Definition
Withdrawal that occurs from a certificate of deposit (CD) before the maturity date.
An early withdrawal penalty is usually applied to CDs from which early withdrawals are made .
The early withdrawal penalty is often waived for IRAs, if the owner is either at least age 59 ½ when the withdrawal occurs or of RMD age
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. Therefore it is not reported on IRS Form 1099-R.
