How to Change an IRA CD to a Regular CD

By: Diane Stevens

Discuss moving your money with your banker.

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While the purpose of an IRA CD is a long-term investment for retirement, there may be a circumstance when you need the money for another purpose. You can withdraw the money from your IRA CD and convert it to a regular CD, but you should be aware that you will incur income tax liabilities and maybe even a penalty on top of that. However, exceptions are allowed for the penalty -- but not the taxes due -- if you withdraw the money to buy your first home, pay education expenses or to cover one of the Internal Revenue Service approved hardships.

Step 1

Learn about the IRS rules for early withdrawal and the possible tax consequences. For instance, if you are younger than 59 1/2, you will incur a 10 percent penalty. If you are close to 59 1/2-years of age, it may be worth waiting to make the change to avoid the 10 percent penalty.

Step 2

Check the due date on your current CD. If you close a CD early, there will be a penalty, such as loss of interest. If your CD is close to maturity, try to wait to avoid the bank’s penalty for early withdrawal.

Step 3

Research bank rates on CDs. Check not only your local banks but banks across the country. Look for the highest rate for the term you want.

Step 4

Go to your bank, or call, and tell an account representative that you want to close your IRA CD and to forward the funds to you.

Step 5

Open your new CD and deposit the check received from the closing of your IRA CD.


About the Author

Diane Stevens' professional experience started in 1970 with a computer programming position. Beginning in 1985, running her own business gave her extensive experience in personal and business finance. Her writing appears on Orbitz's Travel Blog and other websites. Stevens holds a Bachelor of Science in physics from the State University of New York at Albany.

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