After your IRA CD matures, you may choose to roll it into a regular IRA. This process may sound complicated, but it’s actually quite simple if you take it one step at a time.
- Decide if you’ll open a traditional or Roth IRA.
- Choose which financial institution you’ll open an account with and fill out any necessary paperwork.
- Ask your current financial institution to transfer or “roll over” the funds from your existing CD into the new account.
What Is the Difference Between a CD and an IRA?
CDs and IRAs serve very different purposes.
A certificate of deposit is a low-risk savings account offered by banks, credit unions and other financial institutions. CDs have pre-determined maturity dates with fixed interest rates that generally cannot change throughout your term. The advantage is that you know how long your money will be locked up and how much you’ll earn over time.
An individual retirement account is an investment account with unique tax advantages designed to help you save for retirement. Unlike a CD, which has a fixed return, your IRA can be invested in several different assets with different risks and rates of return, including stocks, bonds or mutual funds.
Ultimately, the choice between a CD or IRA depends on your situation and goals. If you need quick access to your money, a CD might be best for you. But if you’re looking to contribute regularly toward your future retirement, then an IRA may be a better bet.
Bottom Line
Investing in an IRA CD can be a great way to save for retirement if you’re worried about stock market fluctuations or want a locked-in, guaranteed return. If you’re not sure where to start your search, the five financial institutions on this list have the best IRA CD rates for 2023.
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