Melrose CU progress
Got forms and disclosures from Melrose. One of the shortest fee schedules I have ever seen for a financial institution. Also some of the lowest fees.
Membership in the credit union is open to anyone. This is different from most other credit unions that have a specific industry(s) or geographic areas that they serve. It doesn't matter were you live or work.
They also have a 5 star rating from www.bauerfinancial.com which is the best you can get.
Rolling a maturing CD to them was a simple process requiring an IRA application, a beneficiary designation and an investment selection. Got a check from the old holder of the IRA CD made payable to Melrose FBO IRA (my name) and sent it to Melrose.
If you don't need to physically go to the bank, this might be a good institution to do your banking through.
Appreciate any feedback on this credit union.
Obama encourages savings
Within the last several days the President has encouraged Americans to save more by getting their tax refunds in savings bonds and making "opt-out" the norm for 401(k) plans. Is this a good idea for you?
Series EE Bonds earn .7% interest. You can probably do better with a bank CD or Money Market account. Maybe even a savings account.
By establishing an "opt-out" approach to participation in company sponsored 401(k) plans, the President is forcing you to take action to not have money from your pay check contributed to a company sponsored retirement plan. There are lots of advantages to participating in a 401(k) plan. You are saving pre-tax dollars (you don't pay taxes on the money you save when you save it).
However, you are usually offered a limited set of investment choices as selected by your plan (employer). These usually include a variety of mutual funds and a money marketmutual fund. Seldom does it include investments in bank CD's.
Why is that important? With mutual funds you are investing in the stock market. Thus you are subject to the whims of the market and the expertise of the portfolio manager.
You won't have the security of a government insured CD that can be obtained from a bank. As far a I know, only one 401(k) plan administrator offers CD's as an option in a 401(k) portfolio. That is Pentegra. Funny thing is they were originally set up to handle the 401(k) accounts of the Federal Home Loan Banks in 1943. Maybe they knew that CD's were a more secure investment than anything else.
The point of this commentary is that if you are encouraged to join a 401(k) plan then press your employer to provide one that offers a safe and secure investment alternative, such as CD's.
If your over 59 1/2 years old you can also ask if your 401(k) plan allows withdrawals over this age. These can be taken without penalty as long as the funds are then moved into a traditional IRA. The IRA will now allow you to invest in federally insured CD's and remove the risk of principle loss to a volatile market.
Melrose CU update – CD Penalty
Account opening went smoothly. As mentioned application was created and approved on-line with a printed version sent in.
Got a package of material back yesterday. Included IRA application and CD purchase form. On the 12th, when my other CD matures will send in forms to open the CD.
One big surprise is the penalties for early withdrawal from any CD product offered by Melrose CU. Three months interest on anything 1 year or less, and 6 months interest on anything over 12 months. The interesting thing is that in both cases the interest rate on the CD then drops to 1.5% for the remainder of the term. Pretty tough penalty.
Have not seen this harsh a penalty before. Suspect it is legal since it is disclosed clearly up front.