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3-Year IRA CD
3-Year IRA CDs are time deposits made by investors to a financial institution that have certain restrictions that govern their use. The federal government guarantees deposits up to $250,000 per individual, per FDIC or NCUA-insured institution. Investing in 3 Year CDs is a secure way to grow savings at a higher rate of interest than typical savings accounts.
What is an IRA CD?
An IRA CD is a retirement account that uses a fixed-time investment instrument to increase earnings. The IRA component means tax liabilities (and advantages!), and the CD is the underlying investment that grows the account at a fixed rate. One advantage of the IRA CD, as opposed to the standard IRA Savings account, is that banks and credit unions will usually not charge a monthly management fee. A brokered CD also charges a fee, so be sure to read the fine print if you go that route.
Moving IRA CD Proceeds
As long as you move your IRA CD proceeds to another IRA vehicle after the CD’s maturity, you can continue to defer taxes on earnings. The 3-Year IRA CD is on the longer side of available investments, so you should evaluate if and when you will need the funds so as to avoid incurring early withdrawal penalties. The Traditional IRA CD allows you to write off yearly contributions from your income, and the Roth IRA CD allows you to freely withdraw any of your contributions for any reason, as they are post-tax dollars.