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CD deposits

I have 100,000 dollars in roth IRAs paying 2.25% interest. Would it be better to put them  CDs paying 5.60%i

3 Replies
Employee Tax Expert

CD deposits

Interest earned on CDs is taxed as ordinary income at your individual federal income tax rate. 


You may want to ask your investment advisor if municipal bonds may be better than CDs. 



Most all interest income earned on municipal bonds is exempt from federal income taxes. When you buy muni bonds issued by the state where you file state taxes, the interest you earn is usually also exempt from state income taxes. If you buy muni bonds issued by another state, you'll still typically avoid federal taxes, but you'll likely be subject to state (and possibly local) income taxes.

Employee Tax Expert

CD deposits

Here is an article about Roth IRAs, if you would like to choose between a Roth IRA, CD, or municipal bonds:




Roth IRAs are a great option for anyone interested in tax-free retirement income, and are particularly good for young workers who could benefit from decades of tax-free growth. Roth IRAs are also good for anyone who expects to be in a higher tax bracket in retirement.

Employee Tax Expert

CD deposits

If you can get out of whatever is currently paying 2.25% without much cost or penalty, then yes, you would be much better off investing in something returning 5.6%. 


Note that you may not have to take the money out of the Roth IRA. Many banks allow you to open a Roth IRA CD so you could roll over the funds into the CDs. 

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