CDs and CD ladders

May individuals invest in CDs and CD ladders with the fixed income portion of their portfolio.

Although we do not have an account type to accommodate CD, you have the ability to enter a CD in My Plan using this workaround.

First, we need to account for the money invested in the CD.

STEP 1: Head on over to My Plan > Accounts and Assets
STEP 2: Press on Create an Account + and select Investment/Savings/Checking

STEP 3: Give the account a descriptive name, "CD 5" years, for example

STEP 4: Select Ordinary Income as your tax treatment

STEP 5: Enter the balance of the CD

STEP 6: Set the optimistic and pessimistic rates of return to 0%

STEP 7: Exclude the account from your withdrawal strategies

Then, we need to account for the interest coming in.

STEP 8: Head over to My Plan > Income > Pension and enter a lump sum pension for the amount of interest the CD will pay at the end of the term. This will ensure that the interest is taxed at your ordinary interest rate.

STEP 9: Direct the lump sum pension distribution to the CD account

This should get you as close as possible to your desired outcome. The end result will be the $100,000 (or appropriate balance) plus interest in the CD Account in 5 years (or the appropriate term) and will properly tax the interest. Your next step will be including this account in your plans to fund your expenses.

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