Last week a CD was up and my name was the primary with my
parents names also on the account. I then had the CD renewed for a lesser amount but switched my dad to the primary with my mom and me now as secondaries. We all have deposit and withdrawal privaledges. With 3 days I realized that I made a mistake because this may have been subject to a gift tax and asked the bank to switch it back. They said they had to close
out the CD book and issue a new one and could not just reverse the names on the original CD book. Is this true?

It's entirely possible. Some banks will permit name changes (corrections or genuine name changes) on CD accounts. Others will only handle them by taking down the first CD and putting up another in its place. A closeout and reopen is often required hen the bank has issued a passbook or other legal document for the CD account.

The bank does not have to impose an early withdrawal penalty whichever route it takes. We hope that your bank won't.

So there wasn't a way for them to just switch the primary (dad) to me and my dad to the secondary without issuing a whole new CD book with new # and closing out the old one as they claim?

Note that I didn't suggest it was in impossibility. I said that that banks choose to handle such a situation in different ways. There are pros and cons to each method as far as the bank is concerned. What is important to you is that the bank could accommodate you, regardless of how it goes about it.

They told me that had to close it out and reissue. Was just wondering if this was how it had to be. You know how it is sometimes where if you talk to someone higher up they can get it done for you and just wanted to make sure that it still wasn't a possibility because i would have preferred it that way instead with my name changed to primary on the original one instead of new CD being issued (new issue date 4 days later) with my name as primary with entire amount including interest in the new CD.

John,

I talked to the person at the bank and they told me they had to reissue a new CD when this occurred. Do you think since this is their policy that even if it was the banks mistake they still would of had to do the same thing? I forgot to ask them that because they did transfer all of the interest over for those 4 days still. Thanks

As I said, it was likely a matter of bank policy, and the policy may very well have reflected the easiest way for the bank to accomplish the desired result. It may be that the bank simply didn't want to have a CD book issued with a correction noted on it.

With all due respect, since you have the end result you wanted, what difference does it make how the bank got there?

I have a cd in my name and got my friend name second and two other names...does this at my death have to be split equally if my friend is appointed to what they wish....

The answer is...it depends. Are the other individuals on the Certificate as Joint owners or Beneficiaries?
If they are all joint owners, any one of them can take all of the money at any time (including while you are still alive.)
If they are beneficiares, unless you have specified differently with your bank, the funds should be divided into three equal shares.

I have a similar question. I'm looking to open a CD with my father. I am intending to list him as the primary and me as the secondary. Will this pose a tax liability for me? I don't want this to be considered a gift.