The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies

URL:  https://boards.fool.com/footsox-quothi-guys-thanks-again-i-have-done-34649542.aspx

Subject:  Re: Roth IRA CD - Trying to transfer to Etrade Date:  10/24/2020  7:22 PM
Author:  JAFO31 Number:  131263 of 131743

footsox: "Hi guys, Thanks again. I have done some Googling. Since I am over 59.5 years old, and have held the ROTH CD for over 5 years, then me cashing out the Roth CD at the credit union is then a "qualified distribution" and I will not have to pay the 10% penalty. OK. I finally get that.
However, won't it count toward my gross income for this tax year?"


No, it will not count as gross income based upon the facts you have reported to us.

"So, I can then just cash it out and deposit it to my normal Etrade account?"

Technically, yes, but there are several reasons not to do it that way, which have been discusssed in this thread.

"Forgive me for my denseness. I was just trying to simplify my darn credit union accounts and this is kind of a straggler. My other Roth accounts are in Etrade, so I wanted to get them all in one place."

Not a problem, but I am not sure you understand and you have a terminology problem.

First, think about it the way rad wrote:

reallyalldone: "Here’s the most important piece you need to understand — you have a CD from your credit union in a Roth IRA. Please read that again. Not understanding this piece is impacting everything else."

next, aj spelled out the best method:

aj485: "Tell the CU that you want to open a money market or savings account in the Roth IRA at the CU, then cash out the CD and the proceeds deposited into the new account in the Roth IRA at the CU. Have E-Trade contact the CU to take the cash (and any interest that may have accrued) and transfer it to E-Trade."

I will try in other words, and more detailed steps:

1. Contact your credit union and tell them you want to break the certificate of deposit/terminate it early. Sometimes this involves a penalty but you have reported that your CU does not charge one.

2. While talking to the CU, inform them that you want the proceeds of the broken CD to remain in a/the Roth IRA and open a money market in the Roth IRA at the CU to receive the proceeds.

3. While talking to the CU, ask when the funds will be available from the money market account in the Roth IRA at the CU.

4. After the date the funds become available in the money market account in the Roth IRA at the CU, again contact Etrade and request that they assist with doing a trustee to trustee transfer of the funds in money market account in the Roth IRA at the CU to your ETrade Roth IRA at Etrade.

5. After the trustee to trustee transfer is complete confirm tha you will not be charged any account fees at the CU for the zero balance money market account in your Roth IRA at the CU; if yes, you likely want to close it.

Ask more questions if you still do not understand.

Regards, JAFO
Copyright 1996-2021 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us