I'm not at all certain why this scenario is "really messy" nor why there are a "ton of factors to consider".
The facts present a relatively simple matter of whether or not to use proceeds from the maturation of CDs to pay off a (primary) home mortgage at the rate of 2.75% or to invest those proceeds in another cash deposit account (presumably at a rate that well exceeds 2.75%).
Formulating hypotheticals is fine, but here they are all inapposite.
The mortgage rate is not 5% and the stated rate of return was well above the mortgage rate.
Further, the funds to be used to pay off the mortgage are not invested in a "balanced investment portfolio", they are invested in time deposits (which, apparently, will continue to be the case in the event the funds are not used to pay off the mortgage).
Finally, there is no indication that the funds to be used to pay off the mortgage are in a retirement account and, in fact, it was mentioned that RMDs would be taken within the next few years.
If @wjgrayson needs estate planning services for other reasons or issues, then that would be a good route. Otherwise, this is a relatively simple financial/tax decision.
