Taxes on IRA funds invested in CD

[tax102523]

If a person invests the money in their IRA into a CD, do they pay taxes on the full value of the CD upon maturity or only on the interest earned? Would those taxes be paid on the tax year of the CD maturity date? Thank you!

[Katherine S 63]

Great question!!

Interest earned on regular CDs is taxable, while IRA CDs grow tax-free. Contributions to a traditional IRA CD are tax deductible, but your withdrawals are taxed. Conversely, Roth IRA CDs get no upfront tax deduction, but withdrawals are tax-free in retirement.

I am assuming above that the CDs are IRA CDs.

Please give me a thumbs up if this was helpful.

Katie S.