Best IRA CD rates – January 2022

An IRA CD is a savings option to consider for those looking for a guaranteed return on retirement funds.

Investing in an IRA CD is relatively easy. It’s similar to purchasing a regular CD, but instead of using money from your checking or savings account, you transfer funds from an IRA or another retirement account.

IRA CDs are safe investments and appeal to investors who like the predictability that comes with a fixed annual percentage yield (APY). Use Bankrate’s CD calculator to see exactly how much money you will earn over the term of the IRA CD.

What is an IRA CD?

An IRA CD is an individual retirement account where your money is parked in a certificate of deposit, a time-deposit account that pays interest at a set rate in exchange for the saver agreeing to deposit cash for a set term. CD terms vary, usually ranging from three months to 10 years. CDs generally offer a higher rate than savings accounts because they are less liquid.

The best one-year IRA CD yields are about eight times the national average of 0.07 percent APY, according to Bankrate’s national index survey of banks and thrifts from Jan. 26, 2022.

Typically, your options are a traditional IRA or Roth IRA. The tax advantages for each are different. Bankrate’s IRA calculator can help you compute and compare potential earnings for both types.

You may want to consider getting an IRA CD if your tolerance for risk is low and you’re looking for a guaranteed return to boost your retirement savings while enjoying tax advantages. IRAs are subject to contribution limits and not all contributions are eligible for tax savings. Check with your tax advisor if you have questions.

Of course, CDs aren’t the only investment option for those looking to put their money into an IRA. Stocks, bonds, mutual funds and money market funds are also popular options.

Best IRA CD rates for January 2022

Bank APY Minimum deposit
Pentagon Federal Credit Union 0.80%-1.45% (1 year-7 years) $1,000
Bethpage Federal Credit Union 0.40%-1.00% APY (3 months-5 years) $50
Ally Bank 0.15%-0.80% (3 months-5 years) $0
Synchrony Bank 0.15%-1.00% (3 months-5 years) $0
Alliant Credit Union 0.55%-0.80% (1 year-5 years) $1,000
Navy Federal Credit Union 0.40%-0.95% (3 months-7 years) $1,000-$100,000 for tiered APYs
Discover Bank 0.20%-1.00% (3 months-10 years) $2,500
SchoolsFirst Credit Union 0.10%-1.15% (30 days-5 years) $500-$100,000 for tiered APYs
Security Service Federal Credit Union 0.15%-1.20% (3 months-7 years) $500-$25,000 for tiered APYs
Suncoast Credit Union 0.40%-1.25% (6 months-5 years) $500-$100,000 for tiered APYs
Delta Community Credit Union 0.50%-0.95% (1 year-5 years) $1,000
Randolph-Brooks Federal Credit Union 0.35%-1.00% (1 year-7 years) $1,000

Note: Annual percentage yields (APYs) shown are as of Jan. 27, 2022. Rates for some products vary by region, and some APYs require higher balances than the minimum deposit. Banks are listed in order of top APYs for one-year IRA CDs with a $25,000 balance.

Which IRA CD is best for you depends on your goals. Consider the rate offered along with other factors, including the minimum deposit required and maturity date. Rates vary by the term of the CD. Some banks may offer more competitive rates on five-year IRA CDs, for example, but not for six-month IRA CDs. Consider your time horizon when deciding how best to invest.

Best IRA CD rates: Bank details

Here are Bankrate’s picks for the best IRA CD rates:

Pentagon Federal Credit Union

APY: 0.80%-1.45% APY (1 year-7 years)

Minimum deposit: $1,000

Pentagon Federal Credit Union was established in 1935. It has more than 2 million members and has its main office in McLean, Virginia.

PenFed has six terms of IRA CDs, ranging from one year to seven years. There are no early withdrawal penalties on the principal.

Bethpage Federal Credit Union

APY: 0.40%-1.00% APY (3 months-5 years)

Minimum deposit: $50

Bethpage Federal Credit Union was founded 80 years ago.

Bethpage Federal Credit Union’s main office is located in Bethpage, New York. It has around 435,000 members and offers nine terms of IRA CDs. The three-month CD is the shortest term and the five-year CD is the longest term.

Besides IRA CDs, Bethpage offers regular CDs, checking accounts, savings accounts, a money market account, loans and other financial products.

Ally Bank

APY: 0.15%-0.80% APY (3 months-5 years)

Minimum deposit: $0

Ally Bank is an online-only bank that offers more CD options than most direct banks. Ally Bank gives savers options with a High Yield CD and a Raise Your Rate CD. If you fund your IRA CD within 90 days, you’ll get its best rate for the term and balance on either the day you open or the day you fund the account. Ally Bank IRA CDs are available as a traditional, Roth and simplified employee pension (SEP) IRA.

Synchrony Bank

APY: 0.15%-1.00% APY (3 months-5 years)

Minimum deposit: $0

Synchrony Bank, formerly known as GE Capital Bank, is a subsidiary of Synchrony Financial. Synchrony Bank offers Roth IRA CDs and traditional IRA CDs.

Opening an IRA CD with Synchrony Bank can only be done over the phone, as Synchrony has no branches and doesn’t offer an online application. Its corporate headquarters are in Draper, Utah.

Alliant Credit Union

APY: 0.55%-0.80% APY (1 year-5 years)

Minimum deposit: $1,000

In 1935, what’s now Alliant Credit Union was founded as the United Airlines Employees’ Credit Union. Alliant currently has 450,000 members nationwide.

You’ll need to keep at least $5 in your High-Rate Savings Account in order to keep it open. You’ll also need to maintain a $100 daily average minimum balance to earn interest with this account.

Navy Federal Credit Union

APY: 0.40%-0.95% APY (3 months-7 years)

Minimum deposit: $1,000-$100,000 for some APYs.

Navy Federal Credit Union has more than 9 million members and is the world’s largest credit union. It has a global network of 340 branches. Navy Federal Credit Union has its headquarters in Vienna, Virginia.

Membership at Navy Federal Credit Union is open to all Department of Defense and Coast Guard Active Duty, civilian, contract personnel, veterans and their families.

In addition to CDs, Navy Federal Credit Union also offers checking and savings accounts, loans and credit cards.

Discover Bank

APY: 0.20%-1.00% APY (3 months-10 years)

Minimum deposit: $2,500

Discover Bank eliminated fees on its deposit products in June 2019. Interest on Discover Bank CDs is compounded daily and credited monthly. Discover Bank provides a nine-day grace period after a CD matures. Its headquarters are in Greenwood, Delaware.

SchoolsFirst Federal Credit Union

APY: 0.10%-1.15% APY (30 days-5 years)

Minimum deposit: $500-$100,000 for some APYs

SchoolsFirst Federal Credit Union was formed by school employees during the Great Depression in 1934. The credit union has 50 branches.

CDs at SchoolsFirst Federal Credit Union feature low minimum balances, terms from 30 days to five years, and four balance tiers: $500, $20,000, $50,000 or $100,000.

Security Service Federal Credit Union

APY: 0.15%-1.20% APY (3 months-7 years)

Minimum deposit: $500-$25,000 for tiered APYs

Security Service Federal Credit Union offers membership to residents of Colorado, Texas or Utah, as well as those who work, attend school, volunteer or have businesses in those states. Members of certain military branches or units are also eligible as are household family members of existing credit union members.

Many Security Service branches in Colorado and Texas offer free, self-service coin-counting machines. Members are able to schedule appointments to meet virtually with credit union representatives for help with opening accounts, applying for loans and other banking needs.

Suncoast Credit Union

APY: 0.40%-1.25% APY (6 months-5 years)

Minimum deposit: $500-$100,000 for tiered APYs

Suncoast Credit Union was started in 1934 as Hillsborough County Teachers Credit Union. Today, it has 69 branches and about 918,000 members.

Suncoast Credit Union is the eighth-largest credit union in the U.S. based on membership. It is also the 10th-largest based on assets.

Anyone who attends school, lives, works or worships in the Florida counties served by the credit union is welcome to join.

Delta Community Credit Union

APY: 0.50%-0.95% APY (1 year-5 years)

Minimum deposit: $1,000

Delta Community Credit Union began as the Delta Employees Credit Union, started by eight Delta Air Lines employees in 1940. The credit union has more than 400,000 members, and 26 branches in metro Atlanta and three branches outside of Georgia.

Anyone living or working in metro Atlanta and current and former employees of more than 150 businesses can become a member. PetSmart, Chick-fil-A and UPS are some of the eligible businesses, to name a few.

Randolph-Brooks Federal Credit Union

APY: 0.35%-1.00% APY (1 year-7 years)

Minimum deposit: $1,000

Randolph-Brooks Federal Credit Union was established in 1952 and has its main office in Live Oak, Texas. It operates 61 branches and serves four major markets: Austin, Corpus Christi, Dallas-Fort Worth and San Antonio.

In addition to its range of CDs with terms from six months to seven years, Randolph-Brooks offers a Really Free Checking account that requires no minimum balance and charges no monthly fee. The credit union has more than 1 million members.

Who are IRA CDs best for?

IRA CDs are worth considering if you’re looking to diversify your portfolio. You may have other retirement accounts with funds invested in areas where a loss of principal is possible, such as the stock market or exchange-traded funds.

That is also why IRA CDs are a good option for someone with a low risk tolerance. If you don’t like surprises and want to know exactly how much interest the investment will make, a fixed-rate IRA CD provides that certainty. As long as you hold the IRA CD to its maturity, you will earn the expected interest on the IRA CD. It’s also worth considering adding to your portfolio if you’re nearing retirement.

At a bank, the Federal Deposit Insurance Corp. (FDIC) covers up to $250,000 for the combined balance of all self-directed retirement accounts owned by the same person in the same insured bank.

At a National Credit Union Administration (NCUA) credit union, the National Credit Union Share Insurance Fund (NCUSIF) covers up to $250,000. The coverage is separate from insurance coverage on your other credit union accounts.

What types of IRAs are eligible for a CD?

  • Traditional IRA: To contribute, you or your spouse, if filing jointly, need to have earned income, such as from employment. Contributions may be tax-deductible if you qualify, and any taxes are deferred until you begin making withdrawals in retirement.
  • Roth IRA: Just as with a traditional IRA, to contribute you (or your spouse, if filing jointly), need to have earned income, such as from employment. There is no tax-deductibility on contributions and there are income limits on being able to contribute directly to a Roth IRA. Your contributions can be withdrawn tax-free and penalty-free at any time, but any investment earnings withdrawn in retirement are tax-free.

Where can you buy an IRA CD?

Your IRA is a basket for your investments, and you get to decide what to invest in. Not all financial institutions offer CD IRAs, so you will need to find one that does.

Make sure you shop around. Look for institutions that offer competitive CD rates, and pay attention to minimum balance requirements.

When choosing an IRA CD, keep your time horizon top of mind. The biggest risk with a CD is accessing your money before the CD’s term ends. Generally, institutions will charge you a penalty if you withdraw money before the CD’s maturity date.

Overall, CDs are a safe place to stash your money. They are insured up to $250,000 at banks by the FDIC and at credit unions by the NCUSIF.

Pros and cons of investing in an IRA CD

Before opening an IRA CD, weigh the pros and cons to see if it’s the right product for you.

The pros of investing in an IRA CD include:

  • A guaranteed return on your investment (as long as you don’t withdraw from your CD before it matures).
  • Your money is insured up to $250,000 as long as it is held at an FDIC-insured bank or an NCUA credit union.
  • You won’t have to worry about fees unless you’re penalized for tapping into your account before it matures.

The cons of investing in an IRA CD include:

  • If you’re younger, you may want to invest in something with the potential for a higher return.
  • The rate you earn may not keep up with inflation.

What are the contribution limits for an IRA?

The IRS limits how much you can contribute to your IRA annually. For 2022, those under age 50 can contribute up to $6,000 annually in a traditional or Roth IRA. Savers 50 and older can contribute up to $7,000.

Are IRA CDs also subject to the same contribution limits?

Yes. Just like any IRA, the IRS limits how much you can contribute to an IRA CD per year.

Is an IRA CD tax-deductible?

You may be able to deduct some or all of your contributions to a traditional IRA. There are exceptions. For instance, if you exceed a certain income, your contribution may have limited deductibility or not be deductible at all.

Roth IRA contributions aren’t deductible. You don’t report the Roth IRA contributions on your tax return either.

Can I transfer an IRA CD to another bank?

Yes, you can. A trustee-to-trustee transfer is one way to move your IRA CD from one bank to another. Here, you won’t touch the money: Your bank with the maturing CD will send money to your new bank provider. Before moving your money, make sure that your CD has matured in order to avoid potential early withdrawal penalties.

If you are nearing retirement and want your money to be more liquid, consider transferring the IRA CD to an IRA savings account or to an IRA money market account instead of another IRA CD. Check with your bank to make sure the funds don’t have to be in this IRA savings account or IRA money market account for a certain period.

What is the penalty for early withdrawal of an IRA CD?

Like any other CD, you will typically pay a penalty if you withdraw your money before an IRA CD matures.

Also, if you withdraw before age 59½ from a traditional IRA CD, you may be subject to pay an additional 10 percent tax on early distributions. The IRS will make exceptions. If the IRA CD term expires within a traditional IRA, you can keep those funds in the IRA but use them to make other investments.

How to effectively use an IRA CD and avoid penalties

To effectively use an IRA CD, fund it with money you won’t likely need until after age 59½. This strategy will help you avoid an IRS additional tax.

If your IRA is heavily invested in risk assets, parking money in an IRA CD can help you diversify your portfolio. With an IRA CD, you will get a guaranteed return and tax benefits.

IRA CD vs. CD

Just like when you open a regular CD, your time horizon is very important when choosing an IRA CD. With a regular CD, withdrawing your money too early may result in an early withdrawal penalty. If the funds are in a traditional IRA CD and you withdraw from the CD both before its term is up and before you turn 59½, you may incur an early withdrawal penalty from your bank and a 10 percent early withdrawal tax.

Unlike a regular CD, contributions to a traditional IRA may be tax-deductible. But you can’t deduct contributions that you make to a Roth IRA CD.

IRA CD risks

IRA CDs are just as safe as a regular CD, as long as they are opened at an FDIC-insured bank or an NCUA credit union and don’t surpass the insurance limits. For instance, IRAs fall in the “Certain Retirement Account” category at the FDIC. The coverage limit is $250,000 per owner on IRAs at an FDIC bank in a deposit product, such as a savings account or a CD. At a credit union, the National Credit Union Share Insurance Fund covers an IRA separately from insurance coverage on your other credit union accounts. The NCUSIF covers an IRA at a credit union up to an additional $250,000.

Use the FDIC Electronic Deposit Insurance Estimator and contact your FDIC-insured bank to confirm that your account is insured. At a credit union, use the Share Insurance Estimator and contact your credit union to confirm your account meets insurance requirements.

Is an IRA CD better than an IRA savings account?

An IRA CD may have a higher APY than an IRA savings account. It also might be a more appropriate option because, for the most part, IRA funds consist of money that you don’t plan on touching.

On the other hand, if you’re over 59½ and plan to actively make withdrawals out of your traditional IRA, then an IRA savings account might make more sense, rather than paying early withdrawal penalties — imposed at your bank — for withdrawing from the CD early.

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