Are cash withdrawals from a matured CD taxable

Home Fairmark Forum Taxation of Investments Are cash withdrawals from a matured CD taxable

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  • #72521
    idreos
    Participant

    Are cash withdrawals from a matured CD taxable I have a CD and when each matures I plan to withdraw 50k a year to pay for my living expenses. As I will have no other income except for earned interest till my social security kicks in 7 years from now, will the money I withdraw on a yearly basis be taxable?? Thanks for your help

    #72605
    Kaye Thomas
    Moderator

    What kind of account holds these CDs? Is it a regular investment account, or a retirement account of some kind?

    #72765
    idreos
    Participant

    Thanks for your reply the CDs are not in a regular investment account

    #72771
    Kaye Thomas
    Moderator

    I still need to know what kind of account they are in. An IRA? Something else?

    #72773
    idreos
    Participant

    Sorry about the confusion
    The CD is in a regular non retirement bank account

    #72776
    Kaye Thomas
    Moderator

    No problem, thanks for the clarification. The interest accruing on CDs in this type of account is taxable when earned, not when withdrawn. Presumably you have been receiving Form 1099 each year showing the amount of taxable interest, and reporting it on your tax return if your overall income was enough to require you to file. There is no additional tax to pay when the money comes out of the account. Withdrawals from a regular bank account are not taxable.

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