I redeemed an IRA CD in tax year 2023 early and was assessed a penalty by the financial institution for the early redemption. How is the penalty treated for 2023 Federal tax purposes? The money was reinvested in another IRA CD at a higher rate at the same institution. I did not receive a 1099-INT for this penalty.
Since all of the activity occurred within the IRA there is no tax implication.
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