For those with large IRAs that rate-chase and wind up with lots of CDs at many different banks:
Are there any tips/tricks/best practices for a CD maturing at Bank A, when you want to quickly grab a good rate at Bank B? A custodian-to-custodian transfer of the funds seems slow/cumbersome, but is seemingly the only foolproof way to avoid a taxable distribution.
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scott1961 said:Not sure what you mean, I have moved IRA CDs from bank to bank at maturity. Couple minutes more of paperwork but was not a big deal
Scott, I am assuming the paperwork you did was all at the destination bank, right?
Were there issues such as: making sure the destination bank processes everything and gets the money out before the end of grace period at the source bank? [assuming source bank rolls over CDs after maturity into new CDs with a few days' grace to take the money out]
Are there any problems to watch out for: such as making sure a Roth IRA CD does not get classified as a Traditional IRA CD, etc?
scott1961 said:I took the matured check from one bank to the new bank. You have a certain amount of time to reinvest the the old CD.That is 60 days which should be more than sufficient for any hardcore rate-chaser.
scott1961 said:I took the matured check from one bank to the new bank. You have a certain amount of time to reinvest the the old CD.
This is also what I have done before. I fill out the app for the new bank and take it too the old bank. They close the cd and cut a check directly to the new bank. I then mail the both of them in.
I did that a lot until this past maturity cycle in the beginning of the year when I moved all my IRAs to brokerage accts. Worked like a charm each time.
Indirect transfers, where the bank makes the check payable to the individual, are reportable to the IRS (not necessarily taxable), whereas custodian-to-custodian transfers are not.
C2C is generally preferable, but by the time you get Bank A to cut and mail you and check, then mail the check to Bank B, maybe Bank B no longer has the great rate you were chasing.
tuphat said:Indirect transfers, where the bank makes the check payable to the individual, are reportable to the IRS (not necessarily taxable), whereas custodian-to-custodian transfers are not.
I don't remember the exact details of the paper work but I do remember the receiving bank filled out something showing I was taking a check from a matured IRA CD and opening a new IRA CD with them. Am sure banks do it all the time so should check with the bank for details
Banks want to charge a tranfer fee and are not very competent when you seek to roll it over elsewhere yourself. Make sure you note the amount on your taxes as distribution and rollover or you'll get a letter in the mail from the IRS. I try to get them to code it as external transfer but most insist as coding it premature distribution and you must note rollover. They also accidently charge fees unless you point out maturity and that they don't have to charge transfer fees, taxes, etc.
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