Stocks, bonds and mutual funds aren’t the only assets you can hold in an individual retirement account, or IRA. You can also hold certificates of deposit, which offer guaranteed interest earnings for low to no risk.
CDs may not offer as high a return as assets like stocks, but they’re much less volatile, which can be attractive to conservative savers such as those approaching retirement age. And with CD rates the highest they may be all year, now is a great time to open an IRA CD and lock in a high annual percentage yield, or APY, before any potential rate drops.
CNET’s picks for the top IRA CD rates
| Bank | Minimum deposit | 1-year | 3-year | 5-year | 5-year return on $10,000 |
| Synchrony | $0 | 4.90% | 4.15% | 4.00% | $2,166.53 |
| Discover | $2,500 | 4.90% | 4.00% | 3.90% | $2,108.15 |
| Alliant | $1,000 | 5.40% | 4.30% | 4.00% | $2,166.53 |
| Bethpage Federal Credit Union | $50 | 4.00% | 3.00% | 3.00% | $1,592.74 |
| PenFed | $1,000 | 4.55% | 4.00% | 3.90% | $2,108.15 |
| Connexus | $5,000 | 4.76% | 4.21% | 3.51% | $1,882.60 |
| Ally | $0 | 4.75% | 4.00% | 3.90% | $2,108.15 |
| Citibank | $250 | 2.75% – 3.75% | 2.00% | 2.00% | $1,040.81 |
More details on the best IRA CDs
Synchrony Bank
- Min. deposit to open
- $0
Synchrony is an online-only bank that uses limited overhead to offer attractive rates for deposit accounts. Its IRA CD rates are competitive for most terms, and you have several options for term lengths and CD types.
You can open a new IRA CD, transfer an existing IRA from another institution or roll over funds from qualifying employer-sponsored retirement plans. However, you’ll need to call the bank for most of these options. Unlike its traditional CD accounts, there doesn’t seem to be an option to open an IRA CD online. If you’re looking for more retirement options, Synchrony also offers IRA money market accounts.
- Early withdrawal penalties range from 90 to 365 days’ worth of simple interest on the principal withdrawn
- Terms range from three to 60 months
- Offers both traditional and Roth IRA CDs
- Offers no-penalty and bump-up CDs for certain terms
- Can withdraw interest without early withdrawal penalty (separate tax penalties may apply)
- Must call to open an account
Synchrony is an online-only bank that uses limited overhead to offer attractive rates for deposit accounts. Its IRA CD rates are competitive for most terms, and you have several options for term lengths and CD types.
You can open a new IRA CD, transfer an existing IRA from another institution or roll over funds from qualifying employer-sponsored retirement plans. However, you’ll need to call the bank for most of these options. Unlike its traditional CD accounts, there doesn’t seem to be an option to open an IRA CD online. If you’re looking for more retirement options, Synchrony also offers IRA money market accounts.
- Early withdrawal penalties range from 90 to 365 days’ worth of simple interest on the principal withdrawn
- Terms range from three to 60 months
- Offers both traditional and Roth IRA CDs
- Offers no-penalty and bump-up CDs for certain terms
- Can withdraw interest without early withdrawal penalty (separate tax penalties may apply)
- Must call to open an account
Discover
- Min. deposit to open
- $2,500
Discover Bank is an online financial services company that offers products such as deposit accounts, credit cards, personal loans and student loans. Its IRA CDs have competitive rates and come in a wide variety of term options up to 10 years.
However, Discover doesn’t offer no-penalty or bump-up CDs. In addition to IRA CDs, Discover also offers an IRA savings account. The bank’s 24/7 customer service and highly rated mobile app make it easy to manage your money.
- Early withdrawal penalties range from three to 24 months’ worth of simple interest on the amount withdrawn
- Terms range from three to 120 months
- Offers both traditional and Roth IRA CDs
- Allows rollovers and transfers from another retirement plan or financial institution
- No early withdrawal penalties if you’re making a withdrawal as part of a required minimum distribution
Discover Bank is an online financial services company that offers products such as deposit accounts, credit cards, personal loans and student loans. Its IRA CDs have competitive rates and come in a wide variety of term options up to 10 years.
However, Discover doesn’t offer no-penalty or bump-up CDs. In addition to IRA CDs, Discover also offers an IRA savings account. The bank’s 24/7 customer service and highly rated mobile app make it easy to manage your money.
- Early withdrawal penalties range from three to 24 months’ worth of simple interest on the amount withdrawn
- Terms range from three to 120 months
- Offers both traditional and Roth IRA CDs
- Allows rollovers and transfers from another retirement plan or financial institution
- No early withdrawal penalties if you’re making a withdrawal as part of a required minimum distribution
Alliant Credit Union
- Min. deposit to open
- $1000
Alliant Credit Union is an online credit union that offers deposit accounts, credit cards, loans and investment accounts. As a credit union, its products and services are only available to members. Membership is open to current or retired employees of Alliant’s partner organizations and businesses, residents of eligible communities in Chicago and immediate family members of current Alliant members. If you’re not eligible through any of those options, you can become eligible by joining Foster Care to Success (FC2S), Alliant’s partner nonprofit.
Alliant offers competitive rates on its share certificates -- the credit union equivalent to CDs -- with marginally higher rates for balances above $75,000. In addition to the standard traditional and Roth IRA options, Alliant also offers SEP IRA certificates for self-employed individuals.
- Early withdrawal penalties range from seven to 180 days’ worth of dividends
- Terms range from three to 60 months
- IRA certificates can be opened only by phone
- Offers higher rates on jumbo certificates ($75,000 or higher) for certain terms
- Offers traditional, Roth and SEP IRA certificates
- No penalties for monthly dividend withdrawals
Alliant Credit Union is an online credit union that offers deposit accounts, credit cards, loans and investment accounts. As a credit union, its products and services are only available to members. Membership is open to current or retired employees of Alliant’s partner organizations and businesses, residents of eligible communities in Chicago and immediate family members of current Alliant members. If you’re not eligible through any of those options, you can become eligible by joining Foster Care to Success (FC2S), Alliant’s partner nonprofit.
Alliant offers competitive rates on its share certificates -- the credit union equivalent to CDs -- with marginally higher rates for balances above $75,000. In addition to the standard traditional and Roth IRA options, Alliant also offers SEP IRA certificates for self-employed individuals.
- Early withdrawal penalties range from seven to 180 days’ worth of dividends
- Terms range from three to 60 months
- IRA certificates can be opened only by phone
- Offers higher rates on jumbo certificates ($75,000 or higher) for certain terms
- Offers traditional, Roth and SEP IRA certificates
- No penalties for monthly dividend withdrawals
Bethpage Federal Credit Union
- Min. deposit to open
- $50
Bethpage Federal Credit Union has its headquarters and all of its branches in New York. Still, anyone who opens a savings account with a $5 deposit can become a member. In an environment where many of the best CD rates available are exclusive to online banks, Bethpage is a rare institution that offers both competitive rates on its share certificates and 32 physical branches for customers to get help in person. To open an IRA certificate, you’ll need to schedule a video, phone or in-person appointment.
- Early withdrawal penalties range from 90 to 180 days’ worth of dividends on the principal amount withdrawn
- Terms range from three to 60 months
- Offers 39-month bump-up IRA certificates
- Offers traditional and Roth IRA certificates
- Must schedule an appointment to open an IRA certificate
Bethpage Federal Credit Union has its headquarters and all of its branches in New York. Still, anyone who opens a savings account with a $5 deposit can become a member. In an environment where many of the best CD rates available are exclusive to online banks, Bethpage is a rare institution that offers both competitive rates on its share certificates and 32 physical branches for customers to get help in person. To open an IRA certificate, you’ll need to schedule a video, phone or in-person appointment.
- Early withdrawal penalties range from 90 to 180 days’ worth of dividends on the principal amount withdrawn
- Terms range from three to 60 months
- Offers 39-month bump-up IRA certificates
- Offers traditional and Roth IRA certificates
- Must schedule an appointment to open an IRA certificate
PenFed Credit Union
- Min. deposit to open
- $1,000
Pentagon Federal Credit Union, or PenFed, is the second-largest federal credit union in the US. Membership is open to anyone who opens a PenFed savings account with a $5 deposit. The credit union offers a large variety of financial products, including three different types of IRA accounts -- IRA certificates, an IRA savings account and an IRA premium account, which is similar to the savings account but requires a higher minimum balance.
PenFed’s IRA CDs have competitive rates but fewer options for short-term certificates. They’re also more of a hassle to open, as you must print and sign a physical copy of the paperwork and then fax or mail it to PenFed.
- Early withdrawal penalty equals all dividends earned (if early withdrawal occurs within the first year) or 30% of the dividends that would’ve been earned had the certificate been held to maturity, not to exceed the total dividends earned so far (if early withdrawal occurs after the first year)
- Terms range from 12 to 84 months
- Offers traditional, Roth and SEP IRA certificates
- Early withdrawal penalty won’t exceed the value of dividends earned to date, meaning you won’t lose any of your principal
- Can only open an IRA certificate by printing and submitting a paper application
Pentagon Federal Credit Union, or PenFed, is the second-largest federal credit union in the US. Membership is open to anyone who opens a PenFed savings account with a $5 deposit. The credit union offers a large variety of financial products, including three different types of IRA accounts -- IRA certificates, an IRA savings account and an IRA premium account, which is similar to the savings account but requires a higher minimum balance.
PenFed’s IRA CDs have competitive rates but fewer options for short-term certificates. They’re also more of a hassle to open, as you must print and sign a physical copy of the paperwork and then fax or mail it to PenFed.
- Early withdrawal penalty equals all dividends earned (if early withdrawal occurs within the first year) or 30% of the dividends that would’ve been earned had the certificate been held to maturity, not to exceed the total dividends earned so far (if early withdrawal occurs after the first year)
- Terms range from 12 to 84 months
- Offers traditional, Roth and SEP IRA certificates
- Early withdrawal penalty won’t exceed the value of dividends earned to date, meaning you won’t lose any of your principal
- Can only open an IRA certificate by printing and submitting a paper application
Connexus Credit Union
- Min. deposit to open
- $5,000
Headquartered in Wausau, Wisconsin, Connexus Credit Union serves customers in all 50 states through its online banking platform as well as its 5,000 shared branches through the Co-op Shared Branch network. Membership is open to those affiliated with the employers or organizations listed here, residents of select communities in Illinois, Minnesota, Ohio and Wisconsin and family members of current members. Anyone can become eligible by joining the Connexus Association, the credit union’s partner nonprofit, with a $5 donation.
Connexus offers a good selection of IRA certificate rates and terms. But keep in mind there’s a $5,000 minimum opening deposit, and you need to call a representative to open a share certificate.
- Early withdrawal penalties range from 90 to 365 days’ worth of dividends on the amount withdrawn
- Terms range from 12 to 60 months
- Offers traditional and Roth IRA share certificates
- Special rate on 17-month share certificates
- Higher rates on jumbo share certificates
- Must call to open an IRA share certificate
Headquartered in Wausau, Wisconsin, Connexus Credit Union serves customers in all 50 states through its online banking platform as well as its 5,000 shared branches through the Co-op Shared Branch network. Membership is open to those affiliated with the employers or organizations listed here, residents of select communities in Illinois, Minnesota, Ohio and Wisconsin and family members of current members. Anyone can become eligible by joining the Connexus Association, the credit union’s partner nonprofit, with a $5 donation.
Connexus offers a good selection of IRA certificate rates and terms. But keep in mind there’s a $5,000 minimum opening deposit, and you need to call a representative to open a share certificate.
- Early withdrawal penalties range from 90 to 365 days’ worth of dividends on the amount withdrawn
- Terms range from 12 to 60 months
- Offers traditional and Roth IRA share certificates
- Special rate on 17-month share certificates
- Higher rates on jumbo share certificates
- Must call to open an IRA share certificate
- Min. deposit to open
- $0
Ally is another online-only bank that offers a robust set of deposit products, loans and services. You can handle all of your banking needs through its mobile app or online banking portal. There are no fees with any accounts, and 24/7 customer support is available via phone, chat or email.
In addition to competitive rates on its IRA CDs and a wide range of CD terms and IRA types, Ally’s IRA CDs come with a unique offering: If you fund your CD within 90 days of opening, you’re guaranteed the best available rate for your term and balance, whether the higher rate is from the time you opened your CD or the time you funded your CD. Ally also offers Raise Your Rate CDs -- which allow you to raise your CD rate a certain number of times if Ally’s rate goes up during your CD term -- for two- and four-year CDs.
- Early withdrawal penalties range from 60 to 150 days’ worth of interest
- Terms range from three to 60 months
- Offers traditional, Roth and SEP IRA CDs
- Early withdrawal penalty waived for Required Minimum Distributions
- If you fund your CD within 90 days, you’re guaranteed the best rate offered for your term and balance, on either the day you open or the day you fund
- Must fund account within 90 days of opening
- Raise Your Rate CDs are available for two- and four-year terms
Ally is another online-only bank that offers a robust set of deposit products, loans and services. You can handle all of your banking needs through its mobile app or online banking portal. There are no fees with any accounts, and 24/7 customer support is available via phone, chat or email.
In addition to competitive rates on its IRA CDs and a wide range of CD terms and IRA types, Ally’s IRA CDs come with a unique offering: If you fund your CD within 90 days of opening, you’re guaranteed the best available rate for your term and balance, whether the higher rate is from the time you opened your CD or the time you funded your CD. Ally also offers Raise Your Rate CDs -- which allow you to raise your CD rate a certain number of times if Ally’s rate goes up during your CD term -- for two- and four-year CDs.
- Early withdrawal penalties range from 60 to 150 days’ worth of interest
- Terms range from three to 60 months
- Offers traditional, Roth and SEP IRA CDs
- Early withdrawal penalty waived for Required Minimum Distributions
- If you fund your CD within 90 days, you’re guaranteed the best rate offered for your term and balance, on either the day you open or the day you fund
- Must fund account within 90 days of opening
- Raise Your Rate CDs are available for two- and four-year terms
Citibank
- Min. deposit to open
- $250
New York-based Citibank is one of the largest banks in the US. It’s the retail banking arm of global financial services giant Citigroup and offers a full suite of financial products and services to its 200 million customers in 160 countries.
Citibank has two options for IRA products: insured money market accounts and CD accounts in traditional and Roth options. Citibank offers a large range of IRA CD terms, including uncommon ones like four and seven months. Some uncommon terms pay paltry rates, but rates for common terms like six months or one year are on par with what the best IRA CDs offer.
Citibank also has a unique 18-month variable rate IRA CD, where the rate might change after your account is opened. (Most CDs have a fixed rate that you lock in when you open the account.)
- Early withdrawal penalties range from 90 to 180 days’ worth of simple interest
- Terms range from three to 60 months
- Products and pricing may vary by ZIP code
- Offers traditional and Roth IRA CDs
- Offers a variable-rate CD product, whose rate might change after account opening
- Must download and mail in a paper application, visit a branch or call a representative to open an IRA CD
New York-based Citibank is one of the largest banks in the US. It’s the retail banking arm of global financial services giant Citigroup and offers a full suite of financial products and services to its 200 million customers in 160 countries.
Citibank has two options for IRA products: insured money market accounts and CD accounts in traditional and Roth options. Citibank offers a large range of IRA CD terms, including uncommon ones like four and seven months. Some uncommon terms pay paltry rates, but rates for common terms like six months or one year are on par with what the best IRA CDs offer.
Citibank also has a unique 18-month variable rate IRA CD, where the rate might change after your account is opened. (Most CDs have a fixed rate that you lock in when you open the account.)
- Early withdrawal penalties range from 90 to 180 days’ worth of simple interest
- Terms range from three to 60 months
- Products and pricing may vary by ZIP code
- Offers traditional and Roth IRA CDs
- Offers a variable-rate CD product, whose rate might change after account opening
- Must download and mail in a paper application, visit a branch or call a representative to open an IRA CD
What is an IRA CD?
An IRA CD is a certificate of deposit held in an individual retirement account. Like a traditional CD, you’ll need to lock up a sum of money to earn a guaranteed rate of return for the duration of the term. If you need to withdraw funds before the term ends, you’ll incur an early withdrawal penalty, typically equal to a few months of interest.
The IRA that holds your CD has additional restrictions for withdrawal. Because IRAs are meant to help you invest for retirement, accessing your money before age 59 ½ incurs a 10% tax penalty on the amount you withdraw (with some exceptions). Once you’ve reached that age, you can enjoy the account’s tax benefits.
Many banks and credit unions offer IRA CDs that can go in either a traditional or Roth IRA. A traditional IRA lets you save for retirement with pretax money and pay taxes on withdrawals. Roth IRAs are funded with money that’s already been taxed, and your withdrawals are tax-free after age 59 ½. You can withdraw contributions -- but not interest earnings -- at any age after five years from account opening.
Combining a CD’s longer-term savings requirement with the stability of a fixed-rate APY creates a stable investment option. One benefit of using an IRA CD issued by a federally insured bank or credit union is fixed-rate growth that’s protected against loss up to $250,000 per person, per institution by the FDIC or NCUA.
Are IRA CDs a smart investment?
An IRA CD can be a wise investment, especially for investors looking to diversify their portfolios and reduce their overall risk. You should consult a qualified investment adviser to discuss whether this product fits your specific investment goals.
For example, if you’re a young adult saving for retirement, you may get better returns from a more aggressive portfolio. Although stocks are riskier than the guaranteed returns CDs offer, their potential for higher returns may be worth it when you have decades to recoup any potential losses.
Pros and cons of investing in IRA CDs
Pros
IRAs offer tax advantages for those who meet income requirements.
You’ll earn a guaranteed rate of return with a fixed APY.
Your deposit and interest are insured for up to $250,000 per person, per institution, as long as your account is held at an FDIC- or NCUA-insured bank or credit union.
Cons
You’re subject to income taxes and a 10% penalty if you withdraw funds before age 59 ½. You’re also subject to early withdrawal penalties, except under exemptions outlined by the IRS.
Your interest rate is locked in when you open the account, so you could miss out on growth potential if rates rise.
You could lose purchasing power if returns don’t keep up with inflation.
Are IRA CDs safe?
IRA CDs purchased through FDIC-insured banks or NCUA-insured credit unions are insured for up to $250,000 per person, per institution. Insurance covers the principal balance and any interest earned to date, making it a low-risk investment. Unlike stocks and bonds, CDs won’t lose value, meaning you’ll never end up with less money than you started with (unless you’re charged an early withdrawal penalty). And because the rate of return is locked in when you open the CD, you can easily predict how much you’ll earn.
How to invest in an IRA CD
When you’re ready to invest in an IRA CD, you should:
- Compare rates: Compare rates, terms and conditions of IRA CDs from banks, credit unions and brokerage firms to find the most favorable option.
- Complete an application: You’ll need to fill out an application with your full name, mailing address, phone number, Social Security number or Individual Taxpayer Identification Number and other basic information.
- Fund the IRA CD: You’ll need to make a one-time deposit to fund your CD or roll funds over from another IRA. The minimum deposit required varies by bank. This is common for most CDs, so be prepared to deposit the full amount once you open the account.
FAQs
If you’re looking for safe investments similar to CDs, consider savings accounts such as high-yield savings accounts or I bonds. These products may not offer returns as high as assets like stocks, but they’re low-risk ways to grow your savings.
A regular CD is a special savings account that offers a fixed APY in exchange for restricting access to deposited funds until a specific date, also known as a maturity date. CDs come in terms that typically range from three months to up to 10 years. Once the maturity date has expired, you can withdraw the funds or renew the CD at the then-current interest rate offered by the bank or credit union.
An IRA CD is a CD that is held within an individual retirement account. The money saved in an IRA CD is intended to be used in retirement and not withdrawn before the owner reaches age 59½.
A regular CD is a special savings account that offers a fixed APY in exchange for restricting access to deposited funds until a specific date, also known as a maturity date. CDs come in terms that typically range from three months to up to 10 years. Once the maturity date has expired, you can withdraw the funds or renew the CD at the then-current interest rate offered by the bank or credit union.
An IRA CD is a CD that is held within an individual retirement account. The money saved in an IRA CD is intended to be used in retirement and not withdrawn before the owner reaches age 59½.
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Methodology
CNET reviews CD rates based on the latest APY information from issuer websites. We evaluated CD rates from more than 50 banks, credit unions and financial companies. We selected the CDs with the highest APY for one-year terms from among the organizations we surveyed and considered rates for shorter terms if one-year terms were identical or unavailable.
The banks, credit unions and neobanks we reviewed include: Alliant Credit Union, Ally Bank, America First Credit Union, American Express National Bank, Axos Bank, Bank of America, Bank of the West, Bank5 Connect, Barclays, BMO Harris, Bread Savings, BrioDirect, Capital One, CFG Community Bank, Citizens Access, Colorado Federal Savings Bank, Connexus Credit Union, Consumers Credit Union, Credit One Bank, Discover Bank, First Internet Bank of Indiana, First Tech Federal Credit Union, FNBO Direct, GO2bank, Golden 1 Credit Union, HSBC Bank, Huntington Bank, Lake Michigan Credit Union, LendingClub Bank, Live Oak Bank, M&T Bank, Marcus by Goldman Sachs, Merrick Bank, Nationwide (by Axos), Navy Federal Credit Union, NBKC, OneUnited Bank, Pentagon Federal Credit Union, PNC, Popular Direct, PurePoint Financial, Quontic Bank, Rising Bank, Salem Five Direct, Sallie Mae Bank, Santander Bank, SchoolsFirst Federal Credit Union, Synchrony Bank, TAB Bank, TD Bank, TIAA Bank, Truist Bank, U.S. Bank, UFB Direct, Union Bank, USAA Bank, Vio Bank and Wells Fargo.
This article includes some material that was previously published on NextAdvisor, a CNET Money sister site that was also owned by Red Ventures and which has merged with CNET Money. It has been edited and updated by CNET Money editors.
The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.
