The Best IRA CD Rates in July 2018

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Are you looking for a safe place to stash your money for retirement? Or maybe you need to roll over retirement funds from another account into a new investment to avoid the tax penalties associated with withdrawal? If you’re close to retirement or already retired, an IRA CD is a popular choice because they offer a secure investment with all the tax benefits of your IRA, but often come with a higher percentage rate than a savings account.

If you’re looking for an IRA CD with the best rates right now, take a look at the ones listed below. Keep in mind that CDs are a secure investment, but do require you to keep your money invested for the full term, lest you end up paying early withdrawal penalties that would likely wipe out most of the interest you earn.

Check with your bank or credit union for specific details on early-withdrawal penalties.

3-Month IRA CD Rates

Ally Bank

IRA High Yield 3-Month CD

APY

0.75%

Min to earn APY

None

APPLY NOW

on Ally Bank's secure site

Signature Federal Credit Union

3 Month IRA Certificate

APY

1.35%

Min to earn APY

$500

APPLY NOW

on Signature Federal Credit Union's secure site

6-Month IRA CD Rates

Service Credit Union

6 Month SEG IRA Certificate

APY

1.75%

Min to earn APY

$250

APPLY NOW

on Service Credit Union's secure site

Ally Bank

IRA High Yield 6-Month CD

APY

1.00%

Min to earn APY

None

APPLY NOW

on Ally Bank's secure site

1-Year IRA CD Rates

Connexus Credit Union

12 Month IRA Certificate

APY

2.80%

Min to earn APY

$5,000

APPLY NOW

on Connexus Credit Union's secure site

AFFCU

1 Year IRA

APY

2.30%

Min to earn APY

$1,000

APPLY NOW

on AFFCU's secure site

Synchrony Bank

18 Month IRA CD

APY

2.75%

Min to earn APY

$2,000

APPLY NOW

on Synchrony Bank's secure site

2-Year IRA CD Rates

Greenwood Credit Union

24 Month IRA Certificate

APY

3.00%

Min to earn APY

$1,000

APPLY NOW

on Greenwood Credit Union's secure site

Connexus Credit Union

24 Month IRA Certificate

APY

3.00%

Min to earn APY

$5,000

APPLY NOW

on Connexus Credit Union's secure site

3-Year IRA CD Rates

Connexus Credit Union

36 Month IRA Certificate

APY

3.20%

Min to earn APY

$5,000

APPLY NOW

on Connexus Credit Union's secure site

5Star Bank

36 Month Variable IRA

APY

2.80%

Min to earn APY

$250

APPLY NOW

on 5Star Bank's secure site

4-Year IRA CD Rates

ConnectOne Bank

48 Month Personal IRA

APY

2.94%

Min to earn APY

$500

APPLY NOW

on ConnectOne Bank's secure site

Service Credit Union

4 Year IRA Certificate

APY

3.00%

Min to earn APY

$1,000

APPLY NOW

on Service Credit Union's secure site

5-Year IRA CD Rates

Connexus Credit Union

60 Month IRA Certificate

APY

3.50%

Min to earn APY

$5,000

APPLY NOW

on Connexus Credit Union's secure site

State Department Federal Credit Union

60 Month IRA Certificate

APY

3.55%

Min to earn APY

$500

APPLY NOW

on State Department Federal Credit Union's secure site

How we chose the best IRA CD rates

We used data from DepositAccounts.com (a LendingTree company) to compare IRA CDs from three months to five years by annual percentage yield (APY). We excluded institutions with a health rating below a B as well as credit unions with very restrictive membership requirements.

Then we chose the two IRA CDs with the highest APY in each category. If the top two had the same APY, we broke the tie by choosing the institution with the lowest minimum deposit (which makes it accessible to more investors). All products in this list are FDIC- or NCUA-insured.

IRA CDs: 101

What’s the difference between an IRA CD and a regular CD?

An IRA CD is a CD product contained with a traditional or Roth IRA. This allows you to invest your money in a CD with the tax benefits you receive from your IRA. For a traditional IRA, you save money on taxes when you invest and pay later when you withdraw your funds. For Roth IRAs, you pay taxes when you make the investment, and avoid them when you take out the money for retirement.

What types of IRA accounts are eligible for an IRA CD?

Not all IRA accounts are eligible for the IRA CD products listed above.  Where available, we have listed which types of accounts are eligible. Please be sure to ask your banker before investing.

The types of IRAs that may be eligible for an IRA CD include:

  • Traditional — Tax-deferred investments. Pay taxes upon withdrawal.
  • Roth — Contributions are not tax-deductible. No taxes paid for withdrawal after retirement.
  • Simplified Employee Pension (SEP) — A simplified option for business owners to contribute to employees as well as their own IRA. This is a traditional IRA and follows all the same rules as a traditional IRA for investment, distribution and rollover.
  • Spousal — If you meet certain requirements, your spouse may contribute to your IRA.
  • SIMPLE — Simple stands for Savings Incentive Match Plan for Employees. It’s a traditional IRA set up for companies not offering a full retirement plan.
  • Coverdell Education Savings Account (CESA) — An account set up to pay the educational expenses of a beneficiary.

Should you invest in an IRA CD?

If you are close to retirement and require a short-term investment or just want some added security for your investment, investing in CDs is a great option. However, if you’re far from retirement, the interest rate for CDs is usually not enough to keep up with inflation, which makes reaching your retirement goals difficult, if not impossible.  So think stocks, bonds or mutual funds as alternatives. When you’re choosing your IRA investments, consider the risks and returns.

Are there any limitations to how much can be deposited in an IRA CD?

The IRS sets the limits each year on how much you may contribute to your IRA account. The limit is the same, whether you invest in CDs or in another financial product.

According to the IRS: “For 2015, 2016 and 2017, your total contributions to all of your traditional and Roth IRAs cannot be more than: $5,500 ($6,500 if you’re age 50 or older), or. your taxable compensation for the year, if your compensation was less than this dollar limit.”

This limit does not apply to rollover contributions or qualified reservist repayments.  Talk to a tax professional before investing to make sure you’re not making excess contributions, otherwise, you’ll be charged 6 percent tax per year as long as the excess amount remains in your IRA.

What happens if I need to withdraw my money early?

As with other CD products, your money is locked in for the full term of the CD. Early withdrawal makes you subject to early-withdrawal penalties. In most cases, these penalties are steep, amounting to three months’ interest for a three-month CD, which essentially wipes out your earnings. Longer-term CDs may charge 12 months’ interest for a two-year term. Depending on when you make the withdrawal, this could still wipe out your earnings and leave you in the hole. Long story short: Don’t invest in CDs if you foresee any possibility of needing an early withdrawal. Check with your bank or credit union to find out about the penalties for the financial product you’re choosing.

What happens after an IRA CD matures?

Most banks are interested in keeping your money, and therefore have a rollover policy which keeps your money invested in CDs if you do nothing after maturity. Check with your bank or credit union to see what its policy is).

In most cases, there is a grace period, during which you may withdraw your money without penalty. However, if you pass the grace period, you will be subject to early-withdrawal penalties, which usually amount to three, six or 12 months’ interest for shorter-term CDs. This is not something you want to have happen, as it will destroy what little money you made in the first place. So be sure you know when your CD is maturing, and if you wish to access your money, make a timely withdrawal.