Skip to Content

Early Withdrawal

Last Updated March 21, 2009

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.