Certificate of Deposit

Archive for July, 2009

Question: How much will I pay in Tax & Penalty on a IRA CD?

I have a Individual Retirement Account Certificate Of Deposit at a bank , I’m 54 years old , the total account value on the last statement I recieved is $22,195.27 , I asked the branch manager what the tax and penalty would be and she gave me the jerk around with no answer , I applied for a $13000.00 personal loan using the IRA CD for colateral and she said the IRA can not be used for colateral , so I’m thinking about cashing it in and paying the tax and penalty…Thanks! for your answers in advance…

Answer: The penalty will be $1300 (10%). You will also pay income tax on the early distribution. That amount will depend on your tax bracket. 15%, 25%…………….and if you are single married filing joint head of household or married filing separate.

Check the link below

http://www.irs.gov/pub/irs-pdf/i5329.pdf

You can also get an estimate on the link below

http://hrblock.com/taxes/tax_calculators/index.html

Christine EA Master Tax Advisor

This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided.

http://www.hrblock.com/tax_professionals/christine_wilkins.html

Auto Loan Commercial

Question: Where can I get a higher return than 5.20% on my money? Need Full liquidity and low or no risk?

I currently have the money ($10,000) in a 5.20% Money Market account, need to money to be available whenever I need it so CD accounts are out. I have looked into Index funds but the returns seem crappy for the amount of risk involved. Anyone have any suggestions

Answer: You can invest in investment grade corporate bonds. They have a risk of default though. But given the current economic climate most should be safe. But stick with U.S companies with atleast 1 billion dollars in assets. You should get around 6.25 – 8 percent and they have a good secondary market.

Money Management: Your Account Size and Money Management Strategies