How to Move a CD From One Bank to Another Without Getting Taxed

by Kimberlee Leonard ; Updated July 27, 2017

A certificate of deposit is a bank account that gives you a defined rate of return for holding the money in the account for a designated period of time, often three months or longer. An ordinary CD generates a 1099 form reporting the interest income on an annual basis. But if you open a CD in an IRA account, you can move the money from one bank to another without incurring taxes. IRAs are taxed only on distributions.

Step 1

Call the bank that currently holds your CD. Confirm the fact that the CD is in an IRA and the account's maturity date. The maturity date is the day the CD becomes liquid and you can take the money out without penalty. Tell the customer service representative that you do not want the CD to roll over automatically into a new CD. You may need to visit the bank to fill out a form if your IRA CD is set up for automatic rollover.

Step 2

Visit the bank into which you want to transfer the money. Explain to the customer service representative that you would like to transfer an IRA CD. Investors transfer IRA CDs for many reasons: to stay under the $250,000 limit for Federal Deposit Insurance Corp. insurance, to get a higher rate or to work with a bank closer to home.

Step 3

Fill out a new IRA account application with transfer paperwork. Indicate that the CD should be transferred "upon maturity." You won't pay taxes regardless of when the CD is transferred, but moving the CD upon maturity avoids any bank penalties for closing the CD early. Submit the paperwork.

Step 4

Allow the CD to mature and give the bank four to six weeks to transfer the assets.


  • While you may be tempted to conduct an indirect rollover--cashing in the CD and depositing the money elsewhere--because it's faster, this triggers an automatic 20 percent federal tax withholding. This is not recouped until tax refunds are sent, but you are still required to put that amount in the new IRA account to avoid its being considered a distribution.

About the Author

With more than 15 years of professional writing experience, Kimberlee finds it fun to take technical mumbo-jumbo and make it fun! Her first career was in financial services and insurance.

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