time period you want. Set up the account, then do the transfer when the rate has been stable for a while. I do the same thing and am always a bit concerned that the rate may fall, so I write on the check and the application a specific rate. If the rate falls, I'll ask to cancel (haven't had to do it yet).

Other thought is that some CU's that pay well (Penfed, Agr..) regularly will post higher rate cd's. Open the share account with them, and then open the cd when the rate/term is within your paramaters.

[Gail]

Originally Posted by tio z

One suggestion, take a look at the cd rates in fatwallet http://www.fatwallet.com/t/52/320690/

and keep an eye on the banks/cu's that consistent are highest in the time period you want. Set up the account, then do the transfer when the rate has been stable for a while. I do the same thing and am always a bit concerned that the rate may fall, so I write on the check and the application a specific rate. If the rate falls, I'll ask to cancel (haven't had to do it yet).

Other thought is that some CU's that pay well (Penfed, Agr..) regularly will post higher rate cd's. Open the share account with them, and then open the cd when the rate/term is within your paramaters.

That's a good suggestion, and probably what we'll end up doing.