Citibank IRA Accounts Review
Citibank IRA review: CD IRAs, Roth IRA, Traditional IRA, Rollover, Money Market IRA. Citibank IRA fees, rates, APY/APR, promotion offer for 2017.
Is Citibank IRA good and safe way to invest?
Introduction to Citibank IRA Choices
Citibank offers a selection of IRA's for people trying to save for retirement. The company's strong financial position definitely has advantages for retirees interested in Individual Retirement Accounts. Let's take a look at these financial benefits and see how they compare to some of the company's rivals.
Citibank customers can open a Roth, Traditional, or Rollover IRA. The Roth account is designed for retirement savers who expect to be in a higher tax bracket during retirement. Earnings grow tax-free, and withdrawals after 59½ are also tax-free. A Traditional account is structured for workers who will be in a lower tax bracket in the future. Contributions are eligible for a tax deduction, although withdrawals are taxed at ordinary income levels.
The Rollover IRA allows old employer plans, such as a 401(k) or 403(b), to be transferred into a Citibank IRA. An IRA with another financial company can also be moved to Citibank as a Rollover account. A Rollover will be set up as either a Roth or Traditional account for tax purposes.
There are no annual fees for any of the bank's IRA's. A CD has a minimum deposit of $250, while the money market account has no minimum to open.
The bank has a helpful IRA hotline that can assist clients with retirement questions or offer assistance in opening an account. A retirement specialist can be reached at 1-800-695-5911 during the week from 8 am to 10 pm, EST, and Saturday from 9 am until 5:30 pm.
Citibank IRA Investment Options
Citibank offers two options to invest IRA assets: a money market deposit account or a certificate of deposit. Both accounts are FDIC insured with a maximum limit of $250,000. Funds can be deposited into the money market account at any time, whereas a CD limits deposits to the start or close of the product's life.
Rates on certificates of deposit vary by term. Currently, an 18-month CD has a variable rate of 1.06%. A 1-year deposit lowers the APY to just 0.2%. The money market account also pays 0.2%. Rates could potentially vary by a small amount depending on the account holder's state of residence.
Some Citibank customers have complained about the firm's low deposit rates. In fact, the bank's rates are fairly competitive when compared against other deposit IRA's in the marketplace. For example, a 24-month IRA CD with Synchrony Bank yields 1.45%. It has a $2,000 deposit minimum, much higher than Citi's minimum.
A Discover Bank IRA CD pays 1.3% with a 2-year term; and it has a
$2,500 minimum. A savings account IRA with Ally Bank pays a lower 1.0%.
Bank of America has the lowest rates in our survey at just 0.03% to 0.15%, depending on account type.
Despite some criticisms from some of its customers, Citibank seems to perform satisfactorily against many of its chief competitors.
Citi Personal Wealth Management IRA
Besides Citibank, Citigroup also has a brokerage department entitled Citi Personal Wealth Management. Here, retirement savers can seek higher returns than what a bank IRA is able to deliver. The broker offers a large selection of securities that have the ability to outperform deposit accounts, although the securities will come with added risk. They include stocks, ETF's, mutual funds, and fixed-income products.
Securities available through Citi are not insured by the FDIC, which is a concern to some investors. However, Citi Personal Wealth Management is protected by the SIPC, which is the brokerage version of the FDIC. All brokerage IRA's with Citi are insured up to $500,000, of which $250,000 can be applied to cash balances.
An IRA with the brokerage division of Citi does come with a $75 annual fee. Some Citi clients have criticized this yearly charge, although this type of fee isn't uncommon in the industry. Vanguard, for example, charges a $20 annual fee. It can be waived by signing up for electronic delivery of account documents. Citi's $75 fee can also be waived by signing up for a CitiGold package.
There is a $100 transfer fee that Citi charges for moving a brokerage IRA to another firm. This fee is above average, although many other
securities firms do assess a fee for transferring an account. For example, Merrill Edge charges $49.95 to move an IRA to another brokerage
house. OptionsHouse customers pay $60, while Capital One Investing has a $70 fee. TD Ameritrade,
by comparison, charges nothing.
Citi is one of the largest financial institutions in the world. Such a status will attract many retirement savers and their nest eggs.
Citibank has decent choices for investors who are looking for safety and stability, while the company's wealth management division offers
higher return potential, although not at lower risk. Citi does a good job compared to some rivals, but it underperforms against others.
Article was updated on 1/25/2017.