While stocks and bonds typically make up the bulk of your individual retirement accounts (IRA) holdings, don’t forget about certificates of deposit (CDs). You’llgarner guaranteed returns for at least the “risk-free” portion of your portfolio, which may be of interest to those living on a fixed income in this high-rate environment.
Account details and annual percentage yields (APYs) are accurate as of May 19, 2024.
Best IRA CD rates
- Synchrony Bank IRA certificates of deposit.
- NASA Federal Credit Union IRA certificate.
- Digital Federal Credit Union certificate IRA.
- Service Federal Credit Union IRA certificate.
Why trust our banking experts
Our team of experts evaluates hundreds of banking products and analyzes thousands of data points to help you find the best product for your situation. We use a data-driven methodology to determine each rating. Advertisers do not influence our editorial content. You can read more about our methodology below.
- 140 CDs from 84+ financial institutions reviewed.
- 4 levels of fact checking.
- 50+ data points analyzed.
Synchrony Bank IRA certificates of deposit
BLUEPRINT RATING
Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.
BLUEPRINT RATING
Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.
Annual percentage yield
0.25% to 4.90%
Minimum deposit requirement
$0
Terms
3 months to 5 years
What should you know
Synchrony Bank’s IRA certificates don’t have a minimum deposit requirement, which makes them rather unique; allowing you to invest what you have without requiring you to save up before you start saving. You can choose between nine terms that run the standard time frame with options from three months to five years. The nine- and 12-month certificates feature the highest yield, 4.90% APY, and even its three-month certificate yield is rather competitive for its term length, at 0.25% APY.All of its CDs also have standard early withdrawal penalties. If you have a sudden need to access your funds, you’ll pay a penalty of: 90 days of simple interest on terms of 12 months or less; 180 days of simple interest on terms more than 12 months but less than 48 months; 365 days of simple interest on terms of 48 months or more. One caveat is that you can only open your IRA CD over the phone. Synchrony doesn’t have physical branches and it doesn’t allow online applications for IRA CDs.
Pros and cons
Pros
- No minimum deposit required.
- Early withdrawal penalties apply only to the principal amount withdrawn.
Cons
- No physical branches.
- No online application.
NASA Federal Credit Union IRA certificate
BLUEPRINT RATING
Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.
BLUEPRINT RATING
Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.
Annual percentage yield
4.00% to 5.50%
Minimum deposit requirement
$1,000 or $10,000
Terms
6 months to 5 years
What should you know
If you’re after a stellar certificate yield and have $1,000 or $10,000 to invest, look at NASA Federal Credit Union. Its nine-month term offers 5.50% APY and its 15-month term offers 5.40% APY. The lowest yield you’ll find is 4.00% APY on its five-year term. NASA FCU’s IRA certificates require a minimum deposit of $1,000 for terms of six-, 12-, 24-, 36-, 48- and 60-months or $10,000 for terms of nine-, 15- and 49-months. Smaller minimum deposits, as low as $50, are available on its non-IRA certificates.As with most certificates, there are penalties if you withdraw the funds before the maturity date. For certificates with terms up to 24 months, you will be charged 182 days of dividends on the amount withdrawn (or, all dividends on the amount withdrawn, if the funds withdrawn have been in the account for less than 182 days). For terms greater than 24 months, the charge is 365 days of dividends on the amount withdrawn (or, all dividends on the amount withdrawn, if the funds withdrawn have been in the account for less than 365 days). Anyone can join NASA Federal Credit Union by becoming a member of the National Space Society (NSS). The credit union provides a complimentary one-year membership to NSS, entitling you to all the benefits of NASA FCU. The institution is part of the national credit union Co-op network, granting you access to more than 5,600 branches and 30,000 ATMs nationwide.
Pros and cons
Pros
- Top-of-the-market yields.
- National branch and ATM access.
Cons
- High minimum deposit requirement for some terms.
- Membership is required.
Digital Federal Credit Union certificate IRA
BLUEPRINT RATING
Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.
BLUEPRINT RATING
Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.
Annual percentage yield
3.46% to 4.86%
Minimum deposit requirement
$500
Terms
3 months to 5 years
What should you know
Instead of offering IRA certificates in a set, standard array of terms, Digital Federal Credit Union (DCU) allows greater customization; rates apply to a range of terms: Its top 4.34% yield applies to any term from 12 to 23 months. This allows you to fine-tune how long you want to invest in an IRA certificate. Overall, you can pick between maturity dates that range from three months to five years.And, if you’re waffling on investing because you think rates may change, also offered is a Digital Federal Credit Union Jump-Up certificate IRA — which comes with terms of 15- and 27-months. If yields increase, you can request a rate increase one time during the certificate’s term.Whichever type of certificate you choose, the early withdrawal penalties are the same. For certificates with terms of three to 11 months, you’ll pay 60 days of dividends; while certificates with terms of 12 to 35 months have a penalty of 90 days’ dividends and certificates with terms of 36 to 60 months charge 180 days of dividends.A slightly annoying catch is that because DCU is a credit union, you must qualify for membership. If you’re not automatically eligible through your employer, you can join an associated nonprofit for as little as $10 and qualify that way.
Pros and cons
Pros
- Access to more than 80,000 ATMs and 5,600 Co-op branches.
- Certificates available for traditional, Roth, SEP and SIMPLE IRAs.
Cons
- $500 minimum deposit required.
- Must meet membership eligibility criteria.
Service Federal Credit Union IRA certificate
BLUEPRINT RATING
Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.
BLUEPRINT RATING
Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.
Annual percentage yield
0.80% to 5.10%
Minimum deposit requirement
$500
Terms
3 months to 5 years
What should you know
Service FCU offers 10 certificates and out of this baker’s dozen, three promotional rates are eye-catching: 5.10% APY for 12 months, 4.75% APY for 15 months and 4.45% APY for 18 months. The other certificates have terms from three months to five years, but don’t have super strong yields — even dipping as low as 0.80% APY for a three-month term.Early withdrawal penalties are: 90 days of dividends for terms that are less than one year, 180 days of dividends for terms of one year to 23 months and 265 days of dividends for terms of two years or greater.You’ll need at least $500 to open one, which is on the low end of minimum deposit requirements, and you must call or visit a branch to open an IRA certificate. Although Service Federal Credit Union focuses on the military community, anyone can become a member by joining the American Consumer Council (ACC). Use the promo code “Service” to join the ACC free of charge.
Pros and cons
Pros
- Competitive promotional rates.
- 10 term options available.
Cons
- No online application for IRA certificates.
- Some terms have very low rates.
Compare the best IRA CDs
| INSTITUTION | STAR RATING | TERMS | APY | MIN. DEPOSIT |
|---|---|---|---|---|
Synchrony Bank | 5 | 3 months to 5 years | 0.25% to 4.90% | $0 |
NASA FCU | 4.97 | 6 months to 5 years | 4.00% to 5.50% | $1,000 or $10,000 (depending on the term length) |
Digital Federal Credit Union | 4.82 | 3 months to 5 years | 3.46% to 4.86% | $500 |
Service FCU | 4.76 | 3 months to 5 years | 0.80% to 5.10% | $500 |
Methodology
We sifted through thousands of data points on more than 180 financial institutions to find the IRA CDs. We scored each bank, credit union and broker out of 100 based on the following.
- Yields 45%: The better the interest rates, the better the IRA CD provider scored.
- Customer service 15%: We considered how well providers scored on sites such as the Better Business Bureau and Trustpilot, as well as its app ratings on iOs and Android platforms.
- Available terms 10%: Traditional CDs lock your funds away for a set time. Having plenty of choices on how long you can commit your funds is important.
- Availability 10%: Some financial institutions have limited geographic reach; some credit unions have super strict eligibility requirements that prevent most people from being able to open IRA CDs. The more available a CD is, the better.
- Minimum deposit requirements 10%: Not everyone can afford to (or wants to) deposit hundreds or thousands of dollars into a CD. The lower the deposit, the higher a provider scored.
- Compound Interest Schedule 10%: The more often a CD compounds, the more you earn from it. IRA CDs that have daily or monthly compounding schedules scored more highly than those with quarterly or yearly ones.
A perfect score of 100 then earned a five-star rating; a score of 80 earned a four-star rating and so on.
What is an IRA CD?
An IRA CD is a certificate of deposit that you invest in as part of your individual retirement account assets.
As your IRA is a vehicle for retirement savings, you get to choose how to invest the funds in that account. This could include stocks, exchange-traded funds, alternative assets or CDs. When you invest an IRA in a CD, it combines the tax advantages of a regular IRA with the locked-in rate of a CD.
How it works
To open an IRA CD you can either contribute new funds to your IRA or use money that is already in it.
If you are contributing new funds there are limits as to how much you can contribute per year into an IRA. In 2024, the total contribution limit to any IRA is $7,000. If you’re 50 years or older, you can contribute up to $8,000 and take a deduction.
The tax advantages of an IRA depend on your income and the type of IRA you choose to open. With a traditional IRA you can deduct your contributions from your income when you file your taxes, however you will pay taxes upon withdrawal. With a Roth IRA you don’t get a tax deduction now, but you can withdraw tax free in retirement.
If you are using funds that are already inside your IRA then you don’t need to worry about contribution or income limits.
When you’ve chosen which CD you’d like to purchase you will open an IRA at the bank where you are getting the CD and then use the money in that IRA to purchase the CD.
IRA CD pros and cons
Here’s what to consider before adding an IRA CD to your retirement portfolio:
Pros
Guaranteed growth: CDs are one of the safest investments you can make, allowing you to skip the volatility of stock market swings. The promised yields and set time frames help you plan out your earnings. “Opting for an IRA CD is a way to have the guaranteed growth and interest rate of a CD without having to pay the immediate taxes,” said Caroline Tanis, financial advisor and founder of the Tanis Financial Group based in New York City.
Tax benefits: You don’t pay taxes on any funds you put in a traditional IRA, allowing your funds to grow exponentially; you only pay Uncle Sam when you finally take a distribution. Roth IRAs offer the reverse — if you’re eligible, you fund the account with after-tax dollars so that all of your qualified distributions are tax-free.
FDIC-insured: Unlike the stock market, your IRA CD funds are extremely low-risk. The interest rate is fixed so you know exactly how much you’ll earn over time. Plus, many providers offer federal deposit insurance.
“For those who are particularly risk-averse or have had negative experiences with market downturns, an IRA CD provides a safer alternative,” said Taylor Kovar, certified financial planner and CEO of Kovar Wealth Management.
Cons
No access to funds: IRA CDs are not very flexible, whether you’re decades away from retiring or already eligible to access normal IRA funds. “As with any CD, the money is locked up during that time period,” said Tanis.
Multiple layers of early withdrawal penalties: If you do end up withdrawing funds, you may lose a large chunk of the balance because of penalties. “You will still have the penalty if you take the money out of that CD, regardless of your age or account type,” said Tanis. And if you don’t meet the IRA withdrawal requirements, you could pay the 10% penalty fee, plus income tax.
Opportunity cost: “While IRA CDs are safe, they typically offer lower returns compared to riskier investment options like stocks or mutual funds,” Kovar said. You may miss out on higher returns from other opportunities.
Choosing the best IRA CD
There are several factors to consider before you pick any IRA CDs as part of your retirement plan. First, make sure the financial institution has deposit insurance. This usually covers deposits up to $250,000.
Next, compare rates. Some banks may have a certificate special rate for shorter periods of time, such as one-year CDs. You may also find better rates with jumbo CDs, which reward you for putting a larger amount of cash in your IRA CD.
CD vs. IRA
A CD is a type of savings account that locks in a set interest rate regardless of whether rates rise or fall during the term. Typically, if you withdraw any funds early, you’ll pay a penalty. CDs are usually insured by the Federal Deposit Insurance Corporation (FDIC) at banks and by the National Credit Union Administration (NCUA) at credit unions.
An IRA is a type of retirement savings plan that can be opened with a bank, credit union, brokerage or life insurance company. You can’t just open an account and call it a day, though. You have to designate what to do with the funds. Putting the funds in a CD is one option.
There are several types of IRAs. The two primary ones are a traditional or Roth. A traditional IRA allows eligible account holders to deduct contributions in the current tax year. A Roth IRA doesn’t have any immediate tax savings, but you don’t pay any taxes on your earnings when you make eligible withdrawals.
Can I roll my IRA CD into a regular IRA?
Because your IRA CD is part of your regular IRA, you likely don’t need to do a roll over. Once your CD matures, you can use the funds on a wide choice of investment options that are available to your specific IRA. You could get another CD or split the funds and build a CD ladder.
An “IRA roll over” is when you transfer all of your funds from one IRA to another. Generally, you may complete only one IRA rollover each year, so you’ll need to do some planning if you have multiple IRAs that you want to combine.
Should you invest in an IRA CD?
Whether you should invest in an IRA CD depends on your goals and risk tolerance. CDs are a great way to safely guarantee a return, but they do have some drawbacks.
For one, you can’t access the funds during the term of the CD without paying a penalty. Also, depending on which slice of history you look at, returns on stocks and bonds have often returned greater yields — you may be giving up some growth in exchange for safety.
Depending on your needs and how close to retirement you are, IRA CDs can serve as the conservative investment portion in your larger retirement portfolio.
Frequently asked questions (FAQs)
Yes, there is the potential for multiple penalties. In most cases, the provider will charge a CD early withdrawal penalty, which costs a predetermined amount of earned interest. (There’s an exception if you opened a no-penalty CD.) Also, with a traditional IRA, you may pay a 10% early withdrawal penalty if you’re younger than 59 ½ years old.
You have a couple of different options when your IRA CD matures. First, you can renew the existing CD at whatever the current rate is for that term length. Consider comparing the market’s current best CD rates in order to maximize the account.
If you don’t renew the CD you can explore other investment options that your IRA offers. You could move the funds to an IRA with a different institution if your current IRA doesn’t have the investment choices you’re looking for. Just note that if you withdraw the funds from the IRA, you may face penalties.
In a traditional IRA, taxes are deferred until you take distributions. In a Roth IRA, the growth is tax-free. However, for either type, you can’t access the growth until you are 59 ½ years old without having to pay penalties.
IRA CD rates tend to increase when the Federal Reserve raises the federal funds rate. At its most recent meeting, the Fed voted to maintain the current federal funds rate. However, the nation’s central bank could cut rates sometime in 2024 should the economy soften.
