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Certificate of deposit (CD)

Last Updated March 19, 2009


An investment product , where investors typically agree to receive a fixed rate of return on the amount invested. Amounts are usually invested for a fixed period, such as a month, a few months or a few years. The end of the investment period is referred to as the maturity date.

CDs that are terminated before the maturity date may be subject to an early withdrawal penalty. This is often waived for IRAs, if the owner is at least age 59 ½ when the withdrawal occurs


Referring Cite

Regulation D, 12 C.F.R. Sec. 204.2(c)(1);  12 C.F.R. Sec. 563.3-1(a)  ; 51 Fed. Reg. 10804


Additional Helpful Information

  • The early withdrawal penalty on an IRA CD is not rollover eligible. For instance, if the CD balance is $1,000, and the early withdraw penalty is $50, only $950 is rollover eligible.
  • The early withdrawal penalty is not treated as a distribution, and is therefore not reported on IRS Form 1099-R