bank rates

Achiever CDs Prove Useful For IRA Funds

two hands holding a white egg with the letters IRA on it.As visitors to this site probably know, I’m a fan of CIT Bank’s Achiever CDs.

I particularly like the protection they afford against declining interest rates.

And, since these CDs recently became available for IRA accounts, I like them even better.

The Achiever CD is distinctive in having both step-up and add-on features.

It permits you to increase your interest rate once and to add to your original balance once during the term – although CIT reserves the right to limit the add-on to $250,000.

Achievers come in 1-year and 2-year maturities, currently posting rates of 1.05% and 1.20% APY, respectively.

The 1-year Achiever sits atop our CD Rates Leaderboard for its term. The 2-year Achiever is 0.05% behind the present term leader.

The minimum opening deposit is $25,000.

By offering these CDs for IRAs, the bank has effectively addressed one of the thorniest problems in IRA CD investing – what to do when a CD matures.

Often, posted rates at maturity compel moving funds from an IRA CD to another institution (“trustee-to-trustee” transfers).

This can be time-consuming and complicated.

First, you have to open an IRA at the new institution.

Then, you have to provide written instructions to the old institution, signed by both you and the new institution, directing the transfer at maturity.

Finally, you have to wait for the old institution to send a check to the new.

Meanwhile, the new institution’s posted rates might have dropped, and it might not be holding your original rate.

With an Achiever IRA CD, you already have an account in place, with a locked-in minimum rate.

Transfer paperwork is still required, but it’s basically sign and go, with minimal hassle.

For example, I just established two 2-year Achiever CDs, each for $25,000, which I’m funding with a trustee-to-trustee transfer from a CD maturing elsewhere.

Later on, I’ll be able, if I wish, to add to each, one time, from the balances of other maturing IRA CDs.

And, of course, it’s possible I’ll eventually be able to raise their rates once.

Another great thing about CIT’s IRA CDs (not just limited to Achievers) is that you can apply online and lock in the current rate, so long as your trustee-to-trustee transfer completes within 60 days.

The major downside to these CDs can’t be fixed by the bank, however.

It’s the $250,000 FDIC insurance limit for retirement accounts.

But for that limit, I might open a lot more Achiever (or maybe other) IRA CDs at CIT.

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