CD in a Roth IRA

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EMDW
Posts: 79
Joined: Thu Jul 04, 2013 11:18 am

CD in a Roth IRA

Post by EMDW » Sun Jan 04, 2015 1:18 pm

I have a CD (certificate of deposit) in a Roth IRA at a federal credit union which matures on 3/25/15 ( 15K, rate is 0.399400%). Does it make sense to move the money over to my Vanguard Roth IRA (funded via the back door roth )? Thank you.

mnvalue
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Joined: Sun May 05, 2013 2:22 pm

Re: CD in a Roth IRA

Post by mnvalue » Sun Jan 04, 2015 2:19 pm

Yes, that rate isn't great at all. Since that rate isn't competitive by historic standards, the new rates likely won't be competitive by current standards. You should move it one way or another.

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Clever_Username
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Re: CD in a Roth IRA

Post by Clever_Username » Sun Jan 04, 2015 2:21 pm

Yes, definitely move it and add it to your general allocation. A CD, particularly at that rate, would be fine if you're in retirement and need to leave some money in cash equivalents while waiting to likely remove it in the near future. To avoid some CD related fees, you may want to wait until it comes up before moving it.
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lululu
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Re: CD in a Roth IRA

Post by lululu » Sun Jan 04, 2015 2:25 pm

sari wrote:I have a CD (certificate of deposit) in a Roth IRA at a federal credit union which matures on 3/25/15 ( 15K, rate is 0.399400%). Does it make sense to move the money over to my Vanguard Roth IRA (funded via the back door roth )? Thank you.
Do you mean .3% or 3%?

It is hard to answer your question without knowing your financial situation. Are you rolling in money and you want to keep this money safe at whatever rate is available in March 2015, like, say 2%? Are you living on the financial edge and this is your emergency fund, so you need it to be safe? Is it play money or part of the money you want in stocks, so you want it at Vanguard so you can invest it in the market?

Topic Author
EMDW
Posts: 79
Joined: Thu Jul 04, 2013 11:18 am

Re: CD in a Roth IRA

Post by EMDW » Sun Jan 04, 2015 5:23 pm

lululu wrote:
sari wrote:I have a CD (certificate of deposit) in a Roth IRA at a federal credit union which matures on 3/25/15 ( 15K, rate is 0.399400%). Does it make sense to move the money over to my Vanguard Roth IRA (funded via the back door roth )? Thank you.
Do you mean .3% or 3%?

It is hard to answer your question without knowing your financial situation. Are you rolling in money and you want to keep this money safe at whatever rate is available in March 2015, like, say 2%? Are you living on the financial edge and this is your emergency fund, so you need it to be safe? Is it play money or part of the money you want in stocks, so you want it at Vanguard so you can invest it in the market?
The CD account was opened in 2002 (4K), 2003 (4K) and 2004 (4K). After 2004, I no longer qualified for a roth and was not aware of the back door roth IRA until a couple of years ago. I don't need this money for emergency. 401K is fully funded. No debt. The current rate of the CD is 0.399400%, 0.01% APY.

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