Is the rate on a Roth IRA fixed by the government, or is the rate
at the discretion of the bank with whom you are investing? Thank
you. -- Derek Dilemma
The government determines who is eligible to contribute to Roth
or traditional IRA accounts. It doesn't set the interest rate the
account can earn. The rate is determined by the financial institution
offering the account or the investment returns on the account's
You don't have to invest with a bank. Most banks now
have a separate brokerage services arm, so you'll need to decide
whether to invest in an IRA account that is an FDIC-insured deposit
account or in a brokerage account with the bank. You can also open
an IRA account with a full-service or discount brokerage firm, or
invest directly with a mutual fund family.
So there's a difference between where the account
is held and how the account is invested. The tax code provision
on contributions and distributions is the same across account types.
My recommendation is for you to decide how you want
to invest the money over time, and then find a financial institution
that offers the investment. Keep your eye on account management
fees, sales commissions and investment management expenses. Keeping
a lid on fees and expenses means more of your money working for
If you're just interested in a high-yielding CD in
a Roth IRA account with a bank, you can shop
rates on Bankrate.