How to Change an IRA CD to a Regular CD

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.