Summary of Best IRA CD Rates April 2020
|Bank||1-year APY||3-year APY||5-year APY||Minimum Deposit||Learn More|
Discover Bank CD
Connexus Credit Union CD
Capital One CD
Synchrony Bank CD
Ally Bank CD
Alliant Credit Union CD
TIAA Bank CD
» Want to see more CD options? Check out our list of the best CD rates overall
Here are NerdWallet's picks for the best IRA CD rates:
- Discover Bank: 0.35% - 1.80% APY, 3 months - 10 years, $2,500 minimum to open
- Connexus Credit Union: 1.01% - 1.56% APY, 1 - 5 years, $5,000 minimum to open
- Capital One: 0.60% - 1.40% APY, 6 months - 5 years, no minimum to open
- Synchrony Bank: 0.25% - 1.65% APY, 3 months - 5 years, $2,000 minimum to open
- Ally Bank: 0.50% - 1.60% APY, 3 months - 5 years, no minimum to open
- Alliant Credit Union: 1.40% - 1.50% APY, 1 - 5 years, $1,000 minimum to open
- TIAA Bank: 0.80% - 1.70% APY, 3 months - 5 years, $5,000 minimum to open
Last updated on April 1, 2020
We featured easy-to-join financial institutions that we've reviewed with the highest CD rates available for CDs designated for IRAs. Higher rates might be available elsewhere.
To recap our selections...
NerdWallet's Best IRA CD Rates April 2020
Frequently asked questions
An IRA CD is a CD that serves as an investment in an individual retirement account plan. You can generally open an IRA plan at a bank or brokerage that holds multiple CDs or other interest-bearing accounts. An IRA is usually traditional or Roth, which have different tax implications.
(See more details about IRAs.)
A certificate of deposit, or CD, is a type of savings account that requires people to put money away for a set period of time. That’s called the "term length," and it generally ranges from three months to five years. Longer terms tend to earn higher returns.
An IRA, or individual retirement account, is a tax-advantaged account that can hold different types of investments, including stocks, bonds and CDs.
IRA CDs earn interest just like standard CDs. Rates are generally fixed and quoted as an annual percentage yield, or APY, which shows the amount an account earns in one year, including compound interest. The higher the APY, the more your money will grow.
» See what CDs can earn with our CD calculator
IRA CDs tend to be a decent option for people looking for guaranteed returns on their retirement savings, especially if retirement is only a few years away. These CDs are useful for those who can’t stomach the risks that come with stocks or bonds. Money in a CD is federally insured up to $250,000.
Younger investors can afford to take more risk with their investments, so they wouldn't want to tie up retirement funds in CDs only, if at all. Current CD rates don't compare to the return that investments can make in the long term. To check out higher-yielding options, see our list of best IRA accounts.
You can transfer money from another retirement account, such as an IRA or 401(k), or add new money. If you choose the second option, keep in mind that IRAs have annual contribution limits: $5,500 if you’re under 50 and $6,500 for those 50 or older. These are the combined limits for all IRAs you own.
You might face two penalties. Pulling money out of a CD before its term expires will likely result in an early withdrawal fee, which is typically a percentage of the interest earned. You could also face an IRS tax penalty.
This penalty could occur if you withdraw the money at the end of its term and deposit it into a non-retirement account without meeting a few requirements that qualify you for IRA distributions. For either a traditional or Roth IRA, you have to be older than 59 1/2, or you have to use the money for specific purchases, such as buying a home or funding higher education (see other exceptions). If it's a Roth IRA, you can withdraw your contributions at any time without an IRS penalty.
Generally, yes. Banks, especially those that don’t have investing accounts, may provide IRAs with limited choices. For example, a bank IRA might offer only CDs and money markets. IRAs at brokerages can hold a wider variety of investments, including stocks and bonds, which tend to provide higher returns over the long term.