401k
401k Information

Ira Cd Rates

“Which is better?” is the question, IRA versus CD for your retirement nest egg. Investors are asking questions like this these days because the market has performed erratically for more than a year now. People are rapidly finding out that their investments have gone belly up, or the money they put in the hands of a mortgage broker was actually part of a ponzi scheme (think Madoff). If you were lucky enough to avoid the fraud and credit crisis then you must be wondering how on earth the market can be moving so much without cause – a 4000 point move on the Dow in just six months. How can this be?

What Is Causing the Market to Move So Much
The answer is that the market right now is being manipulated by vast amounts of available cash in the hands of institutions, hedge funds, and private investors. It is completely illogical that the components of the Dow Jones Industrial Complex could be worth 6000 one month and 10,400 a couple months later. What fundamentally changed in those 6 +/- months? The answer of course, is nothing fundamentally changed.

What is happening is that there was a huge liquidity crisis where banks, hedge funds, and institutional investors had to unwind large and complicated positions in order to meet demands for cash redemptions and the resulting margin calls on vulnerable positions. The market continues to be impacted by imbalances of supply and demand for individual stocks and cash. The result is weak institutional players are being squeezed out and bankrupted one at a time – each one causing another round of volatility as positions are folded up and liquidated.

How Does the Market Volatility Effect My IRA versus CD Decision?
The answer to the IRA versus CD question is simple: you need both in the same package. Adding an qualified Certificate of Deposit to your retirement portfolio is a terrific way to mitigate volatility (risk) in your retirement nest egg. IRA versus CD doesn’t have to be either or – in fact it should be both. Having both in your retirement account dramatically alters the expected return of your account in ways that substantially reduce risk in ways that an equities only portfolio can not.

Frequently Asked Questions

  1. QUESTION:
    IS a Bank CD IRA a good retirement account? Do you know which Banks offer the best rates for Bank IRAs?
    I am looking into investing in a second IRA, a CD Bank IRA, my question is this a good investment, will I make good returns from this, I dont think the rates are good for Bank IRAs but I can be sure I wont lose any money.
    Note: I already have another retirement account through my employer.

    • ANSWER:
      CD’s are one of the worst places for retirement investing. You’ll lose on the purchasing power of each dollar, over time, because of inflation & the taxes you’ll pay when you pull the money out (at over ager 59.5).

      Stay away from banks & insurance companies for retirement products. Here’s some good mutual fund families that can be helpful;
      T. Rowe Price
      Dodge & Cox
      Vanguard

      Good luck!

  2. QUESTION:
    Can I make the bank increase my IRA CD’s rate if rates go up once I’m over 62 years old?
    I’ve heard that if for example I open a 10YR IRA CD at 2% and the interest rates for that IRA CD at the bank climb up to say 3% I can go in and have them change the rate on my CD up to the new 3% rate even though my IRA CD has not matured. Is that true ? Is it an IRS rule ?

    I’ve also heard that you can only do this once a year. Is that also true ? If so, does the yearly rule apply on an account by account basis or is it for all my IRA CD accounts ?

    • ANSWER:
      my only question is, why are you saving money in a CD? If inflation is 3.5% a year and you are only getting 2% on your money, you are losing it purchasing power every year. Find a low risk, well diversified mutual fund!

  3. QUESTION:
    Would Social Security be a better investment if the just bought the taxpayers individual IRAs using CD rates?
    At least our money would be making us something and it would actually be ours.
    No risk. Just returns

    • ANSWER:
      But then who would support the poor people with no jobs who have no IRA’s and 401k’s?

      You know, the Democratic base.

      For working people with jobs, it makes a lot of sense to let us keep our own money in our own 401k instead of paying SS taxes.

      But we live in a welfare state, and the Socialists in Congress and the White House will make sure we all do our job of supporting other people as well as ourselves.

  4. QUESTION:
    Best IRA CD rate in NY is where? Thanks.?

    • ANSWER:
      I agree with the Bankrate.com suggestion. However; I must disagree with the suggestion on Suze Orman. While she is a good place to start, do not take her word as gospel. She does not follow her own advice, as she recently revealed in an interview. For the most part, her advice is pretty good regarding personal finance, with respect to the stock market and investing, I would have to disagree with her on a few points.

  5. QUESTION:
    Why are bank CD rates so low at brokerage houses?
    Interest rates on CDs offered through brokerages are so much lower than the same CDs offered through banks. Why is that? If they were in a regular account I would switch to a bank but it is in an IRA account and not so easy to switch funds back and forth. At this stage want to diversify in IRA account and not keep everything in stocks or bonds.

    • ANSWER:
      Actually your broker should be able to find you the best rates But the rates are all low why not but it in a stock or bond with 6% yield

  6. QUESTION:
    What is a GOOD investment right now w/ the way interest rates are? I use to do CD’s, I already have a roth IRA?
    I have ,000 to put somewhere.

    • ANSWER:
      Although stocks may seem negative, there are many at bargain prices. I would stay away from Banks and Transportation stocks, also unless you have heavily research Biotech stocks they may be a bit tricky. It really depends on if your looking long term, however, I feel that CDs are pretty worthless as their rates barely cover inflation.

      I am starting a website called InvestmentFractions.com that will be able to earn every investor a flat 10% rate, however, it will not be fully running until mid October.

  7. QUESTION:
    Transfer IRA CD from an out of state bank to another institution?
    I have an 18 month IRA CD that I renewed in March of this year. Can I transfer it to another institution without a penalty? I found one offering a much higher interest rate. I’d hate to have to wait until it matures! Also, is there anything else I could roll it over into before it matures without a penalty? It’s not a small amount of money and I’ve really made a stupid mistake in renewing it.

    • ANSWER:
      If this is a bank CD, you are going to have to pay whatever early withdrawal penalty you contracted for. Check your documents, as these penalties vary.

      Otherwise, you are going to have to wait for it to mature.

      Sorry.

      –>Adam

  8. QUESTION:
    Buy municipal bond now, or wait for CD rates to increase?
    We have 10,000 to invest, and were just offered a Vermont Municipal Bond at 4.36% for 17 years…wondering if it’s a good buy, or if it’s likely for CD rates to skyrocket soon as a result of the current banking situation? Investor is in late 40′s with moderate savings in place mostly in form of other bonds and IRA…sources for any answers would be greatly appreciated

    • ANSWER:
      Do you have any idea what inflation is currently running at? There is some argument between what the government say it is and what it might really possibly be, but in either case it is more than 4.36%. My guess is that it is somewhere between 6% and 8%. I might be wrong but that is my guess. Buy a 4.36% 17 year bond opening you to two extreme risks. The first is that inflation is going to continually eat away your pricipal. The 2nd is that interest rates are going to rise and your bond will loose value and you will be stuck with 4.36% when new bonds are being issued paying 14%. Muncis payed 14% during the 80s, a period with similarities to today.

      Actually, it does not really sound as if you would be a prime candidate for muni bonds anyway. They are generally purchased by folks in the 34% income bracket or by people attempting to stay out of that bracket. Does Vermont have a very high state tax?

      If you are a conservative investor, go with the 1 year CD for now or perhaps 6 months T-bills as an alternative that are state tax exempt.

      There are a few investments that are somewhat riskier but which do have a recent history of providing much better current and potential returns. They are in general better suited to an IRA account because of the tax consequences. I am referring to gas pipeline LPs which are taxed at the full tax rate but some of which currently pay above 8% dividends and have in the past also returned a fair amount of capital gains in addition and frequently raise their dividends. PAA, ETP, MMP, and SXL are a few.

  9. QUESTION:
    If a senior is coerced into putting their IRA CD into an agressive mutual fund, is there any recourse?
    My 69 yr old mother went into a bank inquiring about a higher interest rate CD for her IRA and walked out (unknowingly) with an aggressive mutual fund instead. Her english is not the greatest but she expressed interest only in a CD. When I called the bank and spoke to the gentlemen who helped my mother, he said she asked for an “aggressive investment” (2 words that are not in her vocabulary and I explained that to him and he subsequently changed the subject). I explained that this was her life savings (she also told him this as well) and now it was not FDIC insured. He said that it was in fact still insured by SIPC (but found out later that doesn’t cover loss in value) so quite different than FDIC. After she complained to him, he put her mutual fund in a very conservative fund (earning less than her original CD) and charged her fees for doing so.
    They said they can’t put back her CD without charging larger fees. Who can we complain to? She just wants her FDIC insured CD back.

    • ANSWER:
      The first person to see is the bank manager. That should take care of it because the manager has the ability to remove all fees.
      Should that not work take it up with your state Department of Consumer Affairs.
      Don’t quit, you’ve got them nailed.

  10. QUESTION:
    RMD on Beneficiary IRA after Rollover/Change in Trustee?
    I understand that when I rollover my beneficiary IRA that the RMD for 2007 must be taken first. My question is, must the RMD’s continue with the new institution/IRA account after the rollover. I am doing the rollover because the IRA-CD interest rates at the current institution are less than what I can get elsewhere. Please advise. Thanks.

    • ANSWER:
      No.
      You can transfer the IRA to a new financial institution.

  11. QUESTION:
    Difference between Roth IRA CD’s and regular CD’s?
    My credit union offers Roth IRA CD’s, Traditional IRA CDs, Plain CDs, Roth IRAs and Traditional IRAs. Right now all the rates are the same, and my husband and I are deciding between just starting Roth IRAs, or Roth IRA CDs, but we were wondering what would be different if we just did regular CDs instead of the IRA cds. Can anyone explain the difference and what would be better, we still have more than 30 years left to keep saving. Any information?

    • ANSWER:
      a roth ira is tax free if you leave it in for a certain amount of time. i think it is like five years, however you can only put in 3,500 or so per year, i could be a little off on the 3,500 figure but it’s something like that.

  12. QUESTION:
    High Yield CD VS. IRA?
    Hi! I have a question. I have money in what you would call a traditional IRA. It is in the Thrift Savings Plan (TSP), which is used by federal employees. I have left that job, but cannot contribute anymore to the TSP and its just sitting there. I was looking into rolling it over, but with how volatile the economy is and the fact that I lost 32% of what I had in during 2008, should I even roll it over into an IRA or look into High Yield CD IRA? I saw this at bankofamerica.com. I guess its like a CD with a fixed rate, but IRA. Please help!!!!!
    BTW, I’m 25…..forgot to mention that.

    • ANSWER:
      Do not move into a CD. In the long run, inflation will eat away the value of your investment. If you remove it from stocks you will miss the rebound in stock prices. You are 25 and you will retire when 65. You have time to recover the value if you stay with a combination of stocks and bonds.

  13. QUESTION:
    What is an IRA CD? How is it diff from a CD? And…?
    What is an ira cd? How is it diff from a CD? And how much could i end up with if I were to lock into an interest rate of 6%. I could invest 500 at 6% for one year. What would that be? I just dont get how the interest is calculated. Can anyone help? Thanks

    • ANSWER:
      There are two types of IRA accounts, a traditional IRA account and a Roth IRA account. They are retirement savings accounts. Anyone making less than 0,000 income a year can put up to 00 into a Roth IRA. The money you put into a Roth IRA is after tax dollars, but the income earned in not taxed ever or until they change the law, whichever comes first. So no money taken out of a Roth IRA is taxed. If you are not participating in a 401k, you can put up to 00 into a traditional IRA. That money is before tax money. You do not pay taxes on that money, but all money taken out of that IRA is taxed as regular income when you take it out.

      You have to be 59 1/2 to begin taking money out of an IRA account without penalty.

      Now for CD’s.

      Once you set up your IRA account, one of the vehicles you can invest in are CD’s. However, I do not believe that one year CD’s currently pay 6% interest for one year. The current rate is about 5% to 5.2%, with most being 5%.

      Interest is calculated by multipling the amount by the interest rate expressed as a decimal value 5% becomes 0.05 expressed as a decimal. If the CD is for a period of other than one year, you must then multiply the annual amount by the time period to get an approximate return. It will not be exact for over a year because of compounding. But compounding requires a calculator or spread sheet to calculate.

  14. QUESTION:
    Benefits of a CD or IRA?
    I have a wamu, now jp morgan, online savings account which gets 3.93% interest rate and 4.0% apy. Their CDs and IRAs have much lower rates than these. So my question is why would you put money into a CD or IRA if you can get higher interest and apy with a savings account which gives you access to your money any time??

    • ANSWER:
      If You were Smart- you wouldn’t. You’d keep your $$$ RIGHT where it is! Let’s just HOPE Online Banking doesn’t suffer the SAME Fate as most of Our “Real World” Accounts have !!! :0

  15. QUESTION:
    do i need to pay taxes on High Yield CD IRA ?
    if i open a High Yield CD IRA Short, 12-month term with a locked 2.05% APY2. ,000 minimum to open. Special online-only rate do i need to pay taxes on the High Yield CD IRA?

    • ANSWER:
      Yes you do.

  16. QUESTION:
    Traditional IRA CD vs. annuity?
    My traditional IRA CD matured this week, and the bank is pushing me to invest in a fixed annuity account via a large insurance corporation. This account is not guaranteed by FDIC but is secured 100% by Transamerica Financial Life Insurance Co. The difference is the interest rate. The traditional IRA interest is currently 3.3% for 3 years, and the insurance-based IRA CD is 3.55% for 5 years. If I want to be sure these funds are absolutely safe, which route should I take? How safe would the annuity be? Thanks!

    • ANSWER:
      Carol,

      As others have pointed out, the bank officer makes more commission on an insurance annuity than rolling over your CD (which has no commission).

      Shop around for a better CD rate. Federal Credit Unions pay very well and you should check out bankrate.com for banks close to you or you can buy a CD by mail (I prefer a local bank myself). Even brokerage firms like TD Ameritrade and Charles Schwab have IRA FDIC insured CDs.

      Note: The IRS allows 60 days to take the proceeds from the old CD and deposit the money into a new CD somewhere else so don’t feel any pressure whatsoever from your bank.

  17. QUESTION:
    What options do I have for the funds I have put away into a Roth IRA?
    I have already set up a couple IRA CD’s before the market went too far south knowing I wouldn’t touch the money for a long time. But what are some other options with higher rates of return?
    I have already set up a couple IRA CD’s before the market went too far south knowing I wouldn’t touch the money for a long time. That’s obviously the safe bet, but what are some other options with higher rates of return? Can it be used in Mutual funds? Stock?

    • ANSWER:
      The types of investments you can purchase within a Roth IRA are almost limitless, depending upon where the account is held. If you have it at a regular bank, which is what it sounds like, the CD’s are probably about the only option, unless the bank also has a brokerage department.

      If you transfer your IRA to a brokerage firm, or the brokerage-arm of your bank if they have one, you can have the ability to purchase stocks, bonds, mutual funds, and all sorts of other fancy securities within your Roth account.

      If you consider yourself a “savvy investor”, you could consider moving your account to a company like eTrade where you can manage your own investments. If you prefer to have personal guidance, you can ask your banker if they have a brokerage department they can refer you to, or try another full-service broker in your area.

      Advantages & Disadvantages?
      CDs:
      + Predictable Returns
      + FDIC Insured
      - Low rate of return
      Securities:
      + Potential for significantly higher returns
      - Not FDIC insured. May lose value.

      Best of luck!

  18. QUESTION:
    I will graduate with a MSW in May. I have 36K in student loans and 25K in an IRA. No job. Pay loan with IRA?
    IRA earns CD rates. Not married. Full time student – very little income.

    • ANSWER:
      You can use the IRA for higher education without paying a penalty. However, you will still be taxed at the end of the year as if the IRA were income.
      You will have to do what you have to do, I guess.

  19. QUESTION:
    What are your thoughts on ING Direct?
    I would like to know about your experience with ING Direct. I was looking at their site, and I like their rates as compared to other banks expecially local banks. What do you all think of their CD, IRA rates, savings, etc. Is their a minimum amount of money to set up an account. Also when I close an account there, will they send me a check or how does that work. I will give points to the best answer to my questions. Thank you

    • ANSWER:
      We have used ING for some time. I noticed two things lately – first is the interest being offered has steadily been going down. The second, which is more important, is that withdrawls (from ING to my bank checking account) take several days. I also have a Fidelity account and they move the money overnight reliably.

  20. QUESTION:
    Where can I move retirement money (that is currently in an IRA CD) when the IRA is due?
    I am 25 years old and have several thousand retirement dollars accrued from a job that I held for two years. When I left the job, I had to move the money into another retirement medium, and for security, I chose a 5% IRA CD (this was in June 2007 when you could get a 5% CD). It will be due in January 2009 and with the rates as low as they are, I’d like to move the money to another place that is still considered “retirement” that makes me more money but is safe. I have not been adding any extra money. My current employer does not offer any retirement or 401K options. Any ideas or suggestions? Thank you!

    • ANSWER:
      Yes, you can “rollover” your Roth IRA CD into a Roth IRA brokerage account. Your bank may offer brokerage services already. Or you can transfer to a brokerage firm. You can CDs from a brokerage account too. But you can buy stocks, bonds, mutual funds, or money market shares which may give you a better return.

      If your employer doesn’t have a 401k, you can also fund a traditional IRA in addition to a Roth (provided you meet eligibility requirements). The traditional IRA has a higher contribution limits that the Roth and offers similar tax differed benefits to a 401k.

  21. QUESTION:
    Are IRA mutual funds better than IRA CDs for a 28 yr old?
    I am 28 and have saved K in IRA CDs. The broker at my bank tells me this is ridiculous for someone my age because the CD interest rate basically gets cancelled out by inflation. Should I switch to mutual funds b/c of my age? I understand that he can diversify it between low and high risk. But I worked very hard to save this money and am afraid of losing it. How much actual risk is involved? Should I keep any amount in CDs? Is he right? Thank you.

    • ANSWER:
      Mutual funds are going to show better returns over the long term than CDs. Since this is money that you will not be needing any time soon you can afford to take some risks with it.

      Keep in mind not all mutual funds are equal. Make sure that you invest in a no-load low-expense fund. A fund with a high expense ratio will also eat up a lot of your money over the years. I would recommend one of the index funds from Vanguard (expense ratio 0.2%).

  22. QUESTION:
    What type of CD (Certificate of Deposit) should I invest in?
    I have 500 bucks i want to dedicate to investing. Through my bank I have a list of CD’s I can choose from. I’m pretty new to investing into CD’s and I’m not sure what would be best for me.

    I know I’m responsible for a minimum amount of 0, but can I let it just sit and grow, or do I have to keep depositing money? Is there a penalty if you stop depositing money?

    Also, what does “compounded” mean/do?
    Here is a chart of what my bank offers.

    7 Days CD

    APY 0.75%

    Interest rate.75%

    Compounded: Simple

    Minimum Balance: 0

    32 Days CD

    APY: 0.75%

    Interest Rate: .75%

    Compounded: Simple

    Minimum Balance: 0

    91 Days CD/IRA

    APY: 1.00%

    Interest Rate: 1.00%

    Compounded: Simple

    Minimum Balance: 0 (1)

    182 Days CD/IRA

    APY: 1.50%

    Interest Rate: 1.49%

    Compounded: Semi-Annual

    Minimum Balance: 0 (1)

    7 Month Special CD/IRA (2)

    APY: 2.05%

    Interest Rate: 2.03%

    Compounded: Continuously

    Minimum Balance 0 (1)

    1 Year CD/IRA

    APY: 1.75%

    Interest Rate 1.73%

    Compounded: Continuously

    Minimum Balance: 0 (1)

    2 Year CD/IRA

    APY: 2.00%

    Interest Rate: 1.98%

    Compounded: Continuously

    Minimum Balance: 0 (1)

    3 Year CD/IRA

    APY: 2.00%

    Interest Rate: 1.98%

    Compounded: Monthly

    Minimum Balance: 0 (1)

    18 Month Variable Rate IRA

    APY: 1.51%

    Interest Rate: 1.50%

    Compounded: Monthly

    Minimum Balance: Auto Deduct

    All interest rates and Annual Percentage Yields (APYs) are accurate as of 02/25/2009 and are subject to change any time without prior notice. A penalty will be imposed for early withdrawal. Fees may reduce earnings. The Annual Percentage Yield (APY) assumes principal and interest will remain on deposit until maturity.

    (1) IRA Accounts are not subject to the minimum balance requirements.
    (2) Business accounts are limited to a total investment of 0,000. Account is not available to municipal deposits.

    • ANSWER:
      It’s pretty simple the way CDs work. You choose an amount (it seems the minimums above are 0, and that’s what you seem to have), then choose a duration. It appears from your list that the best interest rate is for a 7 month CD (2.03)so go with that. These CDs pay simple interest, which means that they will pay you a straight 2.03 interest per year, pro-rated for the duration of your CD (7 months). That will come to about .17 at the end of the 7 months. I know that’s not much, but that’s about what you get in a CD these days. And yes, you can just let the money sit there for 7 months. No need to add any more. At the end of that time, you can get your money back with interest, or if you do nothing, the bank will probably put it in another 7 month CD at the whatever rate they are offering then.

  23. QUESTION:
    Can I cancel an IRA account after 24 hours?
    I just opened a traditional IRA account today. I put in 24 hours and the interest rate is 1.83 – which sucks. I’m no financial guru, but when I got home I found out that I can open up an IRA CD with a much better rate. Is it possible to go to the bank on Monday, close the account due to error, and open another one? I’m surprised the bank guy didn’t say anything – I feel like I got screwed on this. Help please!

    • ANSWER:
      It actually depends on the company you invested the IRA in. I think you have the ability to cancel the account within 10 to 30 days of opening it. It may need to involve talking to the manager.

  24. QUESTION:
    Where can I get a good CD rate?
    I’m looking to invest 00 in a CD or any savings account (not an IRA) for no more than 18 months. My credit union currently offers:
    10 month CD: 0.85%
    17 month CD: 1.17%

    Can anyone beat these rates? Thanks.

    • ANSWER:

  25. QUESTION:
    Which IRA is best suited?
    I am looking to open one of those no fee IRA with B of A. On top of the checking and savings I already have. I was looking to choose between a variable rate CD IRA or a Money Market IRA. Both has a min opening balance of 0, FDIC insured, and you can make deposits anytime. The variable rate cd has a 1.35% APY with terms from 18-23 months.The money market has a 1.25-1.25 APY.
    As you can tell, I know little about these different accounts. Though, with the information I provided. Will it be beneficial for me to save in those accounts rather than my regular savings w/ keep the change please let me know. Please provide me with all the info possible. Thanks for the time!

    • ANSWER:
      I would like very much to be able to tell you which is best. If it were I, I would have to go with the money market account. What is 0.1% anyway? Not much. Actually, 1.25% is not much; but it is better than a negative return which most of us have received in other investments over the past 15 months.

      But if you are planning on using this money to retire upon, 1.25% will not get you there in one life time. Maybe 4 life times. Maybe.

      Your only hope is to invest in something that has the potential for returns of about 8% or better. Equities have that potential, maybe. They certainly have not shown that over the past 10 years though. That is for certain. But going forward with current valuations much subdued there is a much better likely hood for the future provided the economy is not in a death spiral. It might be.

  26. QUESTION:
    I’m 22 and want to save for retirement, which is better Roth IRA or CD?
    I’ve been wanting to save since I was 20 but haven’t had the money like I want to save I feel like I behind and I want to start before the end of this year even it’s a 100 or 50 dollars a month until my income increases in the coming years just so I can start building. Should I consider a Roth IRA or a CD what are the advantages and disadvantages? I want to thoroughly examine all the facts before I make a decision. Any links or articles will be great as well. I think Roth IRA will be best since it has a High Yield interest rate and saves greatly but CD is tempting as well, what are your opinions and/or experience? It’s a headache sorting through all of this but of course it’s important.

    Also…do you all know if any good companies High yield returns besides WAMU? It’s not offered where I live.

    Thanks in advance.
    I was also doing some reading, would a CD be better for say if I wanted to buy a house in 10 years than a Direct banking high yield savings account or are they almost the same?

    • ANSWER:
      Your question should be phrased slightly different: Should I invest in stocks/mutual funds or in CDs? A Roth IRA is merely one of various choices for retirement accounts. As such a tool, it enjoys the benefits of such an account. Once you put money (which is post tax) into a Roth IRA you won’t be taxed again when you take it out. There are limits that apply how much you can put in on an annual basis.

      CD’s provide stable, guaranteed fixed income. This means as well that you pay a price for that stability: low interest. Furthermore, you put post tax money into a CD but at maturity the interest will be taxed again. Thus for a long term investment, CDs are clearly a poor choice.

      Now the question is what do you buy with the money you put into your IRA? In your case, it is simple. You are 22 and have roughly 40 years until you retire. So your choice should be mutual funds, preferrably a blend of large, small caps and international funds. Of course, if you just want to put it in and forget it, get index funds that closely track the overall stock market or the S&P 500. Once you get close to retirement you gradually shift your portfolio towards bonds aka fixed income financial vehicle as you can less afford market swings the closer you get to retirement.
      Right now and for quite a while to come is a good time to invest in the market as stocks have been battered. Essentially, the market has turned the clock back 10 years. That means for you, that you start investing at age 12 rather than 22. You should consider yourself lucky that you did not have the money 2 years ago as your portfolio would be bleeding red.

      I just read your PS: 10 years time is still quite a way out. I still would go with an Index Fund (Vanguard, Fidelity ..) rather than a CD. Just think about it: If you put 10k in a CD at a rate of 4% (which is roughly what you are going to get these days) for 4 years. That means you will have roughly gained 00 (including compounded interest).
      If you invest in an index fund, you will receive dividend income (not much but still) for sure. Nobody can guarantee this but I am virtually certain that your 10k investment will yield you a lot more than 2k in 4 years based on the price increase of the fund plus short and long term capital gains distributions.

  27. QUESTION:
    Where to open a CD IRA?
    I was planning to meet with a financial advisor after I am married next spring and organize my 401k, current Roth IRA in Vanguard, my fiance’s retirement accounts etc. But when doing my taxes, I found if I got my AGI down a couple thousand dollars, it would be very beneficial. So I would like to put some money into an IRA now. I can’t go through Vanguard since the amount is less than 3000 dollars. Since I would like to be able to move this money in ~6 months, I don’t want to put it in anything risky.

    How do I go about getting something like a CD traditional IRA. I’m not concerned with getting a high interest rate. Who do I call?

    • ANSWER:
      Your local bank should offer CD IRAs. Good luck.

  28. QUESTION:
    Could my parents hold the mortgage for my sister in their IRA? She would make payments to their IRA.?
    My sister is planning to build a new house and my parents would like to hold the mortgage so they earn the interest income and she gets a fair rate on her loan. Is it against IRS tax laws to have this happen in my parents IRA? Could they just roll over some IRA CDs? Does UTBI factor into this?

    • ANSWER:
      First, they need a self-directed IRA. This also needs to be an arm’s-length transaction. Doing this for one’s child might not meet the requirements. They need to consult their CPA for tax and accounting advice on this one. If they make a mistake, they could lose their IRA. See a CPA!

  29. QUESTION:
    What is the difference between an IRA and a Certificate of Deposit? Pros and Cons?
    I have invested in Certificates for years and want to learn more about the difference between an IRA and a CD. Can someone explain these in more detail for me? What I am looking for is the best interest rate for my dollar. I don’t need the money anytime soon, but don’t want to be majorly penalized if I were in dire straights either.

    • ANSWER:
      You are confusing an “investment” with an account type. A CD is a savings vehicle, or investment. An IRA is an Individual Retirement Acount, a tax-favored account for working individuals to save money for retirement. Opening an IRA is a no-brainer. Everyone needs a retirement plan. But that is not an investment. Once you establish an IRA, you then have to choose the investment.

      A CD is typically used for shorter-term savings. It is generally guaranteed and pays a lower rate of return. It is not going to enable you to build wealth for retirement, however, because lower yields don’t keep you ahead of inflation, especially after-taxes.

      Stocks are commonly used to accumulate wealth for retirement. Stock mutual funds are a great way for smaller investors to participate in a diversified portfolio of stocks that are professionally managed so you don’t have to make the tough buy and sell decisions. Such funds are not going to allow you to “strike it rich” but they are going to give you the best possibility to accumulate real wealth for your retirement.

      Incidentally, you can invest in mutual funds outside an IRA as well….that’s because an IRA is not an investment but rather a type of account that comes with some restrictions (like a 10% penalty-tax if funds are withdrawan before age 59 1/2), and some benefits (like tax-deductible contributions, if you qualify).

  30. QUESTION:
    Purchase CD inside Roth IRA or not?
    My Roth IRA provider (Fidelity) is offering a 10 year CD offering a 5.25% coupon rate. Since I have a pool of cash just sitting in the Roth IRA, I’m wondering if this is a good place to buy the CD. Reasons being as it is safe/secure up to 0k (thanks FDIC).

    My question is on how the interest will be treated that the CD spins off. I’m guessing that the interest will be treated as gains in the IRA, and therefore untaxed…since the Roth IRA was opened with after-tax dollars. If I’m in the 25% tax bracket, does that mean that my actual interest rate is 7%, since I dont have to pay the 25% ordinary income taxes associated with interest that a CD generates?

    All feedback is appreciated.

    Thanks!
    I guess I need to clarify. By my rate being 7%, I meant my effective yield net taxes. The actual rate will still be 5.25%, but if there is no taxes on the gains, then my return is bumped up 25% (no taxes) making my yield higher…is that logic valid?

    • ANSWER:

  31. QUESTION:
    transfer IRA to different instituation? Help!?
    Hi, I just opened up a traditional IRA today. I put in ,000 and the APY is 1.85%. I’m new to all of this and to sum it up I got screwed. Is there any way I can cancel this account Monday morning or transfer it over to another institution that offers an IRA CD with a 4.4% rate? Please help!! Is it too late for me? The lousy bank I opened it with is Bank of America.

    • ANSWER:
      Bank of America is not my favorite bank. They have done me in a few times.

      I would (if you can) be at that bank as soon as they open on Monday morning & try to change it. In the meantime, call customer service at that bank & tell them that you want to cancel. Make a note of everything you do…a kind of journal. Customer service probably won’t be of much help but you may be surprised. Calling them if really just to set things in motion in case you have to fight them. You want to show that you intended to change immediately…that you made a mistake or even better, were misled.

      You will probably get better results dealing with the branch that you opened the account with.

      If they don’t cooperate, call you Senator or Congressman & tell the bank that you are going to do this. The reason is that right now Congress is looking into the banking industry regarding there practices. So this is a good time to protest.

      I have called my state rep. one time & they were very helpful. I got what I needed. It really does help. They will look into it & no one wants someone from Congress looking into what they are doing. It is intimidating.

      Good luck.

      Also, contact the bank that you do want to do business with & they will help you.

  32. QUESTION:
    What’s better: 401K, CD OR IRA?
    Ok…I want to save my money. Is it now safe to put money in a 401K now with the way the stock market is? Since people are losing their money, is it truly a safe bet? Even though the economy will rebound, do you really want to take that chance?

    I am more interested in putting money away in CDs over the next 40 years knowing that the rate of return might now be as great. Won’t my money still be there no matter how the economy is going? Please give any help you can.

    Or should I even look into an IRA?

    • ANSWER:
      If your employer is contributing to your 401K, it is a no lose situation. The money lost in the stock market is most likely your emplorer’s contribution. In most 401K plans they have fairly safe investments such as government bonds. Store your money there until the market turns around.

  33. QUESTION:
    Is it possible to transfer a CD with one bank to a Roth IRA of another bank?
    One month ago I opened a high interest (4.6 APY) CD at a small local bank. At maturation, the CD will be valued at 00.

    Recently I have established an IRA at a big bank in the city of Chicago because I figured I would receive better interest rates. During the 2008 year I put in 00. I will also contribute the maximum amount each year so I will already be approaching the 2009 00 IRA limit.

    So can I move this CD while also maxing out the 00 contribution?
    I guess I could take this 00 and establish a Roth IRA with this bank. Then I could transfer the IRA to another bank because I want to put away as much money as possible. I will have already put int the annual limit

    • ANSWER:

  34. QUESTION:
    How should i start saving for retirement.?
    I am a 19 year old college student. I realize that by the time I reach 65 social security will be non existent. Thats what happens when are government decides to borrow against it. What is the best way to start saving for retirement. I want to put about 500 aside now, and add at least ten percent each pay check. With CD rates so low, is the best investment an annuity? Roth IRA?

    • ANSWER:
      Being so young, the Roth IRA is absolutely the best way to save for retirement. Provided that you leave the money in place for retirement, the interest that you earn can be withdrawn tax free! That’s a huge huge benefit since if you leave it in place for 40 years, most of the account will be interest anyway.

      Stay away from annuities right now. You don’t need any of the insurance features that they offer. If I were you, I would look at some of the big discount brokerages like Fidelity or Vanguard and open a Roth account. I believe you can put up to 5,000 per year in there.

  35. QUESTION:
    Roth IRA Certificate of Deposit in international bank?
    Can I put money earned in US into a Roth IRA Certificate of deposit in an international bank ?
    Reasons –
    1) i am happy with a lower but steady bank interest rate on my retirement funds.
    2) i don’t like bond funds. I would like to buy a 10-15 yr maturity CD and have peace that i wil get the same interest rate.

    Why international ?
    - because of higher interest rates.

    Is it possible ?
    Is it possible in an indian bank (i am interested since i am a citizen of india working in US) ?

    • ANSWER:
      If an Indian bank offers the product, then you can do that. I know that US banks offer ROTH IRA deposit accounts.

  36. QUESTION:
    16 yro wants to spread his money across different investments like an IRA, CDs, Money Markets, etc good idea?
    16 yro wants to spread his money across different investments like an IRA, CDs, Money Markets, etc good idea?

    I have a checking account, and a savings account and I want to save up for a 0 CD account for short term because of the CRAPPY rates. Then I want to save up 00 from my checking account and use that money to open a Money Market account with minimum of 00. With the 0 CD there will be no monthly service charge and the 00 Money Market too will have no monthly service charge.

    1) so not wasting too much of your time I would like to spread my money around different investments like an IRA, CD, money market for college.

    BTW I can’t use online banks because my parents wont let me use em. Im stuck with my local bank for now. Im 16 living in USA if any one asks.

    BTW. I have earned income from a job…

    • ANSWER:
      First of all, you need to understand that an IRA is NOT an investment.

      It’s a particular type of account that you can use to hold investments in. (The way you compared it to a CD, you need to realize that you’re talking apples and grocery stores here: you can hold a CD inside an IRA if you want, but there is no such thing as investing “in” an IRA – you’re investing “through” an IRA.)

      But you want to put your cash into a CD because of the crappy rates? This doesn’t make any sense. The rates you’ll get in a CD are still terrible, and you forfeit access to the money for a significant period of time, as well.

      If you’re 16, you should really consider opening a brokerage account and buying something like a S&P500 ETF. The average yield on a CD might be 4% (or lower), while the historical market average is better than 10%. At your age, if you socked that k into an ETF like SPY, you could reasonably expect that investment to be worth more than 0,000 by the time you’re 70. If you did that in a Roth IRA, you would never have to pay tax on any of that, either. Plus, with the markets down right now, you would probably end up doing a bit better because you’d be buying everything on sale.

      Meanwhile, with a CD, you could probably just keep track with inflation. So when you went to take the money out, you’d end up with the same buying power that you have today.

      If you just have all your money in bank accounts with different names, and slightly different returns, you are NOT diversified. Why not add some stock to your portfolio?

  37. QUESTION:
    Good idea to spread my money across different investments like an IRA, CDs, Money Markets, etc?
    I have a checking account, and a savings account and I want to save up for a 0 CD account for short term because of the CRAPPY rates. Then I want to save up 00 from my checking account and use that money to open a Money Market account with minimum of 00. With the 0 CD there will be no monthly service charge and the 00 Money Market too will have no monthly service charge.

    1) so not wasting too much of your time I would like to spread my money around different investments like an IRA, CD, money market for college.

    BTW I can’t use online banks because my parents wont let me use em. Im stuck with my local bank for now. Im 16 living in USA if any one asks.

    • ANSWER:
      I’m guessing college is two years away for you. The stock market goes in cycles far longer than 2 years (gambling on such short time with all your money is foolish), and bonds have several hidden risks, so there really isn’t a point to opening an IRA or brokerage account. If I were you I’d be satisfied with the CD.

      I’d put all the money you can EASILY spare in CDs, while leaving your expected costs plus a bit extra in cash or a money market account.

      Also, I would think of any money you made here as a bonus. It will likely be only a few hundred dollars. I’m going to college next month, and I’ll have about 00 spare after I pay for books, software, and my next car insurance payment. It’s a bit high for most students (,000 should get you through if you don’t have your care there and have a meal plan), but I like to be a bit safe. My point is that preserving and growing your funds is great, but earning money should be where your main efforts go (note that if you have ,000, you will have 2-3 months to make that same amount for your next year).

      Good luck.

  38. QUESTION:
    16 yro wants to spread his money across different investments like an IRA, CDs, Money Markets, etc good idea?
    I have a checking account, and a savings account and I want to save up for a 0 CD account for short term because of the CRAPPY rates. Then I want to save up 00 from my checking account and use that money to open a Money Market account with minimum of 00. With the 0 CD there will be no monthly service charge and the 00 Money Market too will have no monthly service charge.

    1) so not wasting too much of your time I would like to spread my money around different investments like an IRA, CD, money market for college.

    BTW I can’t use online banks because my parents wont let me use em. Im stuck with my local bank for now. Im 16 living in USA if any one asks.

    • ANSWER:
      It’s great that you want to save and invest! Good for you.

      First, do a little research and find out which banks or credit unions in your community offer no-fee money market accounts and checking accounts. There is no reason why a minor should be paying account fees.

      You can open a Roth IRA at any age if you have earned income that you report to the IRS. You can contribute up to ,000 for 2008, but not more than you earned in income. You can create a separate account for college savings or use part of your Roth IRA in later years for college.

      Another way to save for college is by purchasing U.S. Savings Bonds. The interest you earn is tax-deferred.

      Also, if your parents will help you, why not consider setting up a broad market stock mutual fund? At your age, you have the best time horizon for earning much higher returns compared to having savings, money market and CDs. It would be a good learning experience for you.

  39. QUESTION:
    What is a conservative investment for a SEP IRA?
    I want to start a SEP IRA. This year I will be able to put in 3K. I would like to stick w/VAnguard since I have a Roth IRA there. I want something conservative like a CD or a CD ladder…..what exactly is a CD ladder? Do they have them at Vanguard? What is the rate? Is that a good idea?
    No, I think I can get CDs through Vanguard, but what about the rest of my question?

    • ANSWER:
      Vanguard has a bank, so you could purchase on with them.

      A CD ladder is when you invest a set amount of money in multiple CDs with different maturity dates.

      ex. You invest ,000 in 5 CDs. A 1,2,3,4, and 5 year CD.

      Every year you have a CD maturing. You have the opportunity to invest that money in a higher earning CD.

      When the one year CD matures, you invest it in a five year. When the two year CD matures, you invest it in a five year as well, and so on.

  40. QUESTION:
    making money off of loans and cd accounts roth ira?
    i obviously know nothing about banking and interest rates. however, i understand that at this time it is a good to refinance and take out mortgages cause the rates are low. i know this is just a short term thing, i feel the economy will crap out even worse, but thats besides the point.

    i was wondering if i could take out a loan of say 100k with 2 or 3 percent interest, and turn around and put it into an account with 4 or 5 percent interest. is this even possible? explain, and would they even let someone take out a 100k personal loan

    • ANSWER:
      I’m sure it’s possible, but I doubt you can get such a large ammount for no reason. They lend large ammounts for things like mortages, but for personal loans I’m not sure. And you could get a lot more then 4 or 5 interest with CDs, safely. Or try Junk Bonds, which can go as high as 20%, but are risky. Also, I don’t know of a loan that would only be 2 or 3 %.

  41. QUESTION:
    IRA account and CD…please help?
    Hi,

    I have money in my personal IRA account. I am looking for 4 to 5 % fixed int. rate income for the next 10 to 20 years. What should I do ?…I am looking towards guarantied return of 4 to 5 % per year

    Please help

    • ANSWER:
      Nobody is offering Certificate rates at 4% anymore. Ever since the Fed cut the rate to 0% – .25%, Certificate rates have fallen to 3.50% at best. If you’re looking at earning a guaranteed return of 4+% over the next 10-20 years, a great place to start looking is Annuities and Mutual Funds. Your bank should offer a Financial Consultant who can set you up.

      I’m offering customers a guaranteed rate of:
      4.25% for 10K+ for 10 years
      4.35% for 25K+ for 10 years
      4.50% for 50K+ for 10 years

      These rates should be similar to what your bank’s Financial Consultant should offer.

  42. QUESTION:
    Investing in a Roth Ira?
    Every year I put down a lump sum for my Roth IRA. I have 00.00 to contribute for 2007. I usually just invest it in the bank CD. The rate currently is 3.75%.
    When people talk of an IRA, they seem to use the return rate of 8%. Obviously, I am not going to earn anywhere near that with the banks rates. So what is the best way to invest this money, rather than the CD. Who should I check out online, or talk with, or what funds should I look at.
    Also I am currently 33, self employed.

    • ANSWER:
      If you are self employeed you should also consider a SEP IRA. You can sock a lot more away in a SEP than a Roth and deduct the amount from earned income. Of course the SEP works like the traditional when it comes to withdrawing the money. But nevertheless it should be a consideration.

      There are several mutual fund companies you could transfer some or all of your bank IRA too when the CDs come due. Fidelity, T Rowe Price, and Vanguard all have a decent range of offerings. And many of their offerings have over the long term returned 8% or better annually. The one caution would be not to get too greedy and stuff your hard earned money into an aggressive growth fund because it happened to have a 24% return last year. These type funds get slautered in a market down turn. Many have not recovered from the 2000 collapse even by now even though the might have returned 24% last year.

      Each of these mutual fund companies offers a target date retirement fund which is a mix of investments in other of their funds that is relatively conservative in nature. Sort of a one stop retirement investment. They are a decent way to invest if you do not want the hastle of picking and choosing what funds to invest in.

      Vanguard Life Strategies Moderate Growth has returned an average annual return of 9.6% since 1994 to give you an idea.

  43. QUESTION:
    What do I need to know about rolling my 401k into an IRA?
    What about a CD? Who has the best interest rates and whats the difference between APY and interest?

    Thanks

    • ANSWER:
      First, you need to establish a zero-balance IRA at a brokerage, bank or credit union. Credit unions offer the best interest rates, and low-cost brokerages, such as Vanguard, offer the best range of investments. Go to a site such as www.fool.com (The Motley Fool) to learn about the basics of investing and decide what types of investments you are comfortable with. While you’re learning, I recommend you simply invest in a credit union IRA. Regardless of the other answer given to your question, it is very easy to move your IRA from one trustee to another. You simply request a direct transfer at the time.

      Now, back to getting your 401(k) transferred. Once you have the IRA established, request that your 401(k) plan administrator do a “direct rollover” of your 401(k) to the new trustee (the financial institution where you set up your IRA). Having a direct rollover exempts you from having withholding taken, and that makes a huge difference. Eventually, that withholding could well become a premature distribution, so you want to avoid that.

      APY = Annual Percentage Yield. It’s the way to compare interest rates offered by competing institutions. It takes into account the frequency of compounding, whether it’s daily, monthly, quarterly, etc. The more frequent the compounding, the higher the yield.

      Interest is a general term that usually means how much you are paid on the account. Most commonly, it refers to the nominal amount you earn before compounding. So a certificate that offers an interest rate of 5% will have an annual percentage yield of 5.12% if it’s compounded monthly.

      Good luck!

  44. QUESTION:
    I need to start investing money and don’t know where to start. Can someone guide me please?
    I’m 33 divorced and have a 12 yr old that is college bound! I’m salaried at 65k a yr ( great in S.C.). I don’t own a home have no savings have about 10 collections on my credit report and know that I am heading for disaster! I do have 6% going into a 401k I’m also a vet (not retired). I don’t know what to do to get some cash going. I need an education fund going at a great rate, CD, IRA, or all! I’m willing to do anything! If someone is willing to coach me one on one that will be great! I just need some financial direction that will get me going. I’ve been following dave ramsey/suze orman and have an 911 fund with 00. But they don’t tell you where to get started or acceptable rates for CDs MMAs or IRAs.
    I have my collection accounts because of the divorce i.e bills in both names that he was supposed to pay!! I’m working on that! So if you could just give me advice on what I asked for which is not how to clear my credit report! I really would like to get help on investing, cds, iras,etc!! Not credit counseling!

    • ANSWER:
      Hi, good questions! Here are some ideas for you to consider.

      1. Owning a home is not for everyone and you are not is a good position right now to considering buying one, so put that one out of your head.
      2. Saving for your college bound son or daughter – this comes last and here is why. At your income level, you will qualify for financial aid. If they are smart or athletic, there is a good chance for a scholarship, if you pick the right school (those that have lots of money and give out big bucks). Your retirement comes first, then college savings. Financial aid doesn’t consider retirement assets in the calculation of need. Assets held by your son or daughter or in a college investment account (529) does so it will end up reducing your financial aid amount i.e., increasing your expected family contribution EFC.
      3. The best savings alternative you have right now is your 401k plan especially if your company matches. A contribution to your 401k reduce your taxable income and grows on a tax deferred basis. You should put as much as possible into your 401k and a good baseline is 10%, maxing it out is even better ,000/yr in your case for 2008. Diversify your 401k Portfolio i.e., invest in all asset classes e.g., 50% Large cap domestics stocks, 10-15% Midcap and Smallcap stocks, 15% International large cap and the balance in high quality investment grade bonds.
      4. Clean up your credit report.
      5. If you can manage additional savings, open up a Roth IRA at a Brokerage company (Schwab, Fidelity, Vanguard, ShareBuilder) and invest in mutual funds or exchange traded funds (ETF’s). Sharebuilder (from ING) is a very low cost option but, has some drawbacks that you will need to consider. You can use the research recommendations from any of the first three companies I mentioned and pick one of their recommended Domestic Large Cap funds to start your Roth savings account. If you choose a mutual fund investment option, invest on a monthly basis via automatic purchase via electronic funds transfer (EFT). You can set this feature up when you open your account. If you purchase ETF’s then you will want to wait until you have at least ,000 before making a buy because you will have a trading commission of approximately -25. A Roth account makes sense for you because withdrawals are tax free when you take your money out at retirement age; over 59.5 years old but, you can take out the principal whenever you want tax free because your contributions are after-tax. So, if you were in desperate need of money you could access your principal without penalty or tax.
      6. Look at your budget and find some areas where you can save money and then start putting more into your 911 account. Invest that in a money market account or a high yield savings account.

  45. QUESTION:
    Is this a good time to invest in Mutual Funds?
    My wife and I both have IRA’s valued about K each and I was wondering if one of us should take advantage of the low rates and put their K in Mutual Funds.
    I’m a novice at investing, I’d rather let it sit in a CD or IRA but with the current low interest rates I think I should diversify.
    Any Intelligent thoughts?

    • ANSWER:
      nope, my friend, nowadays, beware of financial instutitons and assets. If you have money put it in your pocket.

  46. QUESTION:
    What should a Roth IRA consist of now with the market in turmoil?
    I know people normally do a 60/40 % ratio. So 60 percent goes in mutual funds and 40 percent goes in CDs.

    But based on recent events why not establish an IRA and simply put all of the money in short-term CDs?

    Are there CDs out there where you can continually add money to them?
    So it would be like a savings account but you are guaranteed a certain high interest rate?
    Im 19 year old but I don’t want to dump my money into something.

    • ANSWER:
      It depends on your “asset allocation” model which would be built on by looking at your needs, risk tolorence, inflation expectations and years to retirement and a resonable quess at years in retirement.

      A 60/40 split rarlely means 40% in CD’s. for a 19 year old it should be none at all. Beside a 60/40 at your age would be a terrible idea… it may be way too little to get to your goals. So the answer is an “asset allocation” model.

      I believe the last place for retirement money before age 75, is a bank. The next worst place for any retirement money is an insurance company.

      Take some time. Learn about this stuff!!!! Start by reading; Mutual Funds For Dummies. It’s a whole lot better than getting advice from strangers who don’t know you & your needs. Besides you don’t know their qualifications or motives.

  47. QUESTION:
    I am saving 500 bucks a month from work. Where should i put this money.?
    Should i just leave it in saving. Should i start an IRA i am 26. I know CD rates and bad right now. just what do you guys think

    • ANSWER:
      Between your matress is the best place for it

  48. QUESTION:
    Have a quesiton about closing an IRA?
    If I increase the amount of my 401K contribution to cover the amount in the IRA- Is this considered to be a reinvestment, or is it still looked at as a taxable distribution and penalized?

    Have a small amount sitting in a CD that is earning nothing, and would like to get it into something with a higher rate of return.

    • ANSWER:
      No, it would not be considered a reinvesment and you cannot roll your IRA into your 401k.

      You can however roll your IRA into another IRA. I am assuming your IRA is in a CD at a bank. If so your bank may possibly offer other investments such as mutual funds. If not, it is not hard to open open a new IRA account with a company such as Vanguard or Fidelity or even etrade and then do a rollover from your existing IRA to your new one.

      If you do decide to just take a taxable distribution you will have to pay income taxes and a 10% early withdraw penalty. If it is such a small amount this may or may not be a problem. Also the new IRA may have a minimum amount for investment so you’d have to meet that.

  49. QUESTION:
    How does a Roth IRA pay?
    I have a roth IRA in my 401(k) only becasue I always hear its a good idea to have one. Here’s what I know about a roth…then I’ll ask my question. The money I put into it is after tax money. My question…is a roth like a CD in that it earns a fixed rate? Is the money earned taxable. Is a roth like a Money market account?

    • ANSWER:

  50. QUESTION:
    Am I wise to rollover my 401 (K) into an inherited IRA of 50% equity, 50% bonds?
    (at least until interest rates on CD’s increase)

    • ANSWER:
      You need to ask this question to a qualified IRA/Tax specialist, NOT on a board like this. You’ve already received several answers, all of which are either wrong or likely not applicable to your situation.

      Inherited IRA’s are treated differently by the IRS than an IRA you established yourself. Much depends on who you inherited it from, how old they were when they passed away, did they begin taking required distributions, did they take all they had to for the year, etc. The rules for taking money out of them (distributions) are different and typically you can NOT add more money to an inherited IRA.

      Seek professional, face to face advice on this question.

      Simple answers of “Yes” or “No” are best ignored.