Summary
IRA CD is a lower-risk retirement account containing a certificate of deposit account. IRA CDs are often offered by banks, credit unions, and financial institutions.
The combination of insurance and a guaranteed interest rate makes an IRA CD a safer, more conservative investment choice than other investment options like stocks. Some financial institutions may offer the following IRA CDs.
In the U.S. it is illegal to own more than one IRA. In the UK, it is legal to own two IRA accounts. In Canada, it's illegal to hold more than $1,000.
You can invest in both a traditional IRA and a Roth IRA if your total doesn’t exceed 2023’s annual limits of $6,500 for those under age 50. As of 2023, you can put up to $6,.500 annually into Roth and traditional IRAs combined.
IRA CDs may offer higher returns than a regular CD. You don’t pay taxes on any interest earned in an IRA CD during the tax year.
You can open an IRA CD in one of three ways: with a contribution, or transfer/direct rollover. Some allow you to access your interest, while others don’t.
The word “rollover” has two different meanings when speaking about IRA CDs. An IRA CD’s rollover can refer to a CD renewal with the same term length and current interest rate. An IRA CD is rarely suitable for the younger investor with a long inv horizon until retirement.
You can open an IRA CD at any age, including with a contribution at age 70 or older. You can also withdraw money from an IRA without penalty.
An IRA CD can be ideal when you have a low risk tolerance and want to protect your principal and future returns. The best way to decide whether an IRA CD is right for you is to speak with a professional financial advisor.
