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- An IRA certificate of deposit is a type of retirement investment account.
- Traditional, Roth, and SEP IRA CDs follow the same guidelines and restrictions as any other IRA.
- IRA CDs could be a worthwhile option if you're nearing retirement and looking for a safe investment.
- See Insider's list of the best CD rates»
You're probably familiar with an individual retirement account (IRA), a tax-advantaged investment account that helps you save for retirement. You also may have heard of a certificate of deposit (CD), a savings account that locks in your Annual Percentage Yield (APY) for a set amount of time.
But what's an IRA CD and where can you find the best IRA CD rates? It's a type of account that combines these two concepts.
What is an IRA CD?
An IRA CD locks in your APY for a set amount of time and saves your money specifically for retirement. It can be an option worth considering for people who are getting close to retirement and are looking for a safe way to invest their money.
How an IRA CD works
An IRA CD is a type of retirement account that invests your funds in a certificate of deposit (CD). When you open a regular CD, you're putting away money for the near future — with an IRA CD, your CD is part of your long-term retirement savings strategy.
Most banks allow you to choose between aTraditional and Roth IRA CD, and some offer SEP IRAs for people who are self-employed. An IRA CD follows most of the same rules as any other IRA. You're limited to a certain amount in contributions per year, and you'll pay the usual taxes and penalties for early withdrawals that you would with any other Traditional, Roth, or SEP IRA.
This means you'll contribute after-tax dollars to a Roth IRA CD, and you won't pay taxes when you withdraw money. For a Traditional IRA CD and SEP IRA CD, you'll typically contribute money before taxes are taken out, then pay income tax on withdrawals.
Where can you open an IRA CD?
Don't assume that just because a bank offers a CD, it also has IRA CDs — it isn't all that common. Of the banks that do offer IRA CDs, the most competitive rates are currently at banks like Synchrony Bank, and Alliant Credit Union.
| Ally (Member FDIC) | Discover (Member FDIC) | Synchrony (Member FDIC) | Alliant (Federally Insured by the NCUA) | |
| Term length | 3 months - 5 years | 3 months - 10 years | 3 months - 5 years | 1 year - 5 years |
| Type of IRA CDs | Traditional, Roth, SEP | Traditional, Roth | Traditional, Roth | Traditional, Roth, SEP |
| Annual Percentage Yield (APY) | 3.00% to 4.85% | 2.00% to 4.70% | 0.25% to 5.10% | 4.00% to 5.15% |
| Minimum deposit | $0 | $2,500 | $0 | $1,000 |
| Learn more | Start Saving | Learn more | Learn more |
These banks offer competitive rates and a variety of term lengths, and they don't charge monthly maintenance fees. Your choice may come down to what term length you want, how much you have for an opening deposit, or whether you want a SEP IRA.
Should you get an IRA CD?
Here are some of the advantages and disadvantages to consider when getting an IRA CD:
Generally, your retirement savings strategy should change as you approach retirement. If you havea significant number of years left to invest, you'll likely want to take on more investing risk than an IRA CD can provide. If you're retiring in the next few years, however, an IRA CD can be a less risky option for investing with a guaranteed rate of return.
Personal Finance Reviews Editor
Laura Grace Tarpley (she/her) is an expert in mortgage rates, refinance rates, lenders, bank accounts, and borrowing and savings tips for Personal Finance Insider. She worked on Business Insider's "The Road to Home" series, which won a Silver award from the National Associate of Real Estate Editors.She has written about personal finance for over seven years. Before joining the Business Insider team, she was a freelance finance writer for companies like SoFi and The Penny Hoarder, as well as an editor at FluentU.
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