A Quick Guide to the Best IRA Savings Accounts

Most people dream of retiring so that they can finally spend time doing what they love. That might mean playing golf, traveling, writing books, or mowing their lawn.

The problem is that nearly 25% of Americans don’t have a single dollar saved up for retirement. No money in the retirement account means no retirement! Without saving and investing money regularly, you’ll be working forever.

Luckily, you can set up IRA savings accounts today so that you can start moving towards retirement tomorrow.

But what exactly is an IRA savings account? And how can you choose between the top IRA savings accounts for your situation? You owe it to your future self to read our IRA savings account guide below. 

What Is an IRA?

So what is an IRA? IRA stands for “Individual Retirement Account.” It’s an account designated by a section of that tax code that allows you to deposit money in and invest those funds to start earning interest and building your retirement savings.

IRAs are tax-advantaged accounts. These tax savings make it lucrative to put as much as you can in your IRA, saving money on taxes and boosting the amount of money you’ll have in retirement. 

And the benefit of an IRA is that anyone can open one at any time. This is different from a 401(k), which are company-sponsored retirement accounts. 401(k)s can only be opened with a company that offers it to their employees.

These accounts receive contributions from both the employee and employer, helping you to receive free money towards retirement. If you truly care about your retirement, you’ll have both types of accounts. 

But you can’t access the money before you reach age 59 and a half. If you withdraw money before then, you’ll pay huge tax penalties, robbing yourself of money. 

What are IRA Savings Accounts?

Normal IRA accounts are used to acquire assets such as stocks and bonds that earn decent rates of return. This interest compounds, allowing you to earn more and more money over time.

But investments are volatile and might not be the best place for all of your retirement savings. If you’d like a more stable place to park some of your retirement savings, so you don’t have to deal with market swings and down markets, you can use an IRA savings account.

Rather than being offered by an investment brokerage, these accounts are offered by banks. They do not acquire assets. Rather, they sit in the bank, and the bank pays you interest.

Interest rates are much higher than traditional savings accounts but are lower than the annual rate of return in the stock market. The only complaint that most people have is that the interest rate typically drops with the more money you have invested. So in some ways, it discourages you from depositing more and more funds.

However, the rates will still be higher than the standard savings account rate. And you don’t have to deal with crazy fluctuations. It’s a safer place for the money you plan on using sooner rather than later. And you still enjoy the tax savings, unlike a regular savings account would.

Need some IRA savings account tips? Here are some of the best IRA savings accounts to use for long-term retirement savings. 

Premier Members Credit Union IRA Money Market Account

Colorado residents can take advantage of the IRA savings account through Premier Members Credit Union. This account offers 2.00% APY on the first $2,000 you deposit and only requires a $5 minimum deposit. 

After your initial $2,000, you’ll earn a lower interest rate but still higher than normal savings accounts. 

Patelco Federal Credit Union Money Market Select IRA

Patleco Federal Credit Union caters to California residents. There are requirements for becoming a member. But if none of the specific requirements apply to you, you can become a member of the nonprofit organization, Financial Fitness Association. Your membership dues for the first year are covered by the credit union.

Interest rates start around 1.00% APY and start dropping after the first $2,000 you deposit. 

Communitywide Federal Credit Union IRA

You can join Communitywide credit union by becoming a member of their qualifying nonprofit organizations. To enjoy the 0.80% APY, you’ll need to deposit a minimum of $2,000. The only issue is that opening an account requires a phone call and cannot be done online. 

Signature Federal Credit Union IRA Savings

Virginia residents can join the Signature Federal Credit Union by joining their qualifying nonprofit organization. Doing so enables you to open their IRA savings account to earn 0.70% APY. No minimum deposit is required, so you can get started today. 

Bank of America

Bank of America offers multiple IRA savings options online. They have a Money Market IRA, Featured CD IRA, and Standard Term CD IRA.

The Money Market IRA only requires a $100 minimum deposit, and there are no monthly terms. Therefore you can redeem the account at any time. However, rates aren’t published online, so you’ll need to call for current rates. You can also add additional deposits at any time.

The Bank of America CD IRA is a bit more rigid. They require between a $1,000 and $2,000 initial deposit and have term lengths between 6 months and 10 years. Interest rates of 0.03% to 0.05% are available.

Rates vary by the length of the term and the amount deposited. With these accounts, the more you deposit, the more you earn. But rates are lower than the credit unions listed above. 

With a CD IRA, you cannot withdraw or add funds until the CD reaches maturity. 

They also offer a variable rate CD IRA. These flexible accounts let you make additional deposits at any time, but your interest rate will change. As a major bank, Bank of America offers lower rates, but the infrastructure and technology make their accounts easier to open and manage. 

Balance Your Portfolio

IRA savings accounts aren’t going to make you rich. You definitely need to invest most of your retirement savings into stocks, bonds, and other assets to actually grow your nest egg. But these savings accounts provide stability to a portion of your retirement portfolio.

Looking for other financial tips and tricks? Head over to our blog now to find other helpful articles.