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Bank of America Money Market IRA Review
Bank of America Money Market IRA review and rates for 2024. BOFA MMA Roth & traditional IRA accounts pros, cons, fees, and promotions.
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Bank of America Money Market IRA Overview
Investors are increasingly cautious about keeping their retirement savings in traditional stock portfolios. With market volatility high, holding cash in equities has become riskier, especially for those nearing retirement. Even those with many years until retirement might be holding cash, waiting for the market to stabilize. However, holding cash alone isn’t ideal since inflation can erode its value over time. For those in this situation, or for risk-averse investors, Bank of America offers money market options within an IRA.
What is a Money Market IRA?
A money market IRA is a type of savings IRA, which is a variation of the three main IRAs used in retirement planning: Roth, Traditional, and Rollover. Any of these IRAs can be used as a savings IRA.
A savings IRA has the same tax advantages as a standard, stock-focused IRA but includes additional features that help reduce risk:
Tax Advantages
Since a money market IRA is a type of IRA, it enjoys the same tax benefits as other IRA accounts. It’s best to consult with a tax professional to understand your specific situation, but generally, Roth IRAs offer tax-free withdrawals, while Traditional IRAs provide other tax benefits.
(Almost) Risk-Free
A money market IRA uses banking products rather than speculative investments like stocks or options. The funds in a money market IRA are FDIC-insured, meaning the federal government guarantees your cash up to a certain limit (usually $250,000) if the bank fails or can’t return your money.
Bank of America Benefits
Like other Bank of America IRAs, the money market IRA doesn’t have annual or custodial fees.
Bank of America Money Market IRA
Bank of America’s money market IRA offers more flexibility than other savings IRAs, which often focus on certificates of deposit (CDs).
The primary advantage of a money market IRA over a CD is flexibility. With a CD, your money is locked in for a set period, so you can’t easily access it to invest in stocks or make withdrawals during retirement.
CDs also require a higher initial investment than the $100 minimum needed to open a money market IRA, making the money market IRA a good option for new investors looking to start and grow their retirement savings.
Additionally, with a CD, you’re stuck with your initial investment until it matures. A money market IRA, on the other hand, allows you to add more funds anytime without a minimum investment requirement.
The yield on a money market IRA can vary, but with rising interest rates, current yields are higher than they were before. You’ll need to call Bank of America to get the current rate, but when we checked, it ranged between 0.05% and 0.07%. This offers an opportunity to grow your cash reserves while waiting to withdraw or invest in stocks at lower prices.
Bank of America’s money market IRA rates are relatively low. In comparison,
Webull offers
4.25% APY on free cash balances.
Top Alternatives
Bank of America Money Market IRA Conclusion
While investing in stocks within an IRA can yield greater gains over the long term, those who prefer less risk may find today’s market volatility leading them to consider safer options like Bank of America’s money market IRA.
This savings IRA is almost risk-free with FDIC insurance, offers more flexibility than other fixed-income options like CDs or bonds, and is suitable for any investor, whether they are just starting out, waiting to re-enter the stock market, or withdrawing funds in retirement while still earning some interest.
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Updated on 7/2/2024.
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