No. of Recommendations: 2
Try this site: http://www.irs.gov. They tend to have the current regualtions since they make (with the help of Congress) and enforce them. This is not an IRS issue. Pen Fed had a policy of allowing CDs in IRAs to be cashed out with no penalty then rolled over at a new rate. This was a dysfunctional policy, and they figured it out. What they are doing now is more standard. With CDs in taxable accounts, you can elect not to reinvest dividends, but you cannot take out principal without a penalty. In an IRA, because of the need for RMDs, at least some banks and credit unions, now including Pen Fed (which did not allow this previously) let you take out some principal without penalty. The specific rules at Pen Fed need to checked out. At my regular credit union, you can request a draw down of principal at a rate above RMDs for an IRA CD, but this rate has to be determined at the time the CD is purchased (or rolled over). This prevents cashing out to get better interest.
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