Current APY (1Y / 5Y)
4.65% / 4.00%
Discover Bank IRA CD Review (2026)
TL;DR: Discover Bank IRA CDs run 3 months to 10 years at ~4.00-4.65% APY across Traditional and Roth wrappers. $2,500 minimum opening deposit (higher than most online competitors). FDIC-insured with no IRA wrapper fees. The big differentiator is the 10-year term, available almost nowhere else. For 5-year IRA money, A-rated IRA MYGAs still pay more in the same tax wrapper.
Insurance
FDIC $250K
Minimum deposit
$2,500 minimum
Early withdrawal penalty
3-24 months interest
IRA wrappers offered
Traditional, Roth
Discover IRA CD at a glance
Discover Bank (FDIC #5649) is the online-banking arm of Discover Financial Services. The IRA CD lineup is unusual in two ways: it has a $2,500 minimum (most online competitors are $0), and it offers terms all the way out to 10 years (most online competitors stop at 5 years). Traditional and Roth IRA wrappers are supported; SEP IRA is not currently offered as an IRA CD wrapper at Discover.
Discover IRA CD rates by term (mid-2026)
| Term | APY | EWP |
|---|---|---|
| 3 month | ~2.00% | 3 months interest |
| 6 month | ~3.65% | 3 months interest |
| 9 month | ~3.85% | 3 months interest |
| 12 month | ~4.65% | 6 months interest |
| 18 month | ~4.45% | 6 months interest |
| 2 year | ~4.35% | 9 months interest |
| 3 year | ~4.20% | 12 months interest |
| 4 year | ~4.10% | 18 months interest |
| 5 year | ~4.00% | 18 months interest |
| 7 year | ~3.85% | 24 months interest |
| 10 year | ~3.75% | 24 months interest |
How IRA CD taxation actually works
This is the single most misunderstood point. An IRA CD is taxed like any other IRA asset, not like a taxable bank CD.
- Inside a Traditional IRA: Interest credited each year is not reported on your 1040. You do not get a 1099-INT for IRA CD interest. The CD compounds tax-deferred. You only owe tax when you withdraw — and withdrawals are taxed as ordinary income.
- Inside a Roth IRA: Interest is never taxed, provided your withdrawal is qualified (you are age 59½ or older and the Roth has been open at least 5 years).
- What you owe each year: Nothing. Zero. The annual 1099-INT that taxable CD holders receive does not apply to IRA CDs.
- What triggers tax: The withdrawal (Traditional) or a non-qualified Roth distribution. The CD's interest crediting cycle is irrelevant for tax purposes.
If you are under age 59½ and withdraw, two penalties can stack: the bank's early withdrawal penalty (typically 90–365 days of interest) and the IRS 10% additional tax on the withdrawn amount. The bank's penalty is enforced by the bank; the IRS penalty is enforced via Form 5329 on your tax return.
Should you ever buy a 10-year IRA CD?
The 10-year Discover IRA CD is a rare animal. The rate (~3.75%) is below the 5-year, which is the bank market telling you the yield curve is inverted at that horizon. Compare this to a 10-year IRA MYGA, where A-rated carriers currently post in the 5.40-5.85% range — roughly 200 bps higher on a 10-year horizon, with state guaranty fund backing in addition to the carrier's claims-paying ability. On a $100,000 balance over 10 years, the difference compounds to about $25,000-$30,000. That is not a rounding error.
The only case for a 10-year bank IRA CD over a 10-year IRA MYGA is if you specifically value FDIC over state guaranty fund coverage. For most retirement-money buyers, that preference is overweighted by media coverage of bank failures; in practice both protections have paid out 100% on covered amounts in every modern instance.
When a MYGA beats an IRA CD
An IRA MYGA (multi-year guaranteed annuity) is, in plain English, a CD-equivalent issued by an insurance carrier instead of a bank. Inside an IRA wrapper, both are tax-deferred — the tax wrapper is identical. The difference is the rate, the insurance backing, and the surrender mechanics.
| Feature | IRA CD (bank) | IRA MYGA (insurance) |
|---|---|---|
| Typical 5 years rate (mid-2026) | ~4.00% | ~5.60% |
| Tax treatment inside IRA | Deferred | Deferred (identical) |
| Insurance / guaranty | FDIC $250K per depositor per bank | State guaranty fund, typically $250K–$300K per owner per carrier; backed by carrier balance sheet |
| Early access | Pay 90–365 days interest, get principal back | 10% free withdrawal annually most carriers; surrender charge on excess |
| Rate lock-in length | 3 months to 5 years typical | 3 to 10 years; 5-year is most common |
Worked example — $100,000 for 5 years:
- IRA CD at 4.00%: $121,665 at maturity
- IRA MYGA at 5.60%: $131,317 at maturity
- MYGA advantage: ~$9,651 over the 5-year period on the same starting balance
The rate gap exists because MYGA carriers hold longer-duration corporate bonds than banks hold; banks fund CDs primarily with short Treasuries. Inside an IRA — where you cannot use the principal for spending anyway until 59½ without penalty — locking up for the full term costs you nothing extra. The MYGA is structurally a better fit for IRA money the same way it is for taxable money, with one added consideration: the tax-deferred wrapper is "redundant" inside an IRA, but that does not make the MYGA worse — it just means you are paying for an insurance product purely on rate, not on tax shelter. And on rate, it usually wins.
See IRA CD vs MYGA decision guide and current best MYGA rates.
What happens at age 73 with RMDs?
Under SECURE Act 2.0, Required Minimum Distributions (RMDs) begin at age 73 for Traditional IRA holders (and SEP/SIMPLE IRA holders). Roth IRAs have no RMD during the original owner's lifetime. For an IRA CD, the practical issue is liquidity: if your full IRA balance is locked in a single 5-year CD, you may need to break the CD to take your RMD. Two solutions:
- Ladder. Hold multiple smaller CDs maturing in different years; pull RMD from the maturing rung. See IRA CD ladder strategy.
- RMD-friendly product. Most IRA MYGAs allow penalty-free withdrawal of the RMD amount each year — ask the carrier in writing before signing.
The honest verdict on Discover IRA CDs
Discover's IRA CD product is competently administered and reasonably priced at the 12-month tenor. The $2,500 minimum is a friction point versus $0-minimum competitors. The 10-year option is the only structurally unique feature, and it is dominated by IRA MYGAs at the same horizon. For 12-month IRA cash, Discover is fine. For 3-10 year IRA money, the MYGA option is structurally superior on rate.
Related guides
- IRA CD vs MYGA — which is better for retirement
- IRA CD ladder strategy
- How to rollover a 401(k) into an IRA CD
- Using IRA CDs to cover RMDs
- Inherited IRA CD rules (SECURE Act 10-year)
- Best MYGA rates — 2026
Second opinion before you commit IRA money
Independent licensed producer. Hans Goldstein.
IRA money is retirement money — one bad rollover or product pick costs you years. Before you lock a 5-year IRA CD or sign a MYGA application, get a written side-by-side comparison from a licensed independent producer who is not paid by the bank or the carrier you are considering.
Drop your info — within 24 hours you'll get a written rate comparison (IRA CDs vs IRA MYGAs at your term), the IRS rollover rules that apply to your situation, and a no-pressure 15-minute call if you want one.
Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer appointed with multiple A-rated carriers
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Disclosure
This review reflects publicly available product materials and approximate rates as of the date stated above. CD rates, IRA account fees, MYGA crediting rates, and IRS rules cited (RMD age 73 under SECURE 2.0, 10% early withdrawal penalty before 59½, Roth 5-year qualified distribution rule, post-2019 SECURE Act 10-year rule for non-spouse inherited IRA beneficiaries) are current as of the publication date and subject to change. Always confirm current rates with the issuer and current tax law with a CPA before opening, rolling over, or withdrawing from any IRA. This article is general information for educational purposes; it is not a personalized recommendation, tax opinion, legal opinion, or offer of any specific product. Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated annuity carriers; he does not sell bank CDs and is not affiliated with any bank, credit union, or brokerage discussed in any review on this site. No compensation has been received from any bank, credit union, or brokerage in connection with this review. MYGAs are insurance products with surrender charges; bank CDs are FDIC-insured deposit products; credit union CDs are NCUA-insured share certificates. These are different product categories with different protections and trade-offs.