Quote:
Originally Posted by Boomer
Funny you should say that. I was thinking the same thing — sort off…..
New money just in, sitting in a money market at a 4-plus something rate. Thinking of leaving it alone. Not sure yet though……
I do have a question about those brokered CDs. They are new to me. Bought a couple of short terms a few weeks ago. I get FDIC and call - protected……..
But am I understanding correctly that if the brokered CD does not compound, and instead pays all the interest income at the end of the term, that does not throw all the taxable interest income into 2024 if going out long term? If not, why not? It seems like being taxed on money you did not get — yet. Huh? That makes no sense to me. Maybe I misunderstood.
Am I right or wrong on that? If the taxing is along the way while the interest is not paid yet, how can that be?
Boomer (who is not sure if she heard that right)
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A typical CD earns taxable interest annually, even if the CD does not pay the interest to the CD owner. So, you get a 1099-int every year and must pay tax on it. It doesn't matter when the interest is actually paid to the owner. This would also apply to a brokered CD.
I think that some banks will allow you to withdraw interest earned at any time without paying a penalty.