Q. I have my IRA in an annuity that doesn’t look like it is going to pay anything. These investors never told me I could put my IRA in CDs. From what I’m reading on the Internet it looks like I can. Is that so?

A. You can transfer your IRA to a bank and invest your money in certificates of deposit without having to pay any penalties or taxes on that money. Any bank will be more than willing to help you with the paperwork.

You'll have to decide whether you want to pick a bank that has an office near your home or if you're comfortable dealing with a bank by phone or e-mail. If you pick a bank near your home, you may not get the best rate. To get a sense of the rates banks in your area, and across the country, are offering you can use our rate tables. Every bank in those tables will be insured by the FDIC, which means any money you put into CDs are insured and your principal is safe.

Just be realistic about how much you can make. Our tables show many banks paying 5%, or a little more, on six month or one year CDs. At 5% you can earn about $51 a year on every $1,000 you invest. So if you have $10,000, your income will be $510 a year.

Q. I have 23, $500, 60-month CD's that are gaining 4.5% annually. I purchased them on June 25, 2003 and they mature on June 25, 2008. Today they are worth $576.60 each. If I cash them in I can put that money into a two-year CD at 5.255 but I’d have to pay a $10.75 penalty on each of them. Is it worth it?

A. If each of your 23 CDs is currently worth $576.60, their total value is $13,261. With 21 months left on their 60-month term they'll be worth $14,345 when they mature on June 25, 2008.

If you withdraw the money now and pay the $10.75 penalty on each CD -- a total of $247 -- you'd have $13,014 to invest at 5.25% for two years. After the first 21 months they'd be worth $14,263 – or $82 less.

Yes, you'd be assured of earning 5.25% for another three months if you made the switch. We can certainly guess that interest rates won't be as high in June 2008 as they are now. So sticking with your current CDs means you'll probably have to re-invest for less than 5.25% between July and September 2008.

But you should act on what you know for sure: The penalty makes a switch unprofitable over the next 21 months.

Have a question about your finances? Ask us at editors@interest.com.

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