CD maturity and 1099 and roll into a new CD

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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Reply to
GORILLA
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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Reply to
Victor Roberts

No.
No.
And where are you going?
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 @
formatting link
Columbus OH K2PZH
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Reply to
Arthur Kamlet

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

No, only if the CD is part of a traditional or Roth IRA.
No
Good question, where did you start?
If you say so.
Not going to happen.
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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Reply to
Herb Smith

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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Reply to
Mark Bole
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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Reply to
MyVeryOwnSelf

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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Reply to
Harry
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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Reply to
Steve Pope
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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Reply to
kastnna

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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Reply to
BeanTownSteve

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