Can I Add Money to an IRA That Is Locked Into a Term?

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There are several ways that you can save for your retirement, including paying into the social security system, and contributing to your 401(k) plan, Individual retirement accounts (IRAs), provide a means to set aside some of their retirement funds in a tax-advantaged account. There are numerous investments available for use with your IRA, including fixed-term products.

Individual Retirement Account

An IRA is a tax-advantaged, trustee-based account. An IRA is a type of account, not a type of investment. Your IRA must be held by a trustee, which can be a bank, insurance company, mutual fund company, investments firm or other approved financial organization. Funds inside an IRA are allowed to grow without incurring a current income tax liability. Other benefits of an IRA are dependent upon whether your IRA is a traditional or Roth IRA.

Acceptible Investment Options

The Internal Revenue Service does not dictate the types of investments you can place in an IRA, but it does stipulate a few prohibited investments, including alcoholic beverages, works of art, rugs, stamps and gemstones. If you have a self-directed IRA you can place virtually any kind of investment into your IRA. This includes stocks, bonds, certificates of deposit (CDs), real estate investment trusts, mutual funds, and certain gold and silver coins minted by the U.S. treasury. The company that holds your IRA in trust may restrict the types of investments you place in an IRA.

Locked-Term Investments

You can place a locked-term investment, such as a fixed-rate CD into an IRA. The conditions of your investment will dictate whether or not you can add additional funds to the investment, regardless of whether the investment is held in your IRA. If the company that sold you the investment allows you to add to the investment, you can do so within your IRA, provided you do not exceed the maximum contribution for the tax year.

Addition Investments

Your IRA trustee can dictate the types of investments that you can place within your IRA, but they can't dictate the amount of money you can contribute to your IRA. IRA contribution limits are dictated by law and IRS regulations. You can have a locked-term investment in an IRA, and still contribute to a similar or different type of investment to be held in an IRA, up to the contribution limits prescribed by law.