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#2185256 - 07/13/18 12:32 PM Must interest be credited at least annually?
Likes to Comply Offline
Diamond Poster
Joined: Nov 2008
Posts: 1,062
In the mountains
Must interest on a CD be credited or paid out at least annually when the term of the CD is greater than 12 months? I feel like I read this some years ago but I cannot find it again.
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Operations Compliance
#2185283 - 07/13/18 02:30 PM Re: Must interest be credited at least annually? Likes to Comply
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Interest does not have to be credited at least annually. ยง1030.7(b) says:
Compounding and crediting policies. This section does not require institutions to compound or credit interest at any particular frequency.

However, I believe (didn't look it up to verify) that you have to issue a 1099 each year even though interest wasn't actually provided to the customer. Maybe someone with a better knowledge of IRS rules can verify or correct me.
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David Dickinson
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#2185342 - 07/13/18 05:11 PM Re: Must interest be credited at least annually? Likes to Comply
bigfish Offline
Member
Joined: Oct 2006
Posts: 66
trolling for the big one
Yes, I believe the IRS considers the unpaid interest as Original Issue Discount (OID). The interest amount needs to be reported annually on IRS Form 1099-OID. The instructions for Form1099-OID are located at:

Form 1099-OID Instructions

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