IRA money market accounts to save for retirement

min read

Adding an IRA money market account to your retirement mix may help lessen stress. Here's why:

IRA money market accounts: A more stable choice

When you've been saving for years in hopes of enjoying a comfortable retirement, the fear of losing money can be especially acute. Watching your IRA account bounce up and down with the stock market as you near retirement age can be unbearable.

If that anxiety sounds familiar, you may want to think about investing in a money market account through your IRA itself. Doing so can help you and your money remain secure in chaotic times.

Money market account basics

Money market accounts are much like regular savings accounts, but traditionally pay higher interest and may require a higher minimum deposit to get started. The funds placed in an FDIC-insured money market account are protected up to a limit of $250,000 per deposit, per institution. Credit unions also offer insured money market accounts. A retirement money market account is a great way to ensure security down the road to your golden years. 

Compare the best money market rates

There are many ways to compare money market accounts online, such as through MoneyRates.com's money market account page. In recent years, the best money market rates have been near or at historic lows. While that has been a disappointment to depositors, the strong stability of money market accounts, including money market IRAs, still make them a viable choice for conservative investors.

A chart comparing IRA money market accounts, IRA money market rates and other money market IRA features with savings accounts and other deposits
*Source for national interest rate: FDIC, updated Jan. 23, 2017

IRA money market for retirement: What's the difference?

Some people may be scared away from starting an IRA because they think investing in an IRA automatically means being associated with the stock market. But in reality, you can put your IRA contributions into nearly any investment vehicle you want, including stocks, bonds or a certificate of deposit.

An IRA money market account can be a good option if you desire a higher interest rate than a regular savings accounts can provide, as well as the ability to move your money quickly, but don't want to court excess risks.

Tax-free savings and tax penalties for IRA investing

The primary perk is that no matter what investment products you choose within the account, you can gain substantial income tax benefits just for contributing. For example, if your tax rate is 35 percent between federal and state, you can save $350 in taxes for every $1,000 you contribute to your IRA.

Certain special rules apply to IRA investing, so consider checking with a tax professional before starting. You'll also want to remember that the account may be subject to tax penalties if you withdraw the money before age 59 1/2. If you anticipate needing some of your savings sooner than that, it may be best to store some of it outside of your IRA in a conventional CD, savings account or money market account.

Visit the MoneyRates money market page for the best money market rates

CHERYL 16 March 2016 at 11:18 pm

I am receiving money from my divorce from an IRA, they told me I have to put it in an IRA account. I need some of it to pay down debt from divorce and leave the tax portion in for 2016 taxes. What is the best acct to put it in that does not penalize or charge an early withdrawal fee? I am 61, does my age help?

Stephanie Conlan 21 February 2016 at 10:01 pm

I contacted the Discover IRA Department today (2/21/16), and they NO LONGER OFFER an IRA money market account. Please update your website.Thank you, Stephanie

sunshine 24 August 2015 at 7:43 pm

any good suggestion for the south san francisco area?

Terry Zimmerman 30 July 2015 at 5:03 pm

I am looking for a bank that offers a IRA /MMA with a higher rate than a Vanguard MMA Terry Z

Chris nelson 11 June 2015 at 11:31 am

Thx this was very helpful

Brent 4 June 2015 at 11:48 am

No thanks

Connie Blackmon 16 April 2015 at 1:46 pm

I have a 401 k program at work, but I would like to invest some money in an account to make more money!

wmyers4u 11 October 2014 at 2:32 am

Wouldn't low risk bonds and/or bond funds bed about as safe with better returns?

Ed 17 September 2014 at 6:38 pm

Hi, the money market rate available in my traditional Vanguard IRA is .01% much lower than the after tax account I have with Barclay's outside of my IRA at .09%. Are money market rates within traditional IRAs restricted in some way?

Steve Dubberly 26 July 2011 at 3:13 am

Great article. What website would you suggest for locating a suitable IRA money market in Jacksonville, FL ? Steve in Jax Beach