Confused about IRAs

[prog]

My bank is being zzz-slow getting back to me with a time-sensitive question I have about IRAs, so I thought I'd turn to LazyWeb.



I wanna make my third annual last-minute $3,000 (legal maximum) IRA contribution, as the IRS smiles upon such things. Right now my bank shows me holding two IRA accounts: a traditional one I started two years ago, and a Roth I opened last year because it seemed like a better idea.

Each account contains one (1) CD. I want to put my $3,000 into my Roth IRA account. And here is where i get stuck.

My bank's Web interface isn't letting me treat my CDs like regular bank accounts. (There is probably an excellent reason for this. I don't know what it is, because I don't know anything about any of this.) So, the way to make my contribution does not seem as simple as transferring the money from my savings account to that Roth CD.

I can buy a new Roth CD, and just put it alongside the one I got last year. So is that what IRA accounts are made of? An array of distinct CDs, one for every contribution made?

This would imply that as the years pass I'm going to own an ever-growing collection of CDs, each worth $(whatever the legal contribution max was when it was opened) + $(interest it has accrued since it was opened). Is that right? It seems weird.

Comments

[magid.livejournal.com]

A Roth IRA is just another account that happens to be post-tax for investing, and tax-free for earnings. You can invest what's in the account in a CD (as you have), or in stocks, or in any other investment. And I believe that CDs aren't like bank accounts, in that you buy one for $x (face value) at a particular time, and the rate of return may vary depending on the $ you put in at once. If you choose to invest only in CDs, then, yeah, you'll end up with a number of CDs at the end (note, though, that depending on the duration of the CDs, you could put together a new contribution with the funds coming out of another CD that's maturing, and buy one with a higher face value).