IRA CD question

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staybalanced
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IRA CD question

Post by staybalanced » Fri Sep 23, 2016 10:58 am

I have recently become a big fan of Allan Roth, reading his book and many of his published articles. I really am interested in his idea of using fdic insured cd's for part of your fixed income. Obviously you get the most benefit by holding them within an IRA.

Question, if you hold your ira at vanguard, can you transfer part of it to ally bank into an ira for cd's. Example you have 300k in vanguard ira and want to put 50k in ally bank cd.

Second question, those that do this I assume still own some total bond in their main Ira so they can re balance into stocks when necessary?

Thanks!

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cheese_breath
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Re: IRA CD question

Post by cheese_breath » Fri Sep 23, 2016 11:09 am

I believe all you have to do is open an IRA with Ally, and then you should be able to transfer part of your VG IRA into the Ally IRA.
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sport
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Re: IRA CD question

Post by sport » Fri Sep 23, 2016 11:13 am

You can also purchase CDs within your Vanguard account, using the brokerage function. The choice of those CDs will be from Vanguard's brokerage offerings. Those will be brokered CDs rather than direct CDs.

LeeMKE
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Re: IRA CD question

Post by LeeMKE » Fri Sep 23, 2016 11:48 am

+1 sport

I buy CDs in my Fidelity accounts to keep things simple.
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staybalanced
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Re: IRA CD question

Post by staybalanced » Fri Sep 23, 2016 12:40 pm

Vanguard offers brokered cd's as well. The only problem is you lose the benefit to break them before maturity. Most online banks have a minimal fee to get out of it, example is during a rising rate environment you break it early and reinvest into a higher yield. With a brokered cd you would have to sell it on the open market and take a principal hit based on current rates.

dollarsaver
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Re: IRA CD question

Post by dollarsaver » Fri Sep 23, 2016 1:36 pm

I've done this a few times my Vanguard IRA Account. Sometimes they wire the IRA money to my new CD at a new bank and sometimes they send a check to the new IRA CD that is set up a the new bank. Never was a problem.

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Rob5TCP
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Re: IRA CD question

Post by Rob5TCP » Fri Sep 23, 2016 1:42 pm

I wrestled whether to go with brokered CD's vs. bank CD's for that portion of my portfolio. Two factors tilted me to dealing directly with banks.
1. I am able to get better rates; up to 3% NCUA insured.
2. Their is no market rate risk if interest rates rise only an EWP (early withdrawal penalty).
The penalty, in the past has been as little as two months. Currently 6 months seems to be the norm (not for all).

staybalanced
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Re: IRA CD question

Post by staybalanced » Fri Sep 23, 2016 1:56 pm

Rob5TCP wrote:I wrestled whether to go with brokered CD's vs. bank CD's for that portion of my portfolio. Two factors tilted me to dealing directly with banks.
1. I am able to get better rates; up to 3% NCUA insured.
2. Their is no market rate risk if interest rates rise only an EWP (early withdrawal penalty).
The penalty, in the past has been as little as two months. Currently 6 months seems to be the norm (not for all).
where do you get 3%?

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Rob5TCP
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Re: IRA CD question

Post by Rob5TCP » Fri Sep 23, 2016 3:17 pm

Andrews Federal C.U.
special 3% 7 year
ONLY for IRA / Roth

click on traditional IRA / Roth
and you will see the 84 month

https://www.andrewsfcu.org/personal/che ... cates.html

dollarsaver
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Re: IRA CD question

Post by dollarsaver » Fri Sep 23, 2016 4:59 pm

Rob5TCP wrote:Andrews Federal C.U.
special 3% 7 year
ONLY for IRA / Roth

click on traditional IRA / Roth
and you will see the 84 month

https://www.andrewsfcu.org/personal/che ... cates.html

What's the best way to join the credit union?

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friar1610
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Re: IRA CD question

Post by friar1610 » Fri Sep 23, 2016 5:06 pm

A related question.... If you use CDs - regardless of whether brokered or bank - in your IRA and you are of RMD age, how do you take your RMDs? I assume you just keep enough in more liquid assets, such as a bond fund, to cover your RMDs until the CDs come due. Is that all there is to it?
Friar1610

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Kevin M
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Re: IRA CD question

Post by Kevin M » Fri Sep 23, 2016 5:09 pm

InvestorAdam wrote:I have recently become a big fan of Allan Roth, reading his book and many of his published articles. I really am interested in his idea of using fdic insured cd's for part of your fixed income. Obviously you get the most benefit by holding them within an IRA.
Yes, I started following Allan's advice more than six years ago, and now have about 75% of my fixed income in direct CDs. I hold them in both IRAs and taxable accounts.
InvestorAdam wrote:Question, if you hold your ira at vanguard, can you transfer part of it to ally bank into an ira for cd's. Example you have 300k in vanguard ira and want to put 50k in ally bank cd.
Yes, it's easy, but I wouldn't use Ally Bank, as their CDs currently aren't competitive. Already mentioned Andrews FCU 7-year CD at 3% is best deal, and another good one is Achieva CU 5-year at 2.55%. I did one IRA transfer from Vanguard to Andrews FCU, two IRA transfers from Ally to Andrews, and am in the process of doing IRA transfers from Ally and Fidelity to Achieva CU (I'm too close to NCUA insurance limit at Andrews to add more to that one).
InvestorAdam wrote:Second question, those that do this I assume still own some total bond in their main Ira so they can re balance into stocks when necessary?
Not me. Why hold TBM which has lots of lower-yielding Treasuries with more term risk when I can get much higher yields with much less term risk in good direct CDs? Note that TBM also holds investment-grade bonds and longer-term Treasuries, so you could use funds to pick up one or both of these, giving you similar term risk and credit risk as TBM with your CDs plus bond funds, but higher overall yield. That's what I do, except I skip Treasuries entirely.

Kevin
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cheese_breath
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Re: IRA CD question

Post by cheese_breath » Fri Sep 23, 2016 6:23 pm

friar1610 wrote:A related question.... If you use CDs - regardless of whether brokered or bank - in your IRA and you are of RMD age, how do you take your RMDs? I assume you just keep enough in more liquid assets, such as a bond fund, to cover your RMDs until the CDs come due. Is that all there is to it?
I don't know about other banks or CUs, but when my MIL had a Chase IRA with CDs they took the RMD out of the CDs without assessing any early withdrawal penalty for the amount taken. This was set up with Chase for auto payment of the RMD. I don't know what would happen if she had tried to do the RMD manually.
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Kevin M
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Re: IRA CD question

Post by Kevin M » Fri Sep 23, 2016 7:31 pm

cheese_breath wrote:
friar1610 wrote:A related question.... If you use CDs - regardless of whether brokered or bank - in your IRA and you are of RMD age, how do you take your RMDs? I assume you just keep enough in more liquid assets, such as a bond fund, to cover your RMDs until the CDs come due. Is that all there is to it?
I don't know about other banks or CUs, but when my MIL had a Chase IRA with CDs they took the RMD out of the CDs without assessing any early withdrawal penalty for the amount taken. This was set up with Chase for auto payment of the RMD. I don't know what would happen if she had tried to do the RMD manually.
Yes, I believe that the terms of every IRA CD I've purchased have allowed penalty-free RMDs. However, since the CDs I've been getting have such superior yields, I'd take RMDs from my bond funds instead in the current environment, and continue to reinvest the CD interest at the great rates.

Kevin
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Rob5TCP
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Re: IRA CD question

Post by Rob5TCP » Fri Sep 23, 2016 8:39 pm

yorkpond wrote:
Rob5TCP wrote:Andrews Federal C.U.
special 3% 7 year
ONLY for IRA / Roth

click on traditional IRA / Roth
and you will see the 84 month

https://www.andrewsfcu.org/personal/che ... cates.html

What's the best way to join the credit union?
Become a member of the American Consumer Council first ($5). A number of credit unions accept this.
http://americanconsumercouncil.org/

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friar1610
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Re: IRA CD question

Post by friar1610 » Sat Sep 24, 2016 9:09 am

Kevin M wrote: Yes, I believe that the terms of every IRA CD I've purchased have allowed penalty-free RMDs. However, since the CDs I've been getting have such superior yields, I'd take RMDs from my bond funds instead in the current environment, and continue to reinvest the CD interest at the great rates.

Kevin
Thank you. As far as you know does this apply to both brokered and bank CDs?
Friar1610

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Rob5TCP
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Re: IRA CD question

Post by Rob5TCP » Sat Sep 24, 2016 11:22 am

friar1610 wrote:
Kevin M wrote: Yes, I believe that the terms of every IRA CD I've purchased have allowed penalty-free RMDs. However, since the CDs I've been getting have such superior yields, I'd take RMDs from my bond funds instead in the current environment, and continue to reinvest the CD interest at the great rates.

Kevin
Thank you. As far as you know does this apply to both brokered and bank CDs?
Check with whichever broker you are using. Brokered CD's are more like bonds. You don't redeem; you sell on the secondary market (with accompanying profit/loss). If you choose the brokered route; you might want to purchase several smaller ones that you could sell to cover your RMD.
But your broker would presumably have the best answer.

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friar1610
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Re: IRA CD question

Post by friar1610 » Sat Sep 24, 2016 5:40 pm

Rob5TCP wrote:
friar1610 wrote:
Kevin M wrote: Yes, I believe that the terms of every IRA CD I've purchased have allowed penalty-free RMDs. However, since the CDs I've been getting have such superior yields, I'd take RMDs from my bond funds instead in the current environment, and continue to reinvest the CD interest at the great rates.

Kevin
Thank you. As far as you know does this apply to both brokered and bank CDs?
Check with whichever broker you are using. Brokered CD's are more like bonds. You don't redeem; you sell on the secondary market (with accompanying profit/loss). If you choose the brokered route; you might want to purchase several smaller ones that you could sell to cover your RMD.
But your broker would presumably have the best answer.
Thanks. I've never bought a brokered CD so I keep forget about selling on the secondary market.
Friar1610

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Pocket Cruiser
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Re: IRA CD question

Post by Pocket Cruiser » Sat Sep 24, 2016 6:21 pm

Kevin M wrote:
InvestorAdam wrote:I have recently become a big fan of Allan Roth, reading his book and many of his published articles. I really am interested in his idea of using fdic insured cd's for part of your fixed income. Obviously you get the most benefit by holding them within an IRA.
Yes, I started following Allan's advice more than six years ago, and now have about 75% of my fixed income in direct CDs. I hold them in both IRAs and taxable accounts.
InvestorAdam wrote:Question, if you hold your ira at vanguard, can you transfer part of it to ally bank into an ira for cd's. Example you have 300k in vanguard ira and want to put 50k in ally bank cd.
Yes, it's easy, but I wouldn't use Ally Bank, as their CDs currently aren't competitive. Already mentioned Andrews FCU 7-year CD at 3% is best deal, and another good one is Achieva CU 5-year at 2.55%. I did one IRA transfer from Vanguard to Andrews FCU, two IRA transfers from Ally to Andrews, and am in the process of doing IRA transfers from Ally and Fidelity to Achieva CU (I'm too close to NCUA insurance limit at Andrews to add more to that one).
InvestorAdam wrote:Second question, those that do this I assume still own some total bond in their main Ira so they can re balance into stocks when necessary?
Not me. Why hold TBM which has lots of lower-yielding Treasuries with more term risk when I can get much higher yields with much less term risk in good direct CDs? Note that TBM also holds investment-grade bonds and longer-term Treasuries, so you could use funds to pick up one or both of these, giving you similar term risk and credit risk as TBM with your CDs plus bond funds, but higher overall yield. That's what I do, except I skip Treasuries entirely.

Kevin
Hi Kevin,
I spoke with a CSR at Achieva and to get the higher "plus" rate, they say you have to have an active checking account with them. Not sure what they consider active, but they do have a fee after one year of an account sitting idle. Have you heard this as well?

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Kevin M
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Re: IRA CD question

Post by Kevin M » Sat Sep 24, 2016 9:18 pm

Pocket Cruiser wrote: Hi Kevin,
I spoke with a CSR at Achieva and to get the higher "plus" rate, they say you have to have an active checking account with them. Not sure what they consider active, but they do have a fee after one year of an account sitting idle. Have you heard this as well?
It's only a 0.1% bump, so you get 2.45% without the active checking account. CSR told me five transactions per month qualify as active, so I did a few bill pays (including a few birthday checks to daughters) to get my five transactions this month. Hopefully that's all that's required to get the rate bump; I'm not going to mess around with trying to do five transactions per month in this checking account to get the small rate increase; I assume once the CD is open the rate is locked.

Hadn't heard about or paid attention to inactivity fees, but will do this later. If an issue, I'll either close the checking account or set up a small monthly transfer to keep it active.

Kevin
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Aptenodytes
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Re: IRA CD question

Post by Aptenodytes » Sun Sep 25, 2016 6:41 am

Rob5TCP wrote:Andrews Federal C.U.
special 3% 7 year
ONLY for IRA / Roth

click on traditional IRA / Roth
and you will see the 84 month

https://www.andrewsfcu.org/personal/che ... cates.html
But if you play that game you are going to end up with IRAs at dozens of banks, possibly more. No bank is going to consistently beat all the others, because such as a strategy is aimed at juicing the customer rolls short-term. Through a brokerage you can get 7-year CDs yielding about 2.2%.

By the way, buying a 7-year CD through a bank seems to doom you to constantly monitoring the rates and getting ready to redeem early and pay the penalty. Lately I've been buying new CDs every quarter. I would hate to have to track so many things in that way all the time. For me, it is better to get the best the Vanguard brokerage service has to offer and then not worry about things.

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Re: IRA CD question

Post by Dandy » Sun Sep 25, 2016 7:33 am

Cd's are a good choice for some of your fixed income allocation. Ally bank is a decent choice but if you go to depositaccounts.com you can find banks or credit unions with better CD yields. I like having all my TIRA in on place i.e. Vanguard so I use their brokerage CDs. But, you have to be careful with brokerage CDs when you get close to taking RMDs. If you don't hold them until maturity then you must sell on the open market if you need those assets to satisfy your RMD. That could result in a loss, especially if comparable rates have risen.

If you are far away from taking RMDs then having your TIRA in more than one place is fine and using brokerage or direct bank CDs should be fine also. I would suggest direct bank CDs since you can probably get a better rate and have the option of paying a penalty and buying a better yielding CD if/when rates rise. But always keep in mind that the real value of your CDs is safety not yield.

I have about 18% of my fixed income in CDs almost all brokerage CDs with Vanguard. Soon I will be taking RMDs.

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Rob5TCP
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Re: IRA CD question

Post by Rob5TCP » Sun Sep 25, 2016 7:42 am

Aptenodytes wrote:
Rob5TCP wrote:Andrews Federal C.U.
special 3% 7 year
ONLY for IRA / Roth

click on traditional IRA / Roth
and you will see the 84 month

https://www.andrewsfcu.org/personal/che ... cates.html
But if you play that game you are going to end up with IRAs at dozens of banks, possibly more. No bank is going to consistently beat all the others, because such as a strategy is aimed at juicing the customer rolls short-term. Through a brokerage you can get 7-year CDs yielding about 2.2%.

By the way, buying a 7-year CD through a bank seems to doom you to constantly monitoring the rates and getting ready to redeem early and pay the penalty. Lately I've been buying new CDs every quarter. I would hate to have to track so many things in that way all the time. For me, it is better to get the best the Vanguard brokerage service has to offer and then not worry about things.
I had CD's at four banks/CU's recently, not dozens. And I do check periodically on the better rates available.
When 3% became available I jumped because I expected that would be a highly competitive rate for the next few years.
PenFed offered it 3 three years ago, Valor last year and Andrews the most recent.
Since Andrew I've consolidated down to three banks, two very strong financially.
I've never had dozens. I only made the change when the rate (and the financial incentives) were strong enough to overcome the hassles.

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Aptenodytes
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Re: IRA CD question

Post by Aptenodytes » Sun Sep 25, 2016 8:32 am

Rob5TCP wrote:
Aptenodytes wrote:
Rob5TCP wrote:Andrews Federal C.U.
special 3% 7 year
ONLY for IRA / Roth

click on traditional IRA / Roth
and you will see the 84 month

https://www.andrewsfcu.org/personal/che ... cates.html
But if you play that game you are going to end up with IRAs at dozens of banks, possibly more. No bank is going to consistently beat all the others, because such as a strategy is aimed at juicing the customer rolls short-term. Through a brokerage you can get 7-year CDs yielding about 2.2%.

By the way, buying a 7-year CD through a bank seems to doom you to constantly monitoring the rates and getting ready to redeem early and pay the penalty. Lately I've been buying new CDs every quarter. I would hate to have to track so many things in that way all the time. For me, it is better to get the best the Vanguard brokerage service has to offer and then not worry about things.
I had CD's at four banks/CU's recently, not dozens. And I do check periodically on the better rates available.
When 3% became available I jumped because I expected that would be a highly competitive rate for the next few years.
PenFed offered it 3 three years ago, Valor last year and Andrews the most recent.
Since Andrew I've consolidated down to three banks, two very strong financially.
I've never had dozens. I only made the change when the rate (and the financial incentives) were strong enough to overcome the hassles.
Are you at equilibrium with your new accounts? If the equilibrium outcome is somewhere around 4 banks with new IRAs, I'd find that perfectly acceptable. In my case I am in the accumulation phase and I'm in the descending-equity-glide-path phase, so as long the bond market is acting the way it is I expect to be buying new CDs a few times per year (I've bought three so far this year and will buy at least one more before new year's). So my equilibrium outcome, if I were to buy CDs at the best rate available outside the brokerage, would be dozens of new accounts. It sounds like you don't always buy the CD with the highest rate, but sometimes take a lower rate if it lets you remain within your existing stable of bank accounts. I can see how such a strategy could work out well, especially if you want to go for terms of around 7 years where the premium is higher than the shorter terms that I'm buying.

Deciding on the optimal strategy often boils down to sorting out the nitty gritty details that the rules of thumb and the high-level conventional wisdom assumes away.

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Aptenodytes
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Re: IRA CD question

Post by Aptenodytes » Sun Sep 25, 2016 8:44 am

Dandy wrote:But always keep in mind that the real value of your CDs is safety not yield.
That used to be true, but not any more. The 3% the OP is getting on a 7-year CD is better than Baa corporate offerings. Over the last year or so CDs have indeed become a legitimate yield play.

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Re: IRA CD question

Post by Dandy » Sun Sep 25, 2016 8:59 am

That used to be true, but not any more. The 3% the OP is getting on a 7-year CD is better than Baa corporate offerings. Over the last year or so CDs have indeed become a legitimate yield play.
To your point a few years ago I invested in a VG brokerage 10 yr CD at 3.3% which was about 100 basis points higher than the 10 year Treasury Bond at that time.

My point was really aimed at not being overly focused on yield e.g. If the Total Bond fund starts yielding 3.5% don't automatically switch investment plan from x dollars in CDs to the fund. The reason most would be in CDs is the safety not the yield. Also, don't drive yourself crazy opening CDs at 5 different banks to get a few basis point advantage.

FillorKill
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Re: IRA CD question

Post by FillorKill » Sun Sep 25, 2016 9:36 am

Rob5TCP wrote:If you choose the brokered route; you might want to purchase several smaller ones that you could sell to cover your RMD.
But your broker would presumably have the best answer.
With of brokered CDs you may make a larger purchase, say an initial issue purchase of 50K but you're buying 50 1K par CDs. You can sell using the number of increments that meets your needs.

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Rob5TCP
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Re: IRA CD question

Post by Rob5TCP » Sun Sep 25, 2016 11:00 am

Aptenodytes wrote:
Rob5TCP wrote:
Aptenodytes wrote:
Rob5TCP wrote:Andrews Federal C.U.
special 3% 7 year
ONLY for IRA / Roth

click on traditional IRA / Roth
and you will see the 84 month

https://www.andrewsfcu.org/personal/che ... cates.html
But if you play that game you are going to end up with IRAs at dozens of banks, possibly more. No bank is going to consistently beat all the others, because such as a strategy is aimed at juicing the customer rolls short-term. Through a brokerage you can get 7-year CDs yielding about 2.2%.

By the way, buying a 7-year CD through a bank seems to doom you to constantly monitoring the rates and getting ready to redeem early and pay the penalty. Lately I've been buying new CDs every quarter. I would hate to have to track so many things in that way all the time. For me, it is better to get the best the Vanguard brokerage service has to offer and then not worry about things.
I had CD's at four banks/CU's recently, not dozens. And I do check periodically on the better rates available.
When 3% became available I jumped because I expected that would be a highly competitive rate for the next few years.
PenFed offered it 3 three years ago, Valor last year and Andrews the most recent.
Since Andrew I've consolidated down to three banks, two very strong financially.
I've never had dozens. I only made the change when the rate (and the financial incentives) were strong enough to overcome the hassles.
Are you at equilibrium with your new accounts? If the equilibrium outcome is somewhere around 4 banks with new IRAs, I'd find that perfectly acceptable. In my case I am in the accumulation phase and I'm in the descending-equity-glide-path phase, so as long the bond market is acting the way it is I expect to be buying new CDs a few times per year (I've bought three so far this year and will buy at least one more before new year's). So my equilibrium outcome, if I were to buy CDs at the best rate available outside the brokerage, would be dozens of new accounts. It sounds like you don't always buy the CD with the highest rate, but sometimes take a lower rate if it lets you remain within your existing stable of bank accounts. I can see how such a strategy could work out well, especially if you want to go for terms of around 7 years where the premium is higher than the shorter terms that I'm buying.

Deciding on the optimal strategy often boils down to sorting out the nitty gritty details that the rules of thumb and the high-level conventional wisdom assumes away.
I use my CD's and bonds as the safety part of my investments. I take risk on the equity side (in reference to another post).
I do look for the best yields. When I move money it will typically be 6 figures. So a .75% difference on 5 years works out to thousands. I would not change banks for a .5% yield on a couple of thousand dollars - it's just not cost effective/time/hassle effective to me.

I used KevinM's calculator on risk adjusted rates and CD's did indeed come out way ahead. When I saw the 3% I pounced and sold my total bond market, and several CD's at another institution. i plan to hold these until maturity. IF rates jump up dramatically two years from now (like 2-3%); I can redeem this with a modest penalty. If not, then I can enjoy a higher yield available in all but longer term, lower quality corporate bonds.

To me, there has to be a balance between how much pain I am willing to take (opening up at a new place, going through the hassle of proving I am who I say I am, notorized forms, etc) and what the difference would be $ wise in making that switch.

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Re: IRA CD question

Post by Kevin M » Sun Sep 25, 2016 11:38 am

Aptenodytes wrote:Over the last year or so CDs have indeed become a legitimate yield play.
My average yield premium over Treasuries of same maturity for direct CDs purchased over last six years is about 115 basis points, so the "yield play" has been going on for quite a bit longer than the last year. It's true that my yield premium for CDs purchased within the last year is higher, at about 165 basis points, but I got this same yield premium on one of my PenFed 3% CDs purchased in December 2013.

It seems that the key to getting good yield premiums has been to be patient and selective. Of course you also have to be willing to join credit unions and open new accounts at banks.

Kevin
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mouses
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Re: IRA CD question

Post by mouses » Sun Sep 25, 2016 6:27 pm

friar1610 wrote:A related question.... If you use CDs - regardless of whether brokered or bank - in your IRA and you are of RMD age, how do you take your RMDs? I assume you just keep enough in more liquid assets, such as a bond fund, to cover your RMDs until the CDs come due. Is that all there is to it?
I take the entire RMD from the CD with the lowest interest rate. My CDs are all at credit unions. I have never been charged an early withdrawal penalty for doing this, or indeed for breaking into any traditional IRA CD even for not an RMD since I turned 65.

Whether banks do this or not, I don't know.

dollarsaver
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Re: IRA CD question

Post by dollarsaver » Mon Sep 26, 2016 7:26 am

mouses wrote:
friar1610 wrote:A related question.... If you use CDs - regardless of whether brokered or bank - in your IRA and you are of RMD age, how do you take your RMDs? I assume you just keep enough in more liquid assets, such as a bond fund, to cover your RMDs until the CDs come due. Is that all there is to it?
I take the entire RMD from the CD with the lowest interest rate. My CDs are all at credit unions. I have never been charged an early withdrawal penalty for doing this, or indeed for breaking into any traditional IRA CD even for not an RMD since I turned 65.

Whether banks do this or not, I don't know.
Even breaking an IRA CD, no 6 month withdrawal penalty if you are 65 at PenFed or NWFCU? Taking a portion or breaking and taking out all the money? I know if RMD there is no penalty. Thanks

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Re: IRA CD question

Post by mouses » Mon Sep 26, 2016 2:50 pm

yorkpond wrote:
mouses wrote:
friar1610 wrote:A related question.... If you use CDs - regardless of whether brokered or bank - in your IRA and you are of RMD age, how do you take your RMDs? I assume you just keep enough in more liquid assets, such as a bond fund, to cover your RMDs until the CDs come due. Is that all there is to it?
I take the entire RMD from the CD with the lowest interest rate. My CDs are all at credit unions. I have never been charged an early withdrawal penalty for doing this, or indeed for breaking into any traditional IRA CD even for not an RMD since I turned 65.

Whether banks do this or not, I don't know.
Even breaking an IRA CD, no 6 month withdrawal penalty if you are 65 at PenFed or NWFCU? Taking a portion or breaking and taking out all the money? I know if RMD there is no penalty. Thanks
I don't know about PenFed or NWFCU; I have mine in local CUs. It is worth a call to wherever you have your CDs. They don't seem to advertise this feature on their websites.

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Kevin M
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Re: IRA CD question

Post by Kevin M » Mon Sep 26, 2016 4:44 pm

mouses wrote: I don't know about PenFed or NWFCU; I have mine in local CUs. It is worth a call to wherever you have your CDs. They don't seem to advertise this feature on their websites.
Sure, or you can try to find their IRA CD disclosures on their website. Sometimes it's easy, sometimes it's impossible. For example, let me look at PenFed.org.

At the bottom of the home page, I see a link for Membership Disclosures. Clicking through and reading it, nope, not there. So now I look in the IRA section of products; there's a Details and Disclosures section at the bottom of the page, and there I see:
IRA Certificates

Rates are subject to change monthly and are fixed for the term of the certificate. Certificates dividends compound daily. The minimum balance to open a certificate is $1,000.

*Partial withdrawals for members over the age 59 1/2 (including Required Minimum Distributions) and qualified distributions regardless of age (including Disability) may be processed from IRA certificates without incurring an early redemption penalty.
So in this case I'm able to find the pertinent information.

You should have received a disclosure when you bought your CD, and the early withdrawal terms should be in it.

Kevin
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