Are there any drawbacks if you transfer an IRA to a credit union and deposit in a certificate of deposit?

Question

Such as- Can it be transferred as easily as at a bank in the future and are there any more risks or hassle than at a bank.

I am retired and want safety.

Answer 1

You IRA funds should never be in a CD unless you are already in retirement!! And even then only a small portion of your IRA should be in cash (CDs). Besides, right now even savings accounts and money markets are outperforming CDs. CDs aren't even keeping up with inflation! You will LOSE purchasing power (money) if you "invest" in CDs right now!

Your IRA should consist of a broad diversification of US and international stocks. You may also have a small portion in bonds if you are within 10-15 years of retirement.

Credit unions and banks are not usually good places to have an IRA because they have few investment options and charge high annual fees, commissions, and investment fees. Don't let your bank/credit union sell you an IRA. I'm a banker; I know how this works. I would never have my investments at a bank (even the one I work for which I love and respect).

You should have your IRA at a reputable investment firm that offers a wide range of high quality, low cost investment options. That sounds like a gimmick, but it's not. Vanguard and Fidelity are the low-cost leaders of retirement investing--and their funds are consistently top rated. Put your money there, buy a cheap index fund or target retirement fund, and rest easy.

Answer 2

No Risks at all and very little room for growth once inflation is factored in if you don't need this money for 7 or more years you would be much better putting that IRA into a index fund like the S & P 500 and if it was in the stock market this is not the best time to move this money as the market has been down several % in the last week but remeber the market has always out proformed every other investment instrument in history

Answer 3

My funds are in Treasury Notes. The principal is secure, the interest checks are regularly deposited, and, to offset a lower interest rate(which may go up) this interest money is State tax free. I had money in a well reputed mutual fund, and lost exactly one third of it, before I sold out. Lesson learned. When you deal with a brokerage firm ,there is a fee both to buy and to sell. You can buy your own treasury Notes without this charge, over the phone. Strongly advise caution with your funds, as the stock market is tricky, just check the last week's reports. Best wishes.

Answer 4

Liz is right. I also am a banker and have the same feelings. If you aren't retired there is no sense in having those funds in a CD. Liz made very good points that don't need to be repeated.