Roth IRAs are a popular retirement account option for a good reason. They are easy to open with an online broker and, historically, they offer an average annual return of between 7% and 10%. This type of IRA takes advantage of capitalization, meaning that even small contributions can grow significantly over time. That's why it's important to open a Roth IRA as soon as possible, so you can be more prepared for retirement.
However, if you are planning to retire in the near future, an IRA Certificate of Deposit (CD) may be a safer option for investing with a guaranteed rate of return. Some banks may offer more competitive rates on five-year IRA CDs, but not on six-month IRA CDs. If you want to know exactly how much interest your investment will generate, a fixed-rate IRA CD is the way to go. Unless you have invested in an increased IRA CD, you won't be able to take advantage of a higher rate until your CD matures.
In a credit union, the National Credit Union Deposit Insurance Fund covers an IRA separately from the insurance coverage in your accounts. Increased IRA CDs give you the opportunity to increase your interest rate if available, but you are usually only allowed to do so one or twice during the life of the CD. To help you find the best option for your needs, we have rounded up the main IRA CD rates that are available right now for various terms. You can transfer your current IRA, transfer your employer-sponsored IRA, or transfer the Qualified Retirement Plan from a deceased account holder to a beneficiary IRA with Synchrony.
The 1-year IRA CD, also called the 12-month IRA, is offered with the highest interest rates in credit unions, followed by online banks. Traditional banks may only offer Roth IRAs as a certificate of deposit, which typically has a lower rate of return. When selecting an IRA CD, it's important to compare prices to ensure you're getting the best possible rate. Use Bankrate's CD calculator to see exactly how much money you'll make during the term of the IRA CD.
IRAs allow you to invest your money with a guaranteed rate of return, ideal for people nearing retirement age. If you need help with contributions, renewals, distributions, or opening a new account to fund your current plan, call 1-800-BEST-IRA (1-800-237-847). After expiration, if you choose to renew your IRA certificate of deposit, you will earn the then-current base interest rate.