GORILLA wrote:

- quote -

When it is constructively paid (or payable) to you, it's
income. Most CDs pay monthly or quarterly and it is
actually a choice elected by you to "reinvest" those monies.

At maturity, all of the money comes to you, both principal
and accrued interest. What you do with it (rollover, spend,
invest elsewhere) does not change the taxability of it.

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If this is a concern for you, get out of income/interest
producing vehicles. Your willingness to roll the interest
and principle into a new CD leads me to believe that you are
not using the income generated by the CD anyway.

Most clients are in CDs because they have little principle
risk and produce a steady and expected income stream. But in
your case the investment is costing you money (maybe alot of
money) in the form of tax savings.

You might be better off investing in something that could
potentially reduce principal, but will assuredly allow you
to save money tax wise. Even in a down market (remember: the
market historically rises in the long run) as long as tax
savings are greater than principle loss, you come out
better.

I have clients that use an ETF based on treasury inflation
protected securities (TIPS) to do so. Its an ETF (no capital
gains distributed = no 1099) comprised of inflation
protected treasury securities. Their symbol is TIP (as you
might have expected). They carry principal risk similar to
other ETFs, Mutual Funds, bonds, and stock equities but are
based on bond price and performance of government bonds
which are typically less volatile than the market itself.

Oh yeah, and I am in no way associated with, nor stand to
make any gain by giving the recommendation above. I am sure
there are a few dozen other potential investments and they
may or may not be suitable to your individual scenario and
risk tolerance (my recommendation included).

Good luck and sorry for the long post.

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- quote -

Yes, but one year is the limit -- if they give you a five
year CD that doesn't pay any interest until year five, the
IRS would impute interest as you go along. So to simplify
things, banks won't defer interest payments past one year.

Steve

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"GORILLA" <"[remove}clackey3"[at]earthlink.net> wrote:

- quote -

Ask your bank about a deferred fixed annuity, you can get a
short term annuity which can be rolled over tax deferred
into a new annuity. This is the best way to control your
taxable income when you start receiving Social Security.

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- quote -

Sorry, but a CD produces a 1099 each year for that year's
earnings even if the CD doesn't mature. (Exception: a
one-year-or-less CD produces a 1099 at maturity.)

A tax-deferred investment like U.S. Savings Bonds might be
worth considering.

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GORILLA wrote:

- quote -

Even on a multi-year CD, interest is payable, reportable,
and taxable annually. If it was that easy to defer taxes,
everyone would be doing it.

Even if interest is paid less often than annually (very
uncommon for a CD), it is treated as OID and still taxable
each year. See Pub 550.

-Mark Bole

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GORILLA wrote:

- quote -

No, only if the CD is part of a traditional or Roth IRA.

- quote -

No

- quote -

Good question, where did you start?

- quote -

If you say so.

- quote -

Not going to happen.

- quote -

Any CD with a term greater than one year will issue a 1099
EACH YEAR, showing the accrued interest during that year.
This is reportable and taxable in the year accrued.

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GORILLA wrote:

- quote -

No and no. When the CD matures the interest is made
available to you as taxable gross income.

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- quote -

I believe it all depends upon when the bank pays interest.
It is not up to you. Most CDs pay quarterly and will
therefore generate income. I remember years ago a CD that
was advertised as "tax savings" in that it would not pay
interest until the end of the term, which was in the next
tax year.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

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GORILLA <"[remove}clackey3"[at]earthlink.net> wrote:

- quote -

No.

- quote -

No.

- quote -

And where are you going?

- quote -

The 12 month CD will pay its interest and so you declare itg
as taxable at that time.

The 24 month CD has a term of More than 1 year. In that
situation, you have to decl;are as income, and will get a
1099 for accrued interest every year, and noit one humongous
interest income once, when the CD matures.

So if you have a 5-year CD don't worry about having to
declare interest income as a lump sum in 5 years. You will
declare a smaller amount of income each year.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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1. Can matured CD be rolled into a new CD complete with
earnings (without generating a 1099 and the related tax on
earnings?

2. Can a "Promotional CD" That is a one time offering" (can
not be renewed) be rolled into a new CD without 109 being
generated.

Where am I coming from?

On Social Security. Not enough "other income" to cause
Social Security to be taxed.

....but have a large CD(s) that generates enough interest at
maturity to cause Social Security to be taxed. To prevent
that tax event, one needs to somehow roll the CR principal +
earnings into a new CD.

The problem is not so severe with a 60 month CD, but having
12 and 24 months CDs creates tax issues from the 1099s every
year.

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