What to do with IRA after age of 59 1/2

[Zillionaire]

Well, my dad has an IRA certificate account at this bank 5 years ago but their interest rate is so low 2.9% and next week he's eligible to withdraw but he's not ready to withdraw. So which option he should choose?

Thanks

Note: What's IRA certificate. I've been searching on google but couldn't find the answer.

[jIM_Ohio]

You can withdraw at 59 1/2 , you do not have to withdraw until 70 1/2.

Look up required minimum distributions

[noppenbd]

When is he thinking he will need the money? I'm thinking this is an IRA account invested in a certificate of deposit. If he does not need the money I would have him roll it over to a regular Vanguard, Fidelity, or T Rowe Price IRA and invest it in a mutual fund, rather than a CD.

If he withdraws the funds now and it is a deductible IRA, the entire withdrawal will be treated as income in the current year, so he will owe federal and state income taxes on it.

[disneysteve]

You can withdraw at 59 1/2 , you do not have to withdraw until 70 1/2.

True. If he doesn't yet need to tap the money in his IRA, he can roll this over. If the current bank isn't paying a good rate, move it to a different bank.

When is he thinking he will need the money? I'm thinking this is an IRA account invested in a certificate of deposit. If he does not need the money I would have him roll it over to a regular Vanguard, Fidelity, or T Rowe Price IRA and invest it in a mutual fund, rather than a CD.

What type of mutual fund? And why? I think we need a lot more info. Your question of when he will need the money is very important. Also, what does the rest of his portfolio look like? Maybe he already has 60% of his money in stocks and doesn't want or need more? How old is he (OP didn't specify)? Does he have a pension?

Without more details, I would simply suggest rolling over the CD at a bank paying a better interest rate. Check bankrate.com for rates. Also, check you local banks.

[Zillionaire]

When is he thinking he will need the money? I'm thinking this is an IRA account invested in a certificate of deposit. If he does not need the money I would have him roll it over to a regular Vanguard, Fidelity, or T Rowe Price IRA and invest it in a mutual fund, rather than a CD.

If he withdraws the funds now and it is a deductible IRA, the entire withdrawal will be treated as income in the current year, so he will owe federal and state income taxes on it.

That's the reason why my dad doesn't want to withdraw because he's still working. I just found out there are a few credit union banks offer IRA CD. 5 years APY 4.25% it isn't bad

[disneysteve]

Actually, you can get a 5-year for about 5% and a 1-year for over 4%. I'm not sure I'd lock up money for 5 years, though. I'd go shorter, or ladder the money, and wait and see what interest rates do.

[jIM_Ohio]

That's the reason why my dad doesn't want to withdraw because he's still working. I just found out there are a few credit union banks offer IRA CD. 5 years APY 4.25% it isn't bad

The word to use in this case is ROLLOVER. Your father wants to roll his current IRA into an IRA at another institution. What he invests in still needs discussion.

[noppenbd]

What type of mutual fund?
.

I would rather see it in almost any mutual fund (even a money market mutual fund) over a CD paying below or at inflation.

OP needs to answer the original question about when the money is needed. Also, is this part of a larger portfolio, or the whole portfolio?