[retiredguy123]

Originally Posted by Boomer

rg123,

I have owned CDs over the years, too, but they were always regular bank CDs that compounded, making the interest available to take when it posted throughout the term, and that interest was taxable, outside of IRAs. I understand all that.

But — this is the first time I have ever owned brokered CDs, and somewhere I picked up the idea (I think on TOTV) that interest on a brokered CD, inside an IRA, would become a factor in the RMD calculation even though it was not compounding and had not yet been posted. And outside an IRA, the brokered CD interest that had not yet been posted could somehow be taxed……..

Two differences in a brokered CD and a regular CD are the fluctuating value of the brokered CD before term and a lump sum paid at the end of the brokered CD’s term instead of compounding. Those two things — I understand…….

BUT now…..I am starting to wonder if the concern I have about possible consequences of brokered CD interest BEFORE being posted was a complete misunderstanding on my part……Or was it? (It never made sense to me or seemed fair that way, but I have never had any reason to expect tax law to make sense or to be fair.)

Looks like maybe my question was much ado about nothing — maybe.

Boomer

Note that another difference with brokered CDs is that there is no penalty for early withdrawal of principal.