Where to keep cash inside an IRA
Inside an IRA there’s no tax each year, so the state-tax edge of Treasuries is worth nothing and the highest safe yield wins. Today that’s CFG Bank 1-year CD at 4.65%, about $2,325 a year on $50,000.
Cash options in an IRA, ranked by yield
| Option | Rate | Per year on $50,000 | Access |
|---|---|---|---|
| CFG Bank 1-year CD1-year CD, rate locked | 4.65%Nov 2 | $2,325 | Locked 12 months; early withdrawal penalty applies |
| Popular Direct 1-year CD1-year CD, rate locked | 4.60%Nov 2 | $2,300 | Locked 12 months; early withdrawal costs 270 days' interest |
| Rising Bank 1-year CD1-year CD, rate locked | 4.51%Nov 2 | $2,255 | Locked 12 months; early withdrawal penalty applies |
| Quorum Federal Credit Union 6-month CD6-month CD, rate locked | 4.40%Nov 2 | $2,200 | Locked 6 months; early withdrawal penalty applies |
| Popular Direct 6-month CD6-month CD, rate locked | 4.35%Nov 2 | $2,175 | Locked 6 months; early withdrawal costs 120 days' interest |
| 1-year Treasury billBought at auction or in your brokerage, held to maturity | 4.33%Nov 6 | $2,165 | Matures in 12 months; can be sold any day at market price |
| 6-month Treasury billBought at auction or in your brokerage, held to maturity | 4.23%Nov 6 | $2,115 | Matures in 6 months; can be sold any day at market price |
| 3-month Treasury billBought at auction or in your brokerage, held to maturity | 4.19%Nov 6 | $2,095 | Matures in 3 months; can be sold any day at market price |
| Colorado Federal Savings Bank 6-month CD6-month CD, rate locked | 4.15%Nov 2 | $2,075 | Locked 6 months; early withdrawal penalty applies |
| Marcus by Goldman Sachs 11-month No-Penalty CDNo-penalty CD | 4.00%Oct 27 | $2,000 | Withdraw early with no penalty (after the first few days) |
CDs: most banks offer the same CD inside an IRA, sometimes at a different rate; check before opening. High-yield savings accounts are rarely available in IRAs. Amounts are before any tax due on withdrawal.
Why the winner flips
In a taxable account, Treasury interest skips state tax, which is why Treasury money fund (Vanguard) keeps the most at 5% state tax. In an IRA that exemption doesn’t matter, so a fund with a higher yield, even a fully state-taxable one, comes out ahead. The same money can belong in different funds depending on the account it’s in.
Check your IRA’s default sweep
Merrill IRA: 0.01% · Fidelity IRA (FDIC sweep option): 1.96%. Uninvested IRA cash usually sits here until you buy something. All default cash rates · How to move it.
Questions
Where should I keep cash inside an IRA?
Inside an IRA, interest isn't taxed each year, so the state-tax edge of Treasuries disappears and the highest safe yield wins. Today the top options we track are CFG Bank 1-year CD at 4.65%, Popular Direct 1-year CD at 4.60%, Rising Bank 1-year CD at 4.51%. On $50,000 that's about $2,325 a year.
What is the best money market fund for an IRA?
The one with the highest 7-day yield you can buy at your broker, because state tax doesn't apply. Among the funds we track, Treasury money fund (Vanguard) (VUSXX) at 3.89% is highest today. In a taxable account the answer can differ: there, Treasury money fund (Vanguard) keeps the most after 5% state tax.
Are T-bills worth it in an IRA?
They're safe and pay 4.19% (3-month) to 4.33% (1-year) today, but their state-tax exemption is worth nothing in an IRA. Compare their yield directly with money funds and CDs; buy whichever pays more for how long you can lock the money.
Is my IRA cash sweep paying enough?
Often not. Merrill IRA pays 0.01%; Fidelity IRA (FDIC sweep option) pays 1.96%. Money left uninvested in an IRA usually sits in the sweep unless you buy a money fund or T-bills.
Rates are read from each provider’s own page on the date shown. Money market fund rates (taxable accounts) · How we check.