Best IRA CD Rates in November 2022 - MagnifyMoney

Best IRA CD Rates in November 2022

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Individual retirement accounts (IRAs) are tax-advantaged accounts designed to help you save or invest for retirement. Certificates of deposit (CDs) are accounts that pay a guaranteed interest rate for a set term with early withdrawal penalties.

Together, an IRA CD is a very low-risk way to build your retirement nest egg. To ensure you’re getting the best possible return on your savings, it’s important to find the best IRA CD rates. We compiled the best available rates from thousands of banks and credit unions to help you find the right IRA CD.

Highest IRA CD rates for different terms

TermFinancial institutionAnnual percentage yield (APY)Minimum opening deposit to earn APY
Less than a year (9 months)Pennsylvania State Employees Credit Union3.00%$500
1-year (16 months)Langley Federal Credit Union2.30%$500
2-yearConnexus Credit Union4.01%$5,000
3-year (30 months)Quorum Federal Credit Union4.00%$1,000
4-yearLafayette Federal Credit Union4.32%$500
5-yearLafayette Federal Credit Union4.42%$500

Best IRA CD rate less than a year: PSECU


on Pennsylvania State Employees Credit Union’s secure website

NCUA Insured

  • Term: 9 months
  • APY: 3.00%
  • Minimum opening deposit to earn APY: $500
  • Types of IRA: Traditional, Roth, Coverdell ESA

PSECU, which stands for Pennsylvania State Employees Credit Union, allows you to join from outside the state if you become a member of the Pennsylvania Recreation and Park Society, which will cost you $10. The credit union includes Coverdell education accounts among its IRA CD products, which can be helpful if you’re planning for your kids’ future education expenses.

Best 1-year IRA CD rate: Langley Federal Credit Union


on Langley Federal Credit Union’s secure website

NCUA Insured

  • Term: 16 months
  • APY: 2.30%
  • Minimum opening deposit to earn APY: $500
  • Types of IRA: Traditional, Roth

Langley Federal Credit Union is located in the Norfolk, Va. area and offers banking products like IRA CDs, as well as insurance and investments. You can become a member by simply opening a Share Savings Account through Langley. Their 2.30% 16-month CD special is one of the best available rates for an IRA CD.

Best 2-year IRA CD rate: Connexus Credit Union


on Connexus Credit Union’s secure website

NCUA Insured

  • Term: 24 months
  • APY: 4.01%
  • Minimum opening deposit to earn APY: $5,000
  • Types of IRA: Traditional, Roth

Connexus Credit Union is a large credit union that extends membership eligibility to residents of several counties in four Midwestern states, but you can also join from anywhere in the U.S. by donating $5 to the Connexus Association and a $5 deposit into your new savings account. CD terms range from one to five years.

Best 3-year IRA CD rate: Quorum Federal Credit Union


on Quorum Federal Credit Union’s secure website

NCUA Insured

  • Term: 30 months
  • APY: 4.00%
  • Minimum opening deposit to earn APY: $1,000
  • Types of IRA: Traditional, Roth

Quorum Federal Credit Union offers “term savings accounts” that work the same way as CDs. You can become a member of Quorum by joining the American Consumer Council or Select Savers Club — and the credit union gives you the option to join those associations during the membership application process.

Best 4-year IRA CD rate: Lafayette Federal Credit Union


on Lafayette Federal Credit Union’s secure website

NCUA Insured

  • Term: 48 months
  • APY: 4.32%
  • Minimum opening deposit to earn APY: $500
  • Types of IRA: Traditional, Roth

Lafayette Federal Credit Union is located in Washington, D.C. and lets you become a member if you join the Home Ownership Financial Literacy Council. In addition to traditional CD structures, which include a fixed interest rate for the entire term, Lafayette also offers variable rate CDs, which have rates that are subject to change (much like a savings account interest rate could change).

Best 5-year IRA CD rate: Lafayette Federal Credit Union


on Lafayette Federal Credit Union’s secure website

NCUA Insured

  • Term: 60 months
  • APY: 4.42%
  • Minimum opening deposit to earn APY: $500
  • Types of IRA: Traditional, Roth

Read more about Lafayette Federal Credit Union above.

Pros and cons of IRA CDs

Guaranteed interest paymentsLower returns compared with the stock market (on average)
No investment riskInterest rates can’t improve during CD term
Tax-advantaged way to save for retirementIRAs have annual contribution limits

What is an IRA CD?

An IRA CD refers to individual retirement account (IRA) funds that are held in a certificate of deposit (CD). You can maintain IRA funds in many different ways, like by investing in stocks. But, if you’re looking for a stable option with no risk, a CD could work for you.

To understand IRA CDs, it’s good to first know how IRAs work. Both traditional and Roth IRAs provide tax benefits, either when you’re saving before retirement or later when you withdraw after retirement. To encourage you to save, you may owe a tax penalty if you withdraw funds from an IRA before you’re 59 ½ years old. IRAs also have annual IRA contribution limits.

CDs are accounts you can open through various financial institutions. Certificates lock your funds into a guaranteed interest rate. Unlike market investments, which carry risk and could lead to losses, CDs provide reliable returns.

The downsides are that rates could rise while your funds are stuck at a lower fixed rate and that you typically pay a fee for withdrawing CD funds before maturity — on top of any additional IRA tax penalties. Spreading your money out into a CD ladder can help your funds grow as interest rates rise.

Different types of IRAs

You might be most familiar with traditional IRAs, but there are other kinds of IRAs with different tax incentives or contribution processes.

  • Traditional IRAs allow you to make tax-deductible contributions, but you’ll pay taxes on distributions. Review our list of the best IRAs.
  • Roth IRAs contributions aren’t tax-deductible, but your distributions are tax-free. Review our list of the best Roth IRAs.
  • SEP and SIMPLE IRAs are set up by employers or self-employed people. Each has different rules and contribution limits.

Alternatives to IRA CDs

There are a lot of places to put your retirement savings. You could invest an IRA in a target date retirement fund or mutual fund, or even pick and choose your stocks. You could also start a 401(k) plan if your employer offers one.

If the risk-free nature of a CD appeals to you, you could save in a CD without putting your funds into an IRA first. You’d miss out on the tax advantages of retirement savings accounts, but you’d be able to save beyond IRA contribution limits and wouldn’t incur tax penalties for accessing the funds before you turn 59 ½ years old. Here are the best rates for all CDs.

Other deposit accounts are also an option. If you know you might need to access your funds in the short term, a high-yield savings or money market account might be a better option than a CD. There are some no-penalty CDs, too. Chances are that if you’re considering an IRA CD, you’re planning for the long term, and in that case, long-term investments might make the most sense as an alternative.

Summary of the top IRA CD rates in November 2022

  • Less than a year (6-month): PSECU, 3.00% APY ($500 minimum)
  • 1-year (16-month): Langley Federal Credit Union, 2.30% APY ($500 minimum)
  • 2-year (24-month): Connexus Credit Union, 4.01% APY ($5,000 minimum)
  • 3-year (30-month): Quorum Federal Credit Union, 4.00% APY ($1,000 minimum)
  • 4-year (48-month): Lafayette Federal Credit Union, 4.32% ($500 minimum)
  • 5-year (60-month): Lafayette Federal Credit Union, 4.42% ($500 minimum)

Frequently asked questions

It’s pretty simple to open an IRA CD account: go to a bank, credit union or brokerage firm, open an IRA account with your personal information and then open a CD. Your contributions are tax-deductible with a traditional IRA, or your distributions are tax-free with a Roth IRA.

When your IRA CD reaches maturity, you have a few options: you can renew your CD (with the same term or with a different term) or put the money into another kind of IRA. You’ll face a tax penalty if you’re under 59 ½ and withdraw or redirect the funds elsewhere.

You can withdraw money from an IRA CD before maturity, but you’ll face some penalties. CDs charge interest penalties if they’re closed before maturity, and you could be subject to tax penalties if you don’t reinvest the funds into another IRA.

Individual retirement accounts allow you to reduce your tax bill by deducting contributions, and certificates of deposit provide a guaranteed return on your savings. Together, an IRA CD is a safe, stable way to save for retirement.

Methodology: How we chose the best IRA CD rates

To find the best IRA CDs, we reviewed information on thousands of financial institutions through our sister site DepositAccounts to find the best available rates. These CDs are all nationally available and have a minimum deposit of $5,000 or less. Each bank or credit union has Federal Deposit Insurance Committee (FDIC) or National Credit Union Administration (NCUA) insurance.