I’ve been dealing with IRA CDs for about two years now, learning as I go along.
No doubt these accounts represent a good way for the risk-averse, like me, to preserve accumulated retirement nest eggs while realizing a modest return. FDIC insurance, up to $250,000, is available, separate from other personal accounts.
Opening certificates of deposit with existing tax-deferred retirement assets, however, can present complications, primarily because of the paperwork and processing required to transfer funds and to ensure IRS compliance.
When, early in 2009, I scrambled to move my individual retirement account assets from a single T. Rowe Price account to multiple bank IRA CDs, the process proved excruciatingly slow, taking two to three weeks to complete per CD.
I suffered angst over locking in a rate while all the t’s and i’s were duly crossed and dotted.
Some banks, like Bank of America, guarantee a rate for a specified period on IRA transfers; others, like Nationwide Bank, give “soft” assurances to do their best. But many banks make no promises at all.
This blog post is in response to a question from one of our readers, who apparently lost the phone number lottery after she moved to Virginia.
The phone company assigned her a new home telephone number that once belonged to someone on multiple debt collectors’ lists. She and her family received calls from collection agencies all day, every day.
You don’t have to put up with it.
“The one company did call, and I was home to answer the phone,” our reader says. “I explained to the person that the phone number was recycled as of this summer and told her to call Cox (her cable/phone company) if she needed to verify. She was sorry about the mass callings and said she would take care of it.”
Her conversation helped end one company’s calls. Our reader still gets calls from other firms, only she’s usually not home to explain them away.
Posted in Tax by Jen Stryker
December 27, 2010 03:50 PM - 0 Comments
A few Saturdays ago, my boyfriend and I did what a lot of people do at the end of the year: pulled a bunch of dusty stuff out of his basement and drove it to Goodwill.
Not only would this keep stuff out of a landfill, but he would take the tax deduction for his 2010 taxes.
Except we didn’t anticipate something: Goodwill won’t take everything, which is how we ended up driving around with an exercise bike and weight bench in the back of my mom’s truck for three hours.
Here’s how to be a little smarter than we were when giving stuff away:
Match your donation with an appropriate charity. Church thrift shops are often a good place to take used clothing. But save furniture or large appliances for charities that make regular swings through your neighborhood with trucks. Click here to read more
In it, she lays out her very rational and reasonable goals for the new Consumer Financial Protection Bureau, which she’s helping to establish and which should open for business in July.
As usual, Warren doesn’t mince words when discussing the shady tactics of credit card and mortgage companies.
It’s no wonder all of those Republican lawmakers who are in the pocket of the banking industry tried to block creation of the new consumer protection bureau, which was Warren’s idea, and have vowed to fight any effort to make Warren its first director.
I have, on occasion, stepped into the lives of the Kardashian sisters.
Famous for doing absolutely nothing except being born into money, Kim, Khloe and Kourtney have devoted their lives to exposing their overspending, bratty drama-filled lives to a series of reality shows on E!.
They’re like one giant, untalented, stiletto-ed train wreck. It’s hard to turn away.
The “Kardashian Kard” charges so many fees that the Connecticut Attorney General is trying to figure out if it violates consumer protection laws and Consumers Union (the publishers of Consumers Report) has issued a special warning about it.
I recently had dinner with a few friends at a Turkish restaurant in Philadelphia.
While trying to decipher what exactly what kebab I was ordering, I noticed an odd statement on the menu:
“Credit card processing fees that we have to pay, will be your discount when you pay by CASH! , therefore the prices that we have posted here are reduced CASH prices. (10% will be added to your bill, if you prefer to pay by VISA or MasterCard.)”
I’ve been waiting to see merchants start offering cash discounts, but surcharges?
While retailers can cut your bill for paying in cash, they can’t add to it if you use plastic.
Stores and restaurants pay credit cards an “interchange fee” every time customers charge a purchase, which usually costs the retailer about 2% of every transaction.
“The merchant can offer an incentive for the consumer to pay with cash– thus avoiding the interchange fee — but is not allowed to pass that fee along to the customer,” says Gail Cunningham, spokesperson for National Foundation for Credit Counseling. Click here to read more
Have we found the latest in a long line of off-shore bank scams?
A Web site that claims to be a Panama-based “Internet brokerage service” has begun to gain traction with the serach engines, and it’s promising the most eye-popping CD rates we’ve ever seen.
Comexonline says: “We offer online risk-free investment solutions with fixed interest rates from 19.5% to 35.5% APY.”
A photo shows a ritzy office building with Comexonline’s name on it, and there’s supposed to be “representation in the United States,” too.
But that’s just a post office box in Los Angeles and there’s no phone number for customers to call Comexonline’s “investment advisers” in Panama City or California. It can only be reached by email or fax.
Many of the nation’s biggest banks are based in the glistening skyscrapers of Manhattan.
But to find the little New York credit union that’s offering many of the best CD rates in the country, we had to hop on the E train and venture out to Queens.
There, in the Briarwood neighborhood about 12 miles from Citigroup’s Park Avenue headquarters, we found Melrose Credit Union’s single office.
We’ve written so much about Melrose over the past few months that we felt like we just had to go there to assure ourselves – and you – that it really existed.
We wanted to see what the credit union with the unusual charter that allows anyone in the country to join, regardless of where they live or work, is really like, and find out how it can keep offering such great returns month after month after month.
The Federal Reserve announced a second round of what’s called “quantitative easing” today, in a misguided effort to boost the economy by driving interest rates even lower.
The government-controlled bank will buy another $600 billion in long-term Treasuries — 2 ½ to 10-year bonds — over the next eight months.
That’s on top of the $1.725 trillion in government bonds and mortgage securities it bought in 2008 and 2009.
Oh, and it will use the $250 billion to $300 billion it expects to earn from that investment to buy more Treasuries, as well, for a total of as much as $900 billion in new purchases.
While flooding the bond market with money will undoubtedly push interest rates lower, no one believes it will have a significant effect on economic growth or job creation, as the New York Times and Financial Times have already pointed out.
But the Fed’s action will devastate savers, who are already suffering from record low returns on bank deposits and government bonds. Click here to read more
I was listening to Jim Cramer on CNBC’s “Mad Money” last night, and for a guy who constantly extols the value of free markets he has sure bought into the Federal Reserve’s radical, market distorting policies.
Maybe it’s because the Fed’s campaign to drive interest rates down is intended to force savers out of safer investments such as CDs and Treasuries, and into the riskier investments such as the stocks Cramer sells on his show.
Indeed, the former hedge fund manager began last night’s show by saying “I’m going to dispel one of the myths that is keeping you out of the market or in CDs, and that’s the myth of the ‘fragile economy.’
“I swear, if I’ve got to read one more article about the ‘fragile recovery’ I will tear out all my remaining hair.”
Cramer argues that economic growth in most of the world “is very real.”
The recovery is just lagging in the United States because President Barack Obama was pursuing the wrong policies — health care reform and reregulating the financial industry — instead of stimulating economic growth as other countries did.
Ok, fair enough.
But then this champion of free markets goes on to support the Federal Reserve’s relentless, radical intervention in the economy? Click here to read more
The Federal Reserve seems determined to drive interest rates lower by purchasing another big chunk of government debt.
It hopes to make the already rock-bottom rates on Treasury bills and other long-term loans even lower on the questionable assumption that the lure of cheap money will make corporate America more likely to borrow, expand and hire.
The tactic is called “quantitative easing,” and this round of Treasury purchases is being referred to as QE2 since the Fed has been to this well once before.
It bought $1.725 trillion in assets in 2008 and 2009, and is expected to approve buying another $500 billion over the next six months when its key rate-setting committee meets next week.
Today’s edition of the Financial Times has one of the best explanations I’ve seen about how all of this is all supposed to work.
But I think the Fed is kidding itself and this won’t turn our sputtering recovery into a roaring, job-creating machine. Click here to read more
A new study shows the rich control a much larger portion of the nation’s wealth than we think they do – or should.
Two psychologists, Dan Ariely of Duke University and Michael Norton of Harvard University, asked thousands of Americans how they think wealth in this country is distributed.
Respondents estimated that the wealthiest 20% of all Americans control 59% of the nation’s wealth.
In reality, they own around 84%.
Then Ariely and Norton then asked respondents what they consider to be an ideal distribution of wealth for America.
In a perfect world, they said, the wealthiest 20% of all Americans would control just 32% of the wealth.
The obvious conclusion is that Americans think the nation’s wealth is far more evenly distributed than actually it is, and want it to be shared even more equitably than they (wrongly) believe it to be. Click here to read more
It used to take new owners at least a couple of months to decide whether they would honor the CDs they acquired from failed banks.
Now it’s only taking a couple of weeks.
A recent story in the Milwaukee Journal Sentinel tells the story of Tom and Carol Spidell, who were customers of Maritime Savings Bank, which failed on Sept. 17.
Before the month was over they “received five letters – one for each certificate of deposit they had with Maritime — informing them that the interest rates on their CDs had been slashed.
“For the Spidells, that meant the interest on a CD that doesn’t mature until next spring will be paying about a half-percent instead of the 3.05% they signed up for a couple of years ago. Other Maritime CDs with interest rates ranging from 1.5% to 1.95% also were pared to 0.45% or 0.55%, all of them with roughly a year to go before they mature.” Click here to read more
In a story headlined “Easy Borrowing By Corporations Spurs Few Jobs”, the Times explains how companies are using ultra-low interest rates created by the Federal Reserve to borrow billions of dollars they’re just stuffing into the mattress.
Few “of them are actually spending money on new factories, equipment or jobs. Instead, they are stockpiling the cash until the economy improves,” the Times says. Click here to read more
After Jen mentioned the economic stimulus bill in Tuesday’s post I thought it might be worthwhile to set the record straight about this unpopular effort to pull the country out of the recession.
The $787 billion stimulus bill passed in February 2009 divided that money in roughly equal thirds among:
Tax cuts for individuals and businesses.
Aid to states and cities.
Programs that President Obama had campaigned for, such as computerizing medical records, providing grants to innovative schools, and investing in clean energy sources.
Many Americans have decided it was a failure because the unemployment rate still soared and has remained stubbornly high since peaking at just over 10%.
Yet most reasonable economists, including those in the nonpartisan Congressional Budget Office, credit the stimulus bill with shortening the recession and reducing the unemployment rate by about 2 percentage points. Click here to read more