FAQs: Certificates & IRAs

The best option for minors is our Coverdell Education Savings account. You need to open this account on behalf of your child before they turn 18. Anyone in the family, including the child, may contribute to the account. Unlike an IRA, the contributions don’t need to be from earned income. 

Your child can then make tax-free withdrawals on the account to use for qualified education expenses at K-12 schools, college, vocational schools, and more. Qualified expenses include tuition, books, and other supplies.

Read More: How To Save Money For Your Kids

With an IRA CD, you choose the CD terms you want to invest in. The certificates mature when you reach the end of your term. At that time, your CDs will automatically renew for the same term at the new APY if we are not notified in advance that you wish to withdraw your funds and/or close your IRA. 

At the maturation date, you have a 10-day grace period to close your IRA, withdraw funds, or transfer to a new CD IRA. This can be done by calling or texting us, or visiting a branch.

We no longer offer the option for members to receive a paper check for dividend payments. All dividends will be electronically deposited into your designated account.

Dividends are paid monthly to your IRA account on the last day of the month, when they are compounded. Compounded dividends mean you earn interest on your deposited funds – and then you also earn interest on that interest. So your savings grow faster!

With an IRA CD, you have more flexibility to withdraw funds before retirement compared to other IRAs. But you will likely be penalized if you withdraw funds before the maturity date when your chosen certificate term is complete. For example, three months to five years.

Penalties for early withdrawal will be waived if you are over 72 and your withdrawal is part of a Required Minimum Distribution (RMD), or upon death.

With an IRA CD, you can still choose a Traditional or Roth account but the difference is that your funds are invested in Certificates of Deposit (CDs) instead of stocks or bonds. This means your funds are safeguarded from stock market volatility. 

At Baton Rouge Telco, you can choose whether you invest your IRA funds in CDs with terms of three months to five years. Longer terms earn higher yields.

An IRA is a type of retirement account you can open as an individual. You need to be employed to contribute to an IRA, but the account can be held separately from your employer. In most cases, you can open an IRA in addition to a 401(k) though your contributions may be limited. 

IRA contributions typically max out at $6,000 per year for people under age 50 and $7,000 per year if you’re over age 50. 

There are two common types of IRAs that offer different tax advantages:

  • Traditional IRAs offer tax deductions on your contributions and then you pay taxes on your future withdrawals. 
  • Roth IRAs mean you contribute from your post-tax earned income, and then you can make future withdrawals tax-free.


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