When opening a certificate of deposit, you agree to invest a sum of money for a fixed amount of time. In return, the bank or other financial institution pays a higher interest rate and guarantees the money against loss. You can invest as much of your IRA as you want into a CD, but you cannot add funds to the CD after your initial deposit.
You cannot add money to a CD in an IRA once you have bought it. However, you can add other CDs. There is no limit on how many CDs you can hold in an IRA or what value each has, although some institutions require minimum deposits for IRA CDs. If you put your last year's maximum IRA contribution into a CD, you can add a second CD with this year's maximum contribution.
Add at Maturity
You can add money to an IRA CD at its maturity because that is, in effect, starting a new CD. If you have a $5,000 IRA CD that matures in January, you can elect not to have an automatic rollover. Instead, you can combine another $5,000 contribution with the expiring CD and get a new $10,000 CD.
Grace Period Additions
If you have an automatic renewal, you can still add money to a CD at its maturity time. Most institutions offer a "grace" period of seven to 20 days after the CD matures to make additions. The FDIC, which insures CDs up to $250,000, recommends buyers carefully check renewal options to make sure a CD does not renew at an existing rate that might be lower than the current market rate.
CDs come in time periods from 30 days to five years or longer, with higher interest rates generally on longer terms. "Laddering" means buying CDs with different maturities, i.e., buying both short- and long-term CDs so that each group expires at different times. This gives the benefit of higher interest for long-term CDs and liquidity for short-term CDs held in an IRA.
Bob Haring has been a news writer and editor for more than 50 years, mostly with the Associated Press and then as executive editor of the Tulsa, Okla. "World." Since retiring he has written freelance stories and a weekly computer security column. Haring holds a Bachelor of Journalism from the University of Missouri.