Long terms earn higher rates so it makes sense to choose the longest term possible.

With a Share Certificate, you want to make sure you won’t need the funds before your term ends.

• It’s a good idea to have a separate emergency fund rather than tying all your funds up in a certificate.
• Choose a shorter term if you’re concerned about paying the early withdrawal penalty.

With an IRA Certificate, the idea is that your funds are continually reinvested in Certificates until you reach at least 59 ½ or until you reach retirement.

• You will usually choose the longest term available, so you get the highest rates.
• You want to check current rates each time your term ends because there may be special rates on offer for specific terms.

‍

Your choice of account will depend on your plans for the funds.

Choose a Share Certificate to help you achieve short- to medium-term goals. These may include:

• Boost your existing savings by earning higher rates for your chosen term.
• Lock away a nest egg to enhance your financial security.
• Save for something specific like a car or home down payment, or a vacation.

Choose an IRA Certificate if your purpose is to boost your retirement savings. Keep in mind:

• You can avoid the 10% penalty tax if you wait until you’re 59 ½ to withdraw funds.
• You can often open an IRA Certificate in addition to a 401(k) or workplace plan.
• You pay taxes on your withdrawals based on your income level at that time, so you can save money if you’re currently in a higher tax bracket and your contributions are tax-deductible.

Legacy offers both Share Certificate and Individual Retirement Account (IRA) Certificate investment options to help our members in Birmingham, Alabama, make the most of their money. In contrast to unpredictable stocks and bonds, your funds are safely invested in other Certificates and earn guaranteed fixed rates.

• Both accounts require a minimum deposit of $500, but a key difference is that a Share Certificate does not allow additional deposits, while an IRA Certificate lets you add funds continually to save for your retirement.
• A Share Certificate is also known as a Certificate of Deposit (CD). With a Term Share Certificate, you can access your funds when your chosen term ends, and you don’t need to pay any taxes or fees at that time.
• An IRA Share Certificate is also known as an IRA CD. You may be penalized if you withdraw funds from an IRA Certificate before age 59 ½. Like a Traditional IRA, you’ll likely pay income tax on your withdrawals because contributions are often tax-deductible.
• If you don’t withdraw funds at the maturity date, both types of Certificates will automatically reinvest your funds for the same term, or you can choose a different term based on current rates.
• The National Credit Union Administration (NCUA) insures funds in both accounts up to $250,000.

No, there’s no risk of losing money in an IRA certificate. However, if you make an early withdrawal before the term ends, you will have to pay a penalty fee.

Generally, if you remove funds from this type of account before you turn 59 ½ years old, the money will be subject to being included in gross income on your taxes plus an additional 10% tax penalty.

Yes, but not until you access the money at the end of the term.

An IRA certificate account is an interest-bearing account designed specifically for growing retirement funds. It can also be referred to as an IRA certificate of deposit (CD).