Investing How To Open an IRA at Your Bank By Miriam Caldwell Miriam Caldwell Miriam Caldwell has been writing about budgeting and personal finance basics since 2005. She teaches writing as an online instructor with Brigham Young University-Idaho, and is also a teacher for public school students in Cary, North Carolina. learn about our editorial policies Updated on November 29, 2021 Reviewed by Somer G. Anderson Reviewed by Somer G. Anderson Somer G. Anderson is CPA, doctor of accounting, and an accounting and finance professor who has been working in the accounting and finance industries for more than 20 years. Her expertise covers a wide range of accounting, corporate finance, taxes, lending, and personal finance areas. learn about our financial review board In This Article View All In This Article The More Secure the Investment ... Choose an IRA Type Other Retirement Savings Options Photo: PM Images/DigitalVision/Getty Images Many banks offer IRAs for customers, which essentially are tax-advantaged retirement savings accounts with strict rules regarding contributions and withdrawals. For example, to make withdrawals without paying a hefty penalty, you must be at least age 59 1/2. Your bank may offer both a traditional and a Roth IRA. So, what's the difference between the two accounts? A traditional IRA allows you to make contributions tax-free, but you will be taxed on your withdrawals. A Roth IRA’s contributions are taxed, but you can make withdrawals tax-free once you reach retirement age. Key Takeaways IRAs are retirement savings vehicles, typically opened with a brokerage firm, but many banks offer retirement savings accounts as well.Most banks offer IRAs as certificates of deposit (CDs), which are pretty secure, but they can result in less of a return.Some banks have investment arms that will offer IRAs that should result in a greater rate of return.This conservative strategy might be most appropriate as you grow older rather than when you have multiple years ahead of you to save. The More Secure the Investment, the Lower the Return Most banks offer IRAs as certificates of deposit (CDs). The CDs are insured by the FDIC for up to $250,000 per person, per bank, in case the bank were to fail. However, the rate of return on CDs is generally much lower than the rate of return if you were to open an IRA at a brokerage firm. Generally speaking, the more secure the investment, the lower the return. The investment portion of your bank may offer IRAs that are not CDs. Check with your bank to see if its IRAs fall under the "Certain Retirement Accounts Category" of FDIC Insurance. If they do, then your IRAs will be protected with the same limits as a CD. Either way, your funds will likely earn a much higher rate of return in an IRA than they would in a CD. A CD locks in a set rate of return for a specific period of time, and when that period of time ends, you may choose to roll the current CD into a new one, without drawing out any funds. The market rates may go up or down, depending on the current economic conditions. Choose an IRA Type When you are choosing the type of IRA you want to open, consider if you prefer security or growth, then open an IRA with the institution that best meets your needs. This decision may also change according to your age. When you are young, you may be comfortable with taking risks with your retirement savings. However, as you age (and get closer to retirement), your retirement investments should become more conservative. If an IRA is your only current retirement savings account, you may be better off going with an investment firm, since it can offer you an overall better rate of return. You want your retirement savings to grow so you can retire comfortably. Just remember to switch to a more conservative investment strategy as you grow older. If you want a self-directed IRA, you will need to look for one at an investment firm. Other Retirement Savings Options In addition to your IRA, you should open a retirement account with your employer if they offer one, such as a 401(k). Additionally, if they offer an employer match, you should contribute at least that much to your retirement account. If you are self-employed, there are retirement accounts available to you. You can open a SEP, a KEOGH, a self-employed 401(k), or an IRA. Remember that when you are self-employed, you are solely responsible for preparing for your retirement. Although you are required to pay Social Security, you should not plan on receiving Social Security as part of your retirement financial plan. The Social Security system might not be in place when you retire, and you might not qualify for as high of a benefit as you think. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. FDIC. "Deposit Insurance FAQs."