It's common for banks to offer IRA promotions this time of year. Most people can make IRA contributions for 2013 through April 15, 2014. One popular bank that has jumped on this type of promotion is Ally Bank. It’s offering a $250 bonus to customers who make IRA deposits totaling $50,000 or more from outside Ally Bank before 5/31/14. The deposits can include rollovers, trustee-to-trustee transfers and contributions. According to Ally, your $250 bonus will be paid in July 2014 into the Ally IRA Online Savings Account or IRA CD that received the last transaction to reach the deposit required. More details are available at Ally’s IRA page.
|2.75*%||$25k||-||Ally Bank||IRA High Yield 5-Year CD (Traditional, Roth, SEP)|
|OTHER TIERS: 2.50% → Up to $5k | 2.65% → $5k - $25k|
|1.75*%||-||-||Ally Bank||IRA Online Savings Account (Traditional, Roth, SEP)|
This looks like an easy bonus without many requirements. Ally Bank doesn’t have any fees for closing the account and transferring out the funds. According to the FAQs for the IRA Online Savings Account, you have to request a distribution to make a withdrawal. This can be done by logging into your Ally account and requesting a distribution. It can also be done by filling out Ally’s paper distribution form.
Like any savings accounts, the IRA Online Savings Account has a limit of six withdrawals per statement cycle. There’s a $10 fee for each withdrawal over this limit.
The IRA CDs have the same early withdrawal penalties as the regular CDs. The only exception unique to the IRA CD is that Ally will waive the EWP when you need to take a Required Minimum Distribution (RMD). Ally will waive the EWP for partial withdrawals up to the RMD amount.
How Ally Bank’s IRA Compares
The first important thing to note about Ally Bank’s IRA is that your only options for what you can invest in are CDs and the savings account. Ally Bank is not a broker so there are no options for stocks, bonds or mutual funds.
If you’re looking for deposit accounts for your IRA, you can currently get much higher rates at PenFed. I have more details on PenFed in this post. However, PenFed doesn’t offer any bonus. Of course, the one-time bonus doesn’t have a big impact for a long-term point of view.
Other banks, credit unions and brokerages also offer IRA bonuses that are similar to this Ally incentive. One example is what ShareBuilder offers. This is the brokerage under Capital One that was acquired as part of the ING DIRECT acquisition. ShareBuilder offers a bonus that ranges from $50 to $600 depending on the amount of funds deposited into the IRA.
If you have seen IRA bonuses from other institutions, please leave a comment.