Can I Put My IRA in a Structured CD?

Banks offer structured CDs, which blend regular CDs with marketable securities.

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An individual retirement account offers a personal savings plan that allows you, as its owner, to reap tax benefits for contributing funds toward retirement. One tax advantage is the deduction of all or a portion of your IRA contribution from your income for the year. The funds in your IRA, including earnings, accrue tax deferred until distribution. The Internal Revenue Service allows you to invest your IRA funds in most investment vehicles, including structured CDs.


The tax code allows you to set up an IRA with a financial institution such as a brokerage firm, mutual fund company, life insurance company or bank. The IRS places some restrictions on the investments you can choose from, but not many. You cannot invest your IRA in life insurance. You also cannot invest in collectibles, including art, gems or certain coins. You can invest your IRA in a myriad of financial products, including, but not limited to, annuities, mutual funds, stocks, bonds and structured certificates of deposits.

Structured CD

A structured CD is a complex, derivative product. This means it is based on or derived from an underlying asset. The underlying assets in a structured CD are a CD and an option. An option generally allows an investor to buy or sell a security in the future at a specified price. Therefore, a structured CD combines safety with growth potential. A structured CD's protection component -- the certificate of deposit part -- is insured by the FDIC up to $250,000. The growth component -- the option portion -- is linked to a market index, commodity or foreign currency.

Structured CD - Example

For example, you purchase a $10,000 structured CD. The structured CD components include a $9,000 investment that will pay $10,000 at maturity. It also includes a $1,000 investment that will fluctuate based on the market. As long as you hold your structured CDs until the maturity date, you will at least get your $10,000 back. You could potentially make much more if the $1,000 investment portion performs well.

Structured CD Risks

Structured CDs only guarantee the principal back at maturity. If you put your IRA in a structured CD, then sell or redeem your CD before maturity, you may lose some of your initial investment. In addition, your financial institution may levy substantial penalties for early withdrawal from the structured CD.

Roth IRA Differences

When you place traditional IRA funds in a structured CD, those contributions are fully or partially tax deductible, depending on you and your spouse's combined income and coverage by an employer-sponsored retirement plan. If you put Roth IRA funds in a structured CD, none of your contributions are tax deductible, but the funds in your account still accrue tax free. Your Roth IRA qualified distributions will be tax free and penalty free.