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Subject Author Date
$350k in CD's -- Want them to be insured don 03-05-2008
Posted by don on March 5, 2008, 5:09 pm
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 I am most appreciative of the many valid tax ideas I have learned from
this newsgroup. Alas, I am not sure if this post is appropriate for
this group - I sure do not want to post "incorrectly".

My elderly folks (ages: 84/85) have ~$450K in CD's coming due (now in
my mom/dad's name). My Dad is concerned about exceeding the $100k
federal insurance limit. He is aware that he can have 2 individual and
1 joint account - thereby insuring at least $300k at his current bank.
I also suggested that he consider different banks, $100k maximum at
each.

My concern is the avenue that my father is currently contemplating. He
wants to create several different CD accounts, along with his
children. My parents, along with one of his children would be listed
as the owners of each individual CD; with each CD being worth less
than $100k. I am not knowledgeable of any possible estate and maybe
gift tax issues. I expect that there are other concerns - that I am
totally unaware of as well!

Any advice I could provide my folks - before they act - would be most
appreciated.

don
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Posted by Bill Brown on March 5, 2008, 5:47 pm
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 On Mar 5, 5:09 pm, d...@hotmail.com wrote:
> I am most appreciative of the many valid tax ideas I have learned from
> this newsgroup. Alas, I am not sure if this post is appropriate for
> this group -  I sure do not want to post "incorrectly".
>
> My elderly folks (ages: 84/85) have ~$450K in CD's coming due (now in
> my mom/dad's name). My Dad is concerned about exceeding the $100k
> federal insurance limit. He is aware that he can have 2 individual and
> 1 joint account - thereby insuring at least $300k at his current bank.
> I also suggested that he consider different banks, $100k maximum at
> each.
>
> My concern is the avenue that my father is currently contemplating. He
> wants to create several different CD accounts, along with his
> children. My parents, along with one of his children would be listed
> as the owners of each individual CD; with each CD being worth less
> than $100k. I am not knowledgeable of any possible estate and maybe
> gift tax issues. I expect that there are other concerns - that I am
> totally unaware of as well!
>
> Any advice I could provide my folks - before they act - would be most
> appreciated.
>
> don

If dad is ok with the kids walking off with his retirement savings ...

There is only a completed gift when/if the kid does take the money out
of the CD. Otherwise, the $s will be in the taxable estate when mom
and dad pass on.

Different banks is easier.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Gil Faver on March 5, 2008, 10:31 pm
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> On Mar 5, 5:09 pm, d...@hotmail.com wrote:
>> I am most appreciative of the many valid tax ideas I have learned from
>> this newsgroup. Alas, I am not sure if this post is appropriate for
>> this group - I sure do not want to post "incorrectly".
>>
>> My elderly folks (ages: 84/85) have ~$450K in CD's coming due (now in
>> my mom/dad's name). My Dad is concerned about exceeding the $100k
>> federal insurance limit. He is aware that he can have 2 individual and
>> 1 joint account - thereby insuring at least $300k at his current bank.
>> I also suggested that he consider different banks, $100k maximum at
>> each.
>>
>> My concern is the avenue that my father is currently contemplating. He
>> wants to create several different CD accounts, along with his
>> children. My parents, along with one of his children would be listed
>> as the owners of each individual CD; with each CD being worth less
>> than $100k. I am not knowledgeable of any possible estate and maybe
>> gift tax issues. I expect that there are other concerns - that I am
>> totally unaware of as well!
>>
>> Any advice I could provide my folks - before they act - would be most
>> appreciated.
>>
>> don
>
> If dad is ok with the kids walking off with his retirement savings ...
>
> There is only a completed gift when/if the kid does take the money out
> of the CD. Otherwise, the $s will be in the taxable estate when mom
> and dad pass on.
>
> Different banks is easier.


at some level, brokered CDs purchased via your stock broker is even easier.
If you have a slef directed account, you can do it all yourself. I prefer
to check out the "quality" of each such financial institution via, for
example, bankrate.com.

each CD is insured to $100,000.00 as to the issuing bank, and teh whole
amount (up to ??? millions) is insured as to the stock broker holding the
CDs for you.

as another poster has replied, the $100,000 FDIC limit is both principal and
interest, with the principal being the par value, not what you paid for it
if above par.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Arthur Kamlet on March 7, 2008, 3:05 pm
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>
>at some level, brokered CDs purchased via your stock broker is even easier.



I sometimes grumble during tax season.


Had a couple last month who has small interest and dividends and
social security and talked to me about their CDs. OK.

Looking it over I first thought they had too little income
to file, but with the stimulus act stuff, file.


Then it turned out they redeemed and "rolled over" $40,000 of CDs.
Broker, of course, issued 1099B for 40,000. So they Had to file.

There really should be a CD execption to having to file a 1099B.

=== === === ===



Another grumble" I learned it as: Spring Forward; Fall Back.


It's still winter!
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by BeanTownSteve on March 5, 2008, 6:57 pm
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On Mar 5, 5:09 pm, d...@hotmail.com wrote:
> I am most appreciative of the many valid tax ideas I have learned from
> this newsgroup. Alas, I am not sure if this post is appropriate for
> this group - I sure do not want to post "incorrectly".
>
> My elderly folks (ages: 84/85) have ~$450K in CD's coming due (now in
> my mom/dad's name). My Dad is concerned about exceeding the $100k
> federal insurance limit. He is aware that he can have 2 individual and
> 1 joint account - thereby insuring at least $300k at his current bank.
> I also suggested that he consider different banks, $100k maximum at
> each.
>
> My concern is the avenue that my father is currently contemplating. He
> wants to create several different CD accounts, along with his
> children. My parents, along with one of his children would be listed
> as the owners of each individual CD; with each CD being worth less
> than $100k. I am not knowledgeable of any possible estate and maybe
> gift tax issues. I expect that there are other concerns - that I am
> totally unaware of as well!
>
There's a lot unsaid here that I won't get into (seeking best return,
laddering etc.) but a place to start regarding what is insured and how
the title to the account might be he's on the right track. A good
resource is the FDIC itself, you could start at
http://www.fdic.gov/deposit/deposits/index.html

Not sure if it's been considered BUT:
The 100,000 limit is both interest and principal. As these CDs age
will the principal + accrued interest go past the limit?
There sometimes is a time lag getting your money back out from an
institutional failure. Usually doesn't happen because the arrangement
is made for
some "other" institution to take over the failed bank, but it can
happen. The law only says insurance should pay "as soon as possible"
and if your money is
in that limbo situation, it's NOT gaining interest. Something to
consider.

If you're going to help him distribute the money to various places,
the best site I've found for rates is www.money-rates.com. There's
more but this one, but for me, it's more timely, consistent and a
wider information base than the others, but I do use several when I'm
trying to place a new CD.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>


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