There are two things going on here.
The first thing, when your mom passed away and left the IRA, you should have been given only two choices:
1. Open an "Inherited IRA" and deposit the funds into that
2. Cash out the account
If you did not open an "Inherited IRA", then you cashed out and should have received a 1099-R for the distribution
The second thing, you opened a CD. You are asking about the tax on the CD.
The amount you deposited into the CD won't be taxed, because you should have been taxed on the distribution from the IRA.
The earnings will be taxed when you withdraw.
Usually a CD is all rolled over for another term or all distributed, but you'll need to talk to the bank about that and how they handle CD's.
I think what they may have told you is that there will be a penalty if you try to tap into the CD before the term is met.
THERE IS ONE MORE OPTION-
The bank may have opened an Inherited IRA from the funds in your mom's IRA, THEN they could have had your Inherited IRA invest in a CD.
I suggest you go to the bank and have them sit down and explain all of this to you.
Most people do not understand these things, so you should not feel silly asking, and it is the bank's job to explain everything to their customers.
@jslimmers
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