The Earlier The Better - IRA Deadlines and Why It Matters To Contribute Early
02/21/2025

An important deadline is coming up for retirement savers and their individual retirement accounts (IRAs). April 15th 2025 is the last day to contribute towards your annual maximum of $7,000 (or $8,000 if you’re 50 or older) for tax year 2024.
With the deadline approaching, now is the time to review your IRA contributions and make sure you’re maximizing your tax-advantaged retirement savings opportunities.
Contributions to Seattle Bank IRAs can be conveniently made remotely or in-person. If you would like to open a new IRA CD or make a contribution to your existing IRA CD, please reach out to our Client Experience team at 206-281-1500 or [email protected].
Want to get a head start on your contributions for this year? As of January 1st, you can begin making contributions to your 2025 tax year limit until tax day in 2026.
With contributions, timing matters. Learn why you shouldn’t wait until the last minute to contribute and why today’s rate environment makes it an ideal time to consider opening IRA CDs.
Why Contributing Early Matters
When it comes to investing, when you invest makes a difference. There are various strategies that savers employ when trying to make the most of their IRA contributions. Some contribute regularly throughout the year while others make a lump-sum contribution early in the year. Some end up waiting until the last minute to contribute.
There’s usually better outcomes for those who choose to contribute early. There’s around a 15-month window to make your IRA contributions for the year. Waiting until the tax deadline to make an IRA contribution means you’ll miss out on more than 15 months of compounding interest.
Generally, the earlier you contribute, the more you benefit from the power of the compounding effect. Delaying your contributions can prove to be costly as you build your retirement nest egg.
Why Consider IRA CDs As Part Of Your Strategy
As you look at ways to maximize your retirement funds for this year, placing your funds in an IRA CD allows you to earn an attractive risk-adjusted return.
Opening an IRA CD provides you with tax advantages and a low risk, predictable rate of return, giving you peace of mind that your retirement funds are safe and secure.
An added benefit is that if you open your IRA CD at a federally insured bank or credit union, your IRA funds will be insured by the FDIC (Federal Deposit Insurance Corporation) or NCUA (National Credit Union Association) for up to $250,000, per institution, per account category. The fixed rate and insurance protection are safeguards to protect your IRA funds for when you need them the most – retirement.
With the current state of CD interest rates, now is the time to secure the best rate.
Despite rates holding steady at the January Federal Reserve meeting, observers believe we could continue to see rate cuts in 2025 as the Fed noted that “economic activity has continued to expand at a solid pace, but the economic outlook is uncertain.” According to CNET, “Pausing rates allows the Fed to see how factors like the new administration’s policies affect inflation and other economic indicators. That’s good news for savers who can still take advantage of certificate of deposit and savings account rates as high as 4.00% annual percentage yield, or APY.”
An IRA CD is a great way to protect your retirement savings in a risk-free account that offers competitive rates and tax-deferred growth. If you’re in a position to open an account or contribute to an IRA now, the earlier the better.
Disclaimer: This is not intended as tax or legal advice. Please consult your tax advisor or financial planner to understand how these topics may affect your individual financial situation.
PROS |
CONS |
Secure Returns: An IRA CD offers predictable, guaranteed returns compared to stocks, bonds, and other savings accounts. This provides the IRA accountholder with the peace of mind of knowing how much they will earn at the CD maturity. This helps them plan more accurately. |
One-Time Deposit: IRA CDs allow you to only contribute a one-time deposit that will stay in the account during its term (unless you open an add-on CD). You are allowed an annual maximum IRA contribution of $ $7,000 or $8,000 if you’re 50 or older for tax year 2024. |
Generally Higher Interest Rates: CDs typically pay higher rates than savings and many other investments. |
Limitations: You are limited to how much you can contribute to an IRA annually |
Tax Advantages: IRA CDs do not require you to pay taxes on interest earned during the tax year unless you withdraw funds. And, for a Roth IRA CD, your interest may be tax-free if you meet Roth IRA withdrawal rules. You may also be able to deduct your IRA annual contribution if you meet the Traditional IRA deductibility rules. Note: Please consult your tax advisor to make sure you’re eligible to deduct contributions. |
Accessibility: The purpose of IRAs is to save for retirement; therefore you will not have access to your funds until age 59.5 without incurring an IRS penalty. Investing your IRA funds in an IRA CD comes with a CD maturity date which may not allow you to withdraw funds until the CD matures without early withdrawal fees. |
No/Low Fees: CDs typically do not require any setup or maintenance fees, but you can incur an early withdrawal penalty fee if you withdraw funds before your CD matures. |
Fees: Depending on the financial institution, you can incur early withdrawal fees if you take out funds before the CD matures. You may also pay a 10% IRS penalty if you withdraw from an IRA before age 59.5. You can be charged both fees if you withdraw before the IRA CD matures and before you turn 59.5. Some financial institutions may charge set-up fees, annual fees, or closing fees for the IRA. |