How to Find the Best IRA CD Rates

Your rate of return depends on the assets held inside your IRA

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Certificates of deposit (CDs) have published rates of return, but you won't find rates for individual retirement accounts (IRAs) without reaching out to the source. Unlike an IRA, a CD is an actual investment instrument. An IRA is an account that holds investment instruments.

You can own many types of assets inside your IRA account, such as CDs, mutual funds, and stocks. The investments you hold will determine your IRA's overall rate of return.

There's No Such Thing as an "IRA Rate"

The term "IRA" refers to the tax treatment of the investments held inside the IRA. You don't pay taxes each year on the interest, dividends, or capital gains that your IRA investments earn. Instead, the investment income builds inside the IRA. You then pay taxes on the income when you take money out of the account, for most types of IRAs. If you have a Roth IRA, withdrawals are often tax-free on the contributions you've made, but if you withdraw more than you've contributed in total you could be subject to both taxes and penalties on the earnings portion of the withdrawal.

When you purchase an "IRA CD" you are simply buying a CD. That's it. The only catch is that you would pay for it with funds from your IRA rather than out of pocket.

Think of an IRA as a bucket. Suppose you had to guess the weight of a bucket, but you couldn't see what was in it. To come up with a decent guess, you would need to know what was in the bucket: air, water, sand, or bricks.

Just like guessing how much the bucket weighs, you have to know what types of investments will be held inside your IRA to figure out the IRA rate.

IRA CD Rates

A CD held within your IRA should almost always deliver the quoted interest rate, so long as it's held to maturity. Its annual percentage yield (API) is the metric to note, as is the minimum deposit needed to achieve that APY and the term of the CD.

Listed below are a few solid options with rates listed as of 2021, to give you a sense of this type of asset. Not that these are merely a sample of the vast market. Also, they are not ranked, as the value of each to you depends on your own needs and goals.

Institution APY
(five year term)
Minimum deposit

Ally Bank
No minimum

Capital One
0.80% No minimum

CommunityWide Federal Credit Union



Discover Bank



Marcus by Goldman Sachs






Alliant Credit Union
0.65% $1,000

TIAA Direct



Most of these financial institutions offer shorter terms, but the APY drops correspondingly. Use these rates and guidelines to compare with the terms offered by your own local bank. Small banks and credit unions may offer IRA CDs and other products as well.

Determining the Overall Rate of Return

To get an idea of your overall rate of return you might earn from your IRA, look at each of the underlying investments, and how well each performs. For example, you'll want to look for the best CD rates if your IRA will hold certificates of deposit. You can invest in a fixed annuity inside your IRA, so if you choose to do so, look for the best fixed annuity rates.

You can own treasury securities or government bonds inside your IRA, in which case the IRA rate would be a combination of the interest rates paid by the underlying bonds it holds. Your IRA can also hold mutual funds, so you'd have to decide whether to own stock, bonds, or balanced mutual funds. Look at the performance history of each to figure out their past rate of return. And, of course, keep in mind that this year's return does not always predict, much less promise, next year's results.

An IRA can hold individual stocks, and if you structure it correctly, you can even own real estate in your IRA, as well as many other types of assets.

Finding the Best Rate of Return

You first have to decide how much investment risk you're willing to take if you're going to achieve the best overall IRA rate. Most investment choices that have the potential to pay a higher long-term rate of return are less stable in the short term.

Choosing higher-risk investments, like stock mutual funds, will often give you a higher return than choosing safer choices like CDs. This is true for the most part if you're young and can afford to leave your money there for a while. If not, CDs are best for those who can't afford the time and the risk. They can also serve to diversify your IRA and the investments held there.

You can then look at the performance history of these investments after you've chosen what you want your IRA to hold. It would only be called a "rate" if it was an interest-paying investment like a CD, a fixed annuity, or a bond.

Cautions and Considerations

Be cautious if an investment firm offers a much higher rate than you can find anywhere else. No one gives money away. High returns with low risk simply don't exist. 

Many ads attempt to lure you in with the promise of a high rate, but then when you dig deeper you learn of fees or limits or other catches that mean it's not as great as the ads make it appear. Read the fine print to see how the investment is structured.

These ads are often sponsored by firms that receive a commission to sell you their investment products. If something seems too good to be true it probably is. Have an independent adviser help you assess the investment before you make a purchase, if you have any doubts.