What Is an IRA Certificate and Share Account?

An IRA share account is a credit union retirement account that operates similarly to an IRA retirement savings account in a bank. As a result, an IRA share certificate is the credit union equivalent to a bank IRA certificate of deposit. Because credit unions are non-profit institutions owned by their shareholder members, they typically have better terms for savers than banks.

IRAs in Brief

IRA stands for individual retirement account or individual retirement arrangement -- in either case, a vehicle designed to help the account holder save for his post-work lifestyle. The two major types are the traditional IRA and the Roth IRA. You set aside pretax money for retirement in a traditional IRA, while you contribute after-tax dollars to a Roth. You don't pay taxes on a traditional IRA until you withdraw money, and Roth withdrawals are completely tax-free after age 59-1/2 and in some other circumstances, according to the Internal Revenue Service.

IRA Share Account

IRA share accounts are the basic credit union vehicle for tax-advantaged retirement savings. Because you are a member and owner, your deposits consist of shares, comparable to shares of stock in a corporation. A share savings account doesn't restrict your withdrawals, but you still must abide by IRS rules governing IRAs, including for taxes and early distributions. Credit union IRA share accounts usually require a lower opening balance than bank savings accounts. The minimum investment is one share, which may cost as little as $5, according to the My Credit Union website.

Both traditional and Roth IRAs are available as credit union share accounts. Similar to bank savings accounts, share accounts pay fixed interest, but credit union interest generally is higher than bank interest. Credit unions also typically charge lower fees than banks.

IRA Share Certificates

IRA share certificates in a credit union are time deposits, similar to bank certificates or CDs. These accounts require you to keep your money invested for a set period of time, called the term. In return, you'll receive a higher rate of interest than in a regular share account. The term for IRA share certificates typically ranges between six months and five years, similar to bank CDs, and longer terms pay higher interest.

The minimum balance to open an IRA share certificate usually is larger than for a regular share account -- $1,000 is a common minimum, though the specific amount varies between individual credit unions.

Finding and Joining a Credit Union

Find and research member credit unions on the NCUA website. To join a credit union, you must open an account by purchasing at least one share. Credit unions are generally limited to certain populations, such as those who work for a specific employer, belong to a trade union or live in a particular area, but choices are available to everyone, according to the My Credit Union website.