A smiling young woman with a high bun and glasses types on a laptop at a sunny table with books, perhaps researching scholarships for women.

10 Popular Scholarships for Women

Scholarships are free money that can help fund an undergraduate or graduate degree. There are plenty of scholarships for women, including some with a purpose to encourage more females to pursue careers where they’re considered underrepresented, as well as scholarships to help them attend college.

Spending some time researching and applying for scholarships you may be eligible to receive could help you pay for college tuition. Keep reading to learn more on 12 top scholarships for women to help pay for college.

Key Points

•   Scholarships for women can be need-based or merit-based, with some targeting underrepresented fields like STEM, business, and aerospace.

•   Examples include AAUW Selected Professions Fellowships ($20,000) and Women in Aerospace Foundation ($5,000).

•   Specialized opportunities exist for groups such as Native American students (AIS Scholarship: $500-$2,000), Chicana/Latina students ($1,500), and nursing students (ANNA scholarships: $1,000–$3,000).

•   Many scholarships also support women pursuing graduate degrees or career mobility, including accounting and statistics-focused awards.

•   Deadlines and eligibility vary widely — early research and preparation are key, as many opportunities go unclaimed due to lack of applications.

What Types of Scholarships Are There for Women?

There are plenty of scholarships available for women, including scholarships for undergraduate students and scholarships for graduate students.

Scholarships may be need-based or merit-based awards. Each one will have specific qualifying and application requirements. Scholarships, essentially, can be like finding free money for college.

Some scholarships may also be location-based, such as those for residents of certain states or for specific schools. There are even some unclaimed scholarships you may be eligible for.

You can use SoFi’s scholarship finder to find and apply for scholarships you qualify for.

💡 Quick Tip: Fund your education with a competitive-rate, no-fees-required SoFi private student loan that covers up to 100% of school-certified costs.

Need-Based vs. Merit-Based Scholarships

Need-based scholarships for women are awarded primarily based on financial need. They’re designed to support applicants whose household income, life circumstances, or financial barriers make paying for education challenging. These scholarships often require documents like tax returns or FAFSA information to show that the applicant genuinely needs financial assistance to pursue her goals.

Merit-based scholarships, on the other hand, focus on achievements rather than financial background. They reward academic excellence, leadership, community involvement, or exceptional talent in areas such as STEM, arts, or athletics. Rather than evaluating income, these scholarships assess accomplishments, grades, or demonstrated potential, making them accessible to women who have excelled in their chosen paths.

Scholarships for Women Returning to School

Scholarships for women returning to school are a type of scholarship designed to help ease the financial burden many face when re-entering higher education after time away. These awards recognize that women often step out of school for reasons like caregiving, career shifts, or financial challenges, and they aim to make the transition back more accessible and affordable. Many of these scholarships consider factors such as financial need, life circumstances, or the desire to advance in a new career path.

Three examples of scholarships for women returning to school include P.E.O. Program for Continuing Education (PCE), Society of Women Engineers (SWE) Reentry Scholarships, and the Jeannette Rankin Foundation Scholarship.

Are There Scholarships for Women in STEM?

There are many scholarships for women who are pursuing careers in science, technology, engineering, and math (STEM). According to the U.S. Equal Employment Opportunity Commission, 29% of all STEM workers are women, with math, engineering, and computer-related jobs being the least represented.

Government organizations, industry associations, and even technology companies offer industry-specific scholarships (we’ll talk more about some of them below). For instance, companies like Google or associations such as the Society for Women Engineers (SWE) offer scholarships for women.

Recommended: I Didn’t Get Enough Financial Aid: Now What?

Fields Commonly Supported by STEM Scholarships

STEM scholarships commonly support fields that drive innovation and require strong technical skills, such as engineering, computer science, and the physical and biological sciences. Many programs also fund studies in mathematics, technology, and emerging areas like cybersecurity, data science, and renewable energy. These fields are often prioritized because they face workforce shortages and play a critical role in economic growth and scientific advancement.

Organizations That Support Women in STEM

Many organizations exist to support women pursuing careers in STEM by providing scholarships, mentorship, networking opportunities, and professional development. Five specific organizations include:

•   Society of Women Engineers (SWE): Provides scholarships, networking, mentorship, and professional development to women in engineering and technology.

•   AnitaB.org: Focuses on advancing women in computing through conferences (like the Grace Hopper Celebration), research, and organizational programs.

•   Association for Women in Science (AWIS): Advocates for women across all STEM disciplines by offering mentorship, career resources, and policy engagement.

•   National Center for Women & Information Technology (NCWIT): Works to increase women’s participation in computing through education programs, research, and community-building initiatives.

•   Girls Who Code: Offers after-school clubs, summer programs, and resources to close the gender gap in technology by equipping young women with coding skills.

Recommended: Scholarships for STEM Students

Below are 12 scholarships available to women that could help you avoid taking on too much student loan debt:

Pepperdine Legacy Partners (PLP) Helen Young Scholarship

Scholarship amount: $5,000

Application deadline: February 15

The Pepperdine Legacy Partners (PLP) Helen Young Scholarship is formerly known as the Associated Women for Pepperdine (AWP) Scholarship. It is one of the largest women’s groups awarding scholarships for female Christian students (though, men can receive this scholarship, too). There are several awards up for grabs, and scholarships can be renewed.

To qualify, applicants need to be students at Pepperdine University, current and active members of the Church of Christ, submit a letter of recommendation from a leader of the Church of Christ, and fill out the Free Application for Federal Student Aid (FAFSA®) application.

Gertrude M. Cox Scholarship

Scholarship amount: $1,000

Application deadline: March 1

The Cox Scholarship aims to encourage women to pursue professions related to the statistics field. There are two scholarships, one for a female early on in their graduate career, and the other for a woman at a more advanced level. Applicants need to be permanent residents or citizens in the U.S. or Canada and be admitted to a full-time graduate statistics program of the year the scholarship is awarded.

Jeannette Rankin Women’s Scholarship Fund

Scholarship amount: Up to $2,500

Application deadline: February 13

This scholarship is for women age 35 or older who are considered low-income and enrolling into a not-for-profit accredited educational institution. Women can pursue an associate’s or bachelor’s degree, or technical or vocational education. To apply, applicants need to demonstrate financial need and answer questions based on their academic and career goals.

American Association of University Women (AAUW) Selected Professions Fellowships

Scholarship amount: $20,000

Application deadline: October

The AAUW awards multiple scholarships, and the Selected Professions Fellowships is one of them.

Women may apply if they intend on pursuing full-time studies at an accredited U.S. institution in a field where women have had historically low enrollment. For instance, scholarships are awarded for women pursuing degrees in STEM and engineering.

Eligibility criteria include women who can prove they have shown promise of high academic excellence and distinction.

Recommended: 7 Tips to Lower Your Student Loan Payments

American Indian Services (AIS) Scholarship

Scholarship amount: $500-$2,000

Application deadline: July 1 to November 1 (depending on when the applicant’s classes start)

The AIS Scholarship aims to help Native American students enrolling in an accredited institution pursue higher education. Awards are given on a quarterly basis, though you’ll only need to apply once per year.

Eligibility requirements include being at least one-quarter of an enrolled member, or descendant of an enrolled member of a U.S. Federally Recognized Native American Tribe, enrolled at least half-time, and completed the FAFSA. This award is currently only available to undergraduate students.

Educational Foundation for Women in Accounting Scholarships

Scholarship amount: $1,500-$5,000

Application deadline: Varies (most end April 30)

The Educational Foundation for Women in Accounting offers multiple scholarship opportunities for women pursuing undergraduate, graduate, or postgraduate degrees in accounting. Applicants may apply to more than one scholarship excluding the Women in Transition and Women in Need awards, of which students can only apply to one.

Eligibility criteria varies, though most will require applicants to provide transcripts, demonstrate financial need, and prove they’re committed to working in the accounting field.

Patsy Takemoto Mink Education Foundation Scholarship

Scholarship amount: $5,000

Application deadline: New information released May 2026

The Patsy Takemoto Mink Education Foundation Scholarship provides financial support to low-income women of color who are pursuing education or vocational training to improve their career prospects. Named after Congresswoman Patsy Takemoto Mink, the scholarship aims to help women overcome economic barriers and gain skills for long-term self-sufficiency.

Applicants must demonstrate financial need, academic potential, and a commitment to completing their educational or training programs, making it an important resource for women seeking to advance their careers and achieve personal and professional growth.

American Nephrology Nurses Association Career Mobility Scholarships

Scholarship amount: $1,000 to $3,000

Application deadline: November

The American Nephrology Nurses Association, or ANNA, offers Career Mobility Scholarships ranging from $1,000 to $3,000 designed to support qualifying members who are pursuing an advanced or BSN degree in nursing. Qualifying criteria includes being a current full ANNA member for at least one year, enrolled or accepted into a qualifying nursing program, and a 250-word essay outlining the potential impact of the scholarship.

Chicana Latina Foundation Scholarships

Scholarship amount: $1,500

Application deadline: Next application cycle will open on January 1

Self-identifying Chicana or Latina college students living in qualifying California counties can apply for a $1,500 scholarship. They need to be students attending an accredited community college, college, or university full-time and meet certain academic requirements. Plus, they’ll need to attend the Chicana Latina Foundation (CLF) Leadership Institute and CLF Annual Awards Dinner if selected for a scholarship.

To apply for this scholarship, applicants will be required to submit one letter of recommendation from a counselor/professor or community member.

Undergraduate students need to submit unofficial or official transcripts from their current degrees and one letter of recommendation. Graduate students will also need to submit a resume or CV in addition to providing a transcript and letter of recommendation.

💡 Quick Tip: Master’s degree or graduate certificate? Private or federal student loans can smooth the path to either goal.

The Women In Aerospace Foundation Scholarship

Scholarship amount: $5,000

Application deadline: June

The Women In Aerospace Foundation aims to promote careers in the aerospace field — this scholarship program is one of the ways it does so. The organization awards four $5,000 awards to women who are rising juniors and seniors working for a bachelor’s degree in engineering, math, or science.

To qualify, applicants need to be currently enrolled in an accredited U.S. college or university, plan to enroll the next academic year, and complete a minimum of 2.5 academic years of full-time college. Applicants also need to have a minimum of a 3.0 GPA.

P.E.O. Program for Continuing Education

Scholarship amount: Up to $4,000

Application deadline: 30 days from when a local P.E.O. chapter recommends you

The P.E.O. Program for Continuing Education (PCE) is a need-based grant up to $4,000 to support women in the U.S. and Canada whose education has been interrupted and who wish to return to school to complete a degree or certification that will improve their employability.

To be eligible, women must be recommended by a local P.E.O. chapter, be U.S. or Canadian citizens or permanent residents, have had at least 24 consecutive months as a non-student, and be enrolled in an accredited program that leads to employment or advancement. They must also be within 18 consecutive months of completing their program, and they cannot already hold a master’s degree or be enrolled in a doctoral program.

Recommended: Grants for College

Society of Women Engineers Scholarship

Scholarship amount: $1,000-$5,000

Application deadline: Emerging First Year Scholars – February 2, 2026; Collegiate/Graduate Scholars – March 31, 2026; India Scholars – March 31, 2026

The Society of Women Engineers (SWE) Scholarship program offers robust financial support to women pursuing undergraduate or graduate degrees in engineering, engineering technology, or computing at ABET-accredited schools. Award amounts typically range from $1,000 to $5,000, though some awards may be higher depending on donor funding.

To apply, candidates submit an application with their transcripts, a personal essay, and a letter of recommendation. One application allows you to apply for all scholarships you’re eligible for, including Emerging First Year Scholars, Collegiate/Graduate Scholars, and India Scholars.

The Takeaway

Applying for one of the many scholarships for women can be a smart tactic if you’re trying to figure out how to pay for your college education. In addition to the scholarships listed here, there are a variety of other opportunities — many scholarships go unclaimed because they don’t receive enough applications. It doesn’t hurt to submit an application since the worst they’ll say is “no,” and the benefits are well worth it.

There are other ways to help cover the cost of college as well, and you’ll likely want to explore your options to see what makes the most sense for your situation.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.


Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Are there scholarships specifically for women over 30?

Yes, there are scholarships specifically for women over 30. Organizations like the American Association of University Women (AAUW) and the Jeannette Rankin Foundation (JRF) offer financial aid to support women returning to education or pursuing career advancement. Check their websites for eligibility and application details.

Can women in trade schools apply for scholarships?

Yes. Women in trade schools can apply for many scholarships specifically created to support women pursuing skilled trades. These scholarships are offered by trade associations, nonprofits, unions, and private organizations to help cover tuition, tools, exams, and training costs, encouraging more women to enter high-demand technical fields.

Are there scholarships for women of color?

Yes, there are scholarships for women of color. Organizations like the United Negro College Fund, Hispanic Scholarship Fund, and Asian & Pacific Islander American Scholarship Fund offer financial aid to support diverse students. Additionally, many universities and professional groups have specific programs for women of color.

How competitive are scholarships for women in STEM fields?

Scholarships for women in STEM fields are highly competitive due to the growing emphasis on diversity and inclusion. Many organizations, such as the Society of Women Engineers and the National Science Foundation, offer these scholarships, but the number of applicants often exceeds the available awards. Strong academic performance, relevant experience, and compelling essays are crucial.

What documents are typically required to apply for women’s scholarships?

Most women’s scholarship applications require proof of identity, transcripts, letters of recommendation, and a personal essay. Many also ask for financial information, a resume, and documentation showing eligibility, such as enrollment verification, income details, or proof of belonging to a specific group, field, or demographic the scholarship supports.


Photo credit: iStock/valentinrussanov

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOSLR-Q425-047

Read more
How to Save for Retirement at 30

How to Save for Retirement at 30

Learning how to save for retirement at 30 is an ideal time to start because you may have a steady salary and access to a workplace retirement plan. It can also be complicated: You may have more expenses and new choices to think about.

The main reason to start saving for retirement in your 30s, though, is that time is on your side. Setting aside even a small amount on a regular basis can help grow your nest egg over time.

While an employer-sponsored plan can make saving easier, you can also set up and manage a retirement plan using an IRA.

Key Points

•  Saving for retirement at 30 is crucial because this is when time is on your side, and can help your nest egg grow.

•  At the same time, the onset of adult financial responsibilities may make it hard to set aside money for the future.

•  If you have access to a workplace retirement plan, like a 401(k), this can get you started. Setting aside even small amounts on a steady basis can add up over time.

•  Even without a 401(k), it’s possible to open your own IRA and start saving and investing now.

•  Remember that saving for retirement comes with certain tax advantages that may be useful in the present and down the road.

5 Ways to Start Saving for Retirement at 30

You can set yourself on a path to healthy retirement savings by using the following strategies. First up, putting money into a designated retirement plan.

1. Contribute to a Workplace Account or an IRA

Saving in tax-advantaged retirement accounts available through work, such as a 401(k), is one of the best things you can do to start saving for retirement.

•   Annual contributions

Your 401(k) allows you to contribute up to $23,500 a year in 2025, and $24,500 in 2026. Contributions come directly from your paycheck as pre-tax dollars, which lowers your taxable income in the year you make them.

Regular, automatic contributions, coupled with the benefits of compounding returns, can help your savings grow. Starting a 401(k) at 30 gives you a few decades for your funds to grow over time.

•   Employer matching funds

Also, many 401(k)s allow employers to contribute to your retirement, and many will offer matching funds as part of your compensation package. Aim to save at least as much as is required to receive your employer’s match.

Work toward maxing out your 401(k) contributions, especially as your salary grows over time.

•   Investing your 401(k)

Many workplace plans offer pre-set portfolios, like target-date funds, as well as a wide selection of other investments.

In some cases, your employer may select a basic option for you. It’s important to check so that you can make the best choice for your financial goals. You may be able to invest online directly through the plan sponsor.

You can access the funds penalty-free once you reach age 59 ½, but you will owe taxes on the money at that time.

Recommended: How to Invest Your 401(k)

2. Open an IRA

An IRA is a retirement account that anyone with earned income can open. If you don’t have a 401(k) at work, you can open an IRA, which will give you access to a tax-advantaged account to save for retirement.

Even if you already have a 401(k), opening an IRA can be a good way to save even more, though you may not be able to deduct your contributions. The contribution limit for an IRA 2025 is $7,000 per year, and the limit is $7,500 per year in 2026.

IRAs come in two different types: traditional and Roth IRAs. If you don’t have a 401(k), you can make contributions to a traditional IRA with pre-tax dollars. Like a 401(k), money in these accounts grows tax-deferred, and you’ll pay the taxes on it when you make withdrawals in retirement.

If you meet certain income restrictions, you may be able to contribute to a Roth IRA instead or in addition to these tax-deferred accounts. With a Roth, you make the contributions with after-tax dollars, but your money will grow tax-free inside the account, and you do not have to pay taxes when you make withdrawals.

Recommended: Traditional vs. Roth IRA: How to Choose the Right Plan

3. Plan Your Asset Allocation

Diversification is a strategy whereby you spread your money across different asset classes. To minimize risk from a decline in one type of asset, it typically makes sense to create a diversified portfolio, including a mix of asset classes, such as stocks, bonds and other assets.

Understanding Mutual Funds

Owing to the difficulty of researching, choosing, and managing multiple securities, most retirement savers choose to invest in mutual funds or exchange-traded funds (ETFs) within their retirement plans. These funds are a type of pooled investment that holds hundreds of different securities.

For example, if you buy shares in an ETF that tracks the S&P 500 index, you’ll be investing in the 500 stocks included in that index.

You may want to invest in stock mutual funds or ETFs, bond mutual funds or ETFs, or hybrid funds that include some of each type of asset.

Understanding Asset Allocation

Your asset allocation refers to the proportion of each asset class that you hold. Your asset allocation will reflect your goals, risk tolerance, and time horizon. Given the relatively long period until your retirement, you might consider a relatively aggressive portfolio consisting mostly of stocks in your retirement account.

Stocks typically provide the most potential for growth, but they also fluctuate more than some other asset classes, and they can be risky. Since you have three decades or more before you retire, you have time to ride out the natural ups and downs of the market.

Bonds tend to be less volatile than stocks but also offer lower returns, and may balance out the riskier equity allocation. As you approach retirement, you may consider rebalancing your asset allocation to include more conservative investments to help protect the income you will need to draw upon soon.

Target-date funds are a type of mutual fund that automatically readjusts your portfolio as you near your target date, often the year in which you wish to retire.

4. Diversify Within Asset Classes

Just as a portfolio with different types of assets offers some downside protection, so too, does diversification within those asset classes. If you invest the entire stock portion of your portfolio shares in just one fund and the share price drops, the value of your entire portfolio drops as well.

Now imagine that you own shares in 500 different companies. When one stock fares poorly, it will have a relatively small effect on the rest of your portfolio. Diversification helps limit the negative effects that any asset class, sector, or company could have on your portfolio.

You can further diversify your portfolio by including companies from different sectors and of all sizes from different parts of the globe. This same idea is true for other asset classes. For example, you could hold funds with a mix of government and corporate bonds, and the corporate bonds could represent companies from various sectors and locations.

5. Don’t Cash Out Your 401(k) When You Get a New Job

If you’re only in your 30s, it’s likely that you’ll change jobs a couple of times or more, over the course of your career. When you change jobs, you’ll have a number of options for what to do with the 401(k) you hold with your previous employer.

One of these options is to cash out your 401(k). But this is typically not a great idea from a personal finance perspective. If you take a lump sum payment and you’re younger than 59 ½, you will owe income taxes on the withdrawal, and also a 10% early withdrawal penalty. What’s more, your money will no longer be working for you in a tax-advantaged account, potentially setting you back in your retirement savings goals.

A better option is to roll over your 401(k) into another tax-advantaged retirement account, such as your new employer’s plan, if they offer one, without paying income taxes. Or you can roll your 401(k) into an IRA without paying taxes. IRA accounts offer the added benefit of additional investment options, and they may have lower fees than your 401(k).

6. Protect Your Earnings with Disability Insurance

An injury or an illness that keeps you from going to work can hamper your retirement savings plan. However, disability insurance can help cover a portion of your lost income — usually between 50% and 70% — for a period of time.

Most employers offer some sort of short-term disability insurance, with a benefit period of three to six months. Some employers may offer long-term policies that cover periods of five, 10, or 20 years, or even through retirement age.

Check with your employer to see if you are covered by a disability policy and whether it provides enough coverage for your needs. If your employer’s plan falls short, or you don’t have access to one, you might consider purchasing a policy on your own.

The Takeaway

The earlier you can start saving for retirement the better. A long time horizon gives you the opportunity to take advantage of compounding growth for a longer period of time, which can help you increase the amount you’re able to save. Pay attention to the fees you’re paying on investments, which can eat away at returns over time.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Easily manage your retirement savings with a SoFi IRA.

FAQ

Is starting to save for retirement in your 30s too late?

Not at all. Being in your 30s is often the best time to start, because you may have a steady salary and access to a workplace retirement plan. Even if you don’t, you can still set up your own retirement plan using an IRA. Setting aside money on a regular basis can build a nest egg over time, because time is what helps money to grow.

How much should a 30-year-old have saved for retirement?

One rule of thumb is to aim to save an amount that’s equivalent to your salary. But that’s just a benchmark. It’s far more important to start saving even small amounts, but on a regular basis, using automatic transfers.

Can I save for retirement if I have debt?

Being in debt makes it harder to save for the future, no doubt. And while it’s difficult to save when you’re paying down bills, saving even a little bit can make a big difference to your nest egg over time.


Photo credit: iStock/AJ_Watt

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Mutual Funds (MFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or clicking the prospectus link on the fund's respective page at sofi.com. You may also contact customer service at: 1.855.456.7634. Please read the prospectus carefully prior to investing.Mutual Funds must be bought and sold at NAV (Net Asset Value); unless otherwise noted in the prospectus, trades are only done once per day after the markets close. Investment returns are subject to risk, include the risk of loss. Shares may be worth more or less their original value when redeemed. The diversification of a mutual fund will not protect against loss. A mutual fund may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.

Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by emailing customer service at [email protected]. Please read the prospectus carefully prior to investing.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

S&P 500 Index: The S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. It is not an investment product, but a measure of U.S. equity performance. Historical performance of the S&P 500 Index does not guarantee similar results in the future. The historical return of the S&P 500 Index shown does not include the reinvestment of dividends or account for investment fees, expenses, or taxes, which would reduce actual returns.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOIN-Q325-095
CN-Q425-3236452-47

Read more
woman on smartphone

SEP IRA vs SIMPLE IRA: Differences & Pros and Cons

One of the most common retirement plans is an IRA, or individual retirement account, which allows individuals to contribute and save money for retirement over time. The money can be withdrawn during retirement to cover living expenses and other costs.

There are several different types of IRAs. Two of the most popular types are the Roth IRA and the Traditional IRA.

Perhaps less well-known are the SEP IRA and the SIMPLE IRA. These IRAs are designed for business owners, sole proprietors, and the self-employed.

For small business owners who would like to offer their employees — and themselves — a retirement savings plan, a SEP IRA and a Simple IRA can be options to explore. According to a 2023 study by Fidelity, only 34% of small business owners offer their employees a retirement plan. This is because they believe they can’t afford to do so (48%), are too busy running their company to do it (22%), or don’t know how to start (21%). SEP or Simple IRAs are generally easy to set up and manage and have lower fees than other types of accounts.

There are a number of similarities and differences between the SEP IRA vs. the SIMPLE IRA. Exploring the pros and cons of each and comparing the two plans can help self-employed people, small business owners, and also employees make informed decisions about retirement savings.

How SEP IRAs Work

A SEP IRA, or Simplified Employee Pension IRA, is a retirement plan set up by employers, sole proprietors, and the self-employed. Although SEP IRAs can be used by any size business, they are geared towards sole proprietors and small business owners. SEP IRAs are typically easy to set up and have lower management fees than other types of retirement accounts.

Employers make contributions to the plan for their employees. They are not required to contribute to a SEP every year. This flexibility can be beneficial for businesses with fluctuating income because the employer can decide when and how much to contribute to the account.

Employers can contribute up to 25% of an employee’s annual salary or $70,000 in 2025, whichever is less. In 2026, employers can contribute up to $72,000 or 25% of an employee’s salary, whichever is less. The employer and all employees must receive the same rate of contribution.

Employees cannot make contributions to their SEP accounts.

💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.

SEP IRA Pros and Cons

There are advantages to a SEP IRA, but there are disadvantages as well. Here are some of the main benefits and drawbacks to be aware of.

Pros

The pros of a SEP IRA include:

•   A SEP IRA is an easy way for a small business owner or self-employed individual to set up a retirement plan.

•   The contribution limit is higher than that for a SIMPLE IRA. In 2025, the contribution limit is $70,000 to a SEP IRA, and in 2026, the contribution limit is $72,000.

•   Employers can deduct contributions to the account from their taxes up to certain amounts, and employees don’t have to include the contributions in their gross income. The money in the account is tax-deferred, and employees don’t pay taxes on the money until it gets withdrawn.

•   For self-employed individuals, a SEP IRA may help reduce certain taxes, such as self-employment tax.

•   An employer isn’t required to make contributions to a SEP IRA every year. This can be helpful if their business has a bad year, for example.

•   For employees, the money in a SEP is immediately 100% vested, and each employee manages their own assets and investments.

•   Having a SEP IRA does not restrict an individual from having other types of IRAs.

Cons

There are some drawbacks to a SEP IRA for employees and employers. These include:

•   Employees are not able to make contributions to their own SEP accounts.

•   Individuals cannot choose to pay taxes on the contributions in their SEP now, even if they’d like to.

•   Employers must contribute the same percentage to all employees’ SEP accounts that they contribute to their own account.

•   There are no catch-up contributions for those 50 and older.

How SIMPLE IRAs Work

SIMPLE IRAs, or Savings Incentive Match Plan for Employees Individual Retirement Accounts, are set up for businesses with 100 or fewer employees. Unlike the SEP IRA, both the employer and the employees can contribute to a SIMPLE IRA.

Any employee who earns more than $5,000 per year (and has done so for any two- year period prior to the current year) is eligible to participate in a SIMPLE IRA plan. Employees contribute pre-tax dollars to their plan — and they may have the funds automatically deducted from their paychecks.

Employers are required to contribute to employee SIMPLE IRAs, and they may do so in one of two ways. They can either match employee contributions up to 3% of the employee’s annual salary, or they can make non-elective contributions whether the employee contributes or not. If they choose the second option, the employer must contribute a flat rate of 2% of the employee’s salary up to a limit of $350,000 in 2025, and up to a limit of $360,000 in 2026.

Both employer contributions and employee salary deferral contributions are tax-deductible.

As of 2025, the annual contribution limit to SIMPLE IRAs is $16,500. Workers age 50 and up can contribute an additional $3,500. In 2026, the annual contribution limit is $17,000, and workers age 50 and up can contribute an additional $4,000.

SIMPLE IRA Pros and Cons

There are benefits and drawbacks to a SIMPLE IRA.

Pros

These are some of the pros of a SIMPLE IRA:

•   A SIMPLE IRA is a way to save for retirement for yourself and your employees. And the plan is typically easy to set up.

•   Both employees and employers can make contributions.

•   Money contributed to a SIMPLE IRA may grow tax-deferred until an individual withdraws it in retirement.

•   For employees, SIMPLE IRA contributions can be deducted directly from their paychecks.

•   Employers can choose one of two ways to contribute to employees’ plans — by either matching employee contributions up to 3% of the employee’s annual salary, or making non-elective contributions of 2% of the employee’s salary up to an annual compensation limit.

•   Employees are immediately 100% vested in the SIMPLE IRA plan.

•   A SIMPLE IRA has higher contribution limits compared to a traditional or Roth IRA.

•   Catch-up contributions are allowed for those 50 and up.

Cons

SIMPLE IRAs also have some drawbacks, including:

•   A SIMPLE IRA is only for companies with 100 employees or fewer.

•   Employers are required to fund employees’ accounts.

•   The SIMPLE IRA contribution limit ($16,500 in 2025, and $17,000 in 2026) is much lower than the SEP IRA contribution limit ($70,000 in 2025, and $72,000 in 2026).

Main Differences Between SEP and Simple IRAs

While SEP IRAs and SIMPLE IRAs share many similarities, there are some important differences between them that both employers and employees should be aware of.

Eligibility

On the employer side, a business of any size is eligible for a SEP IRA. However, SIMPLE IRAs are for businesses with no more than 100 employees.

For employees to be eligible to participate in a SIMPLE IRA, they must earn $5,000 or more annually and have done so for at least two years previously. To be eligible for a SEP IRA, an employee must have worked for the employer for at least three of the last five years and earned at least $750.

Who Can Contribute

Only employers may contribute to a SEP IRA. Employees cannot contribute to this plan.

Both employers and employees can contribute to a SIMPLE IRA. Employers are required to contribute to their employees’ plans.

Contribution limits

Employers are required to contribute to employee SIMPLE IRAs either by matching employee contributions up to 3% of the employee’s annual salary, or making non-elective contributions of 2% of the employee’s salary up to a limit of $350,000 in 2025, and up to a limit of $360,000 in 2026.

With a SEP IRA, employers can contribute up to 25% of an employee’s annual salary or $70,000 in 2025, whichever is less. In 2026, an employer can contribute up to 25% of an employee’s annual salary or $72,000, whiever is less. A business owner and all employees must receive the same rate of contribution. Employers are not required to contribute to A SEP plan every year.

Taxes

For both SEP IRAS and SIMPLE IRAs, contributions are tax deductible. Individuals typically pay taxes on the money when they withdraw it from the plan.

Vesting

All participants in SIMPLE IRAs and SEP IRAS are immediately 100% vested in the plan.

Paycheck Deductions

Employees contributing to a SIMPLE IRA can have their contributions automatically deducted from their paychecks.

Employees cannot contribute to a SEP IRA, thus there are no paycheck deductions.

Withdrawals

For both SEP IRAs and SIMPLE IRAS, participants may withdraw the money penalty-free at age 59 ½ . Withdrawals are taxable in the year they are taken.

If an individual makes an early withdrawal from a SEP IRA or a SIMPLE IRA, they will generally be subject to a 10% penalty. For a SIMPLE IRA, if the withdrawal is taken within the first two years of participation in the plan, the penalty is raised to 25%.

SEP IRAs may be rolled over into other IRAs or certain other retirement plans without penalty. SIMPLE IRAs are eligible for rollovers into other IRAs without penalty after two years of participation in the plan. Before then, they may only be rolled over into another SIMPLE IRA.

Here’s an at-a-glance comparison of a SEP IRA vs. SIMPLE IRA:

SEP IRA

SIMPLE IRA

Eligibility Businesses of any size

Employee must have worked for the employer for at least three of the last five years and earn at least $750 annually

Business must have no more than than 100 employees

Employees must earn $5,000 or more per year and have done so for two years prior to the current year

Who can contribute Employers only Employers and employees (employers are required to contribute to their employees’ plans)
Contribution limits Employers can contribute up to 25% of an employee’s annual salary or $70,000 in 2025, and up to $72,000 in 2026, whichever is less

No catch-up contributions

$16,500 per year in 2025, and $17,000 in 2026

Catch-up contributions of $3,500 for those 50 and up in 2025 and $4,000 for those 50 and up in 2026

Taxes Contributions are tax deductible. Taxes are paid when the money is withdrawn Contributions are tax deductible. Taxes are paid when the money is withdrawn
Vesting 100% immediate vesting 100% immediate vesting
Paycheck deductions No (employees cannot contribute to the plan) Yes
Withdrawals Money can be withdrawn without penalty at age 59 ½. There is generally a 10% penalty if money is withdrawn early, before age 59 ½ Money can be withdrawn without penalty at age 59 ½. There is generally a 10% penalty if money is withdrawn early, before age 59 ½ (or 25% if the account has been open for less than 2 years)

The Takeaway

Both the SEP IRA and the SIMPLE IRA were created to help small business owners and their employees save for retirement. Each account may benefit employers and employees in different ways.

With the SEP IRA, the employer (including a self-employed person) contributes to the plan. They are not required to contribute every year. With the SIMPLE IRA, the employer is required to contribute, and the employee may contribute but can choose not to.

In addition to these plans, there are other ways to save for retirement. For instance, individuals can contribute to their own personal retirement plans, such as a traditional or Roth IRA, to help save money for their golden years. Just be sure to be aware of the contribution limits.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Easily manage your retirement savings with a SoFi IRA.


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

SOIN0124022
CN-Q425-3236452-26

Read more
piggy bank on orange background

How Much Money Should I Have Saved by 30?

As you near 30, you probably have lots of different financial goals. Maybe you’re planning to buy a house. Or perhaps you’re considering starting a family. And while retirement may seem a long way off, it’s never too early to start saving and planning for your future.

You might know you want to save money for all these different things, but you don’t know exactly how much you should be saving. Chances are, you may have been wondering, how much money should I have saved by 30?

The good news is, money you save now can add up. And if you invest that money in a retirement account or an investment portfolio, you can get longer-term growth on your money.

First, though, it helps to know how much you should be saving by age 30 to see if you’re on track. Learn how much you should have saved — plus tips to help you reach your savings goals.

Average/Median Savings by Age 30

The average savings for individuals by age 30 is approximately $20,540, and their median savings is $5,400, according to the Federal Reserve’s most recent Survey of Consumer Finances. It’s important to note that the Fed’s survey doesn’t look specifically at people who are age 30. Instead, it divides them into groups, including 25 to 34 year olds.

These savings amounts are in what the Fed calls “Transaction Accounts.” This includes checking and savings accounts and money market accounts.

How Much Should a 30-Year-Old Have in Savings?

If you’re still asking yourself, how much money should I have saved by 30?, know this: By age 30, you should have the equivalent of your annual salary in savings, according to one rule of thumb. That means if you’re earning $54,000 a year, you should have $54,000 saved.

This number — $54,000 — is based on the average annual salary for those 25 to 34 years old, which is $54,080, according to 2023 data from the Bureau of Labor Statistics.

Strategies to Help You Reach Your Savings Goals by 30

If you don’t have $54,000 saved by age 30, you can still catch up and reach your financial goals.

Here are some techniques that can help you get there.

Set Up an Emergency Fund

Having an emergency savings fund to pay for sudden expenses is vital. That way you’ll have money to pay for emergencies like unexpected medical bills or to help cover your expenses if you lose your job, rather than having to resort to using a credit card or taking out a loan. Put three to six months’ worth of expenses in your emergency fund and keep the money in a savings account where you can quickly and easily access it if you need it.

Pay Down Debt

Debt, especially high-interest debt like credit card debt, can drain your income so that you don’t have much, if anything, left to put in savings. Make a plan to pay it off.

For example, you might want to try the debt avalanche method. List your debts in order of those with the highest interest to those with the lowest interest. Then, make extra payments on your debt with the highest interest, while paying at least the minimum payments on all your other debts. Once you pay the highest interest debt off, move on to the debt with the second highest interest rate and continue the pattern.

With the debt avalanche technique, you eliminate your most expensive debts first, which can help you save money. You may also get debt-free sooner because, as you pay the debt off, less interest accumulates each month.

If the avalanche method isn’t right for you, you could try the debt snowball method, in which you pay off the smallest debts first and work your way up to the largest, or the fireball method, which is a combination of the avalanche and snowball methods.

Start Investing

Retirement probably feels like a long way off for you. But the sooner you can start saving for retirement, the better, since it will give your savings time to grow.

If you have access to a 401(k) plan at work, take advantage of it. Once you open an account, the money will be automatically deducted from your paycheck each pay period, which can make it easier to save since you don’t have to think about it.

If your employer doesn’t offer a 401(k), or even if they do and you want to save even more for retirement, consider opening an IRA account. There are two types of IRAs to choose from: a traditional IRA and a Roth IRA. At this point in your life, when you’re likely to be earning less than you will be later on, a Roth IRA might be a good choice because you pay the taxes on it now, when your income is lower. And in retirement, you withdraw your money tax-free.

However, if you expect that your income will be less in retirement than it is now, a traditional IRA is typically your best choice. You’ll get the tax break now, in the year you open the account, and pay taxes on the money you withdraw in retirement, when you expect to be in a lower tax bracket.

Contribute the full amount to your IRA if you can. In tax year 2025, those under age 50 can contribute up to $7,000 a year, and in tax year 2026, they can contribute up to $7,500 a year.

Take Advantage of 401(k) Matching

When choosing how much to contribute to your 401(k), be sure to contribute at least enough to get your employer’s matching funds if such a benefit is offered by your company.

An employer match is, essentially, free money that can help you grow your retirement savings even more. With an employer match, an employer contributes a certain amount to their employees’ 401(k) plans. The match may be based on a percentage of an employee’s contribution up to a certain portion of their total salary, or it may be a set dollar amount, depending on the plan.

Save More as Your Salary Increases

When you get a raise, instead of using that extra money to buy more things, put it into savings instead. That will help you reach your financial goals faster and avoid the kind of lifestyle creep in which your spending outpaces your earnings.

Though it’s tempting to celebrate a pay raise by buying a fancier car or taking an expensive vacation, consider the fact that you’ll have a bigger car payment to make every month moving forward, which can result in even more spending, or that you may be paying off high interest credit card debt that you used to finance your vacation fun.

Instead, make your celebration a little smaller, like dinner with a few best friends, and put the rest of the money into a savings or investment account for your future.

The Takeaway

By age 30, you should have saved the equivalent of your annual salary, according to a popular rule of thumb. For the average 30 year old, that works out to about $54,000.

But don’t fret if you haven’t saved that much. It’s not too late to start. By taking such steps as paying down high-interest debt, creating an emergency fund, saving more from your salary, and saving for retirement with a 401(k), IRA, or other investment account, you still have time to reach your financial goals.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Invest with as little as $5 with a SoFi Active Investing account.

FAQ

Is $50k saved at 30 good?

Yes, saving $50,000 by age 30 is quite good. According to one rule of thumb, you should save the equivalent of your annual salary by age 30. The latest data from the Bureau of Labor Statistics shows that the annual average salary of a 30 year-old is approximately $54,080. So you are basically on target with your savings.

Plus, when you consider the fact that the average individual’s savings by age 30 is approximately $20,540, according to the Federal Reserve’s most recent Survey of Consumer Finances, you are ahead of many of your peers.

Is $100k savings good for a 30 year old?

Yes, $100,000 in savings for a 30 year old is good. It’s almost double the amount recommended by a popular rule of thumb, which is to save about $54,000, or the equivalent of the average annual salary of a 30 year old, based on data from the Bureau of Labor Statistics.

Where should I be financially at 35?

By age 35, you should save more than three times your annual salary, according to conventional wisdom. The average salary of those ages 35 to 44 is $65,676, according to the Bureau of Labor Statistics. That means by 35 you should have saved approximately $197,000.


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

SOIN0124003
CN-Q425-3236452-37

Read more
All You Need to Know About IRA Certificates of Deposit (CDs)

All You Need to Know About IRA Certificates of Deposit (CDs)

An IRA CD is simply an individual retirement account (IRA) in which the investor has opened one or more certificates of deposit (CDs).

This may provide tax advantages and be a smart long-term move for some savers. Keep reading to learn how an IRA CD works and its pros and cons.

What Is an IRA CD?

An IRA CD is an IRA where your money is invested in certificates of deposit. In other words, an IRA CD is a traditional, Roth, or other type of IRA account where the funds are invested at least partly in CDs.

Investing in CDs can offer some tax advantages and may be a good option for long-term savings. As you may know, a CD, or certificate of deposit, is a time deposit. You agree to keep your funds on deposit for a certain amount of time, typically at a fixed interest rate.

💡 Quick Tip: Don’t think too hard about your money. Automate your budgeting, saving, and spending with SoFi’s seamless and secure mobile banking app.

How Do IRA CDs Work?

If you choose to put your retirement money in an IRA, you have the chance to choose investments that might include stocks, mutual funds, bonds — and also CDs. By investing in CDs within an IRA, you can add to your portfolio’s diversification. Unlike equities, CDs can offer a predictable rate of return.

By investing in an IRA CD, you no longer have to pay taxes on the interest gains, and the money can grow taxed-deferred.

But if you withdraw funds prior to the CD’s maturity date, and you’re under age 59½, you’ll need to pay income taxes and likely a 10% penalty. Plus, your bank may charge you a fee for making an early withdrawal from the CD. Once the IRA CD matures, you can renew the CD or transfer the funds into another investment held in your IRA.

How much can you contribute to an IRA CD? It depends on the type of IRA account you choose. The annual contribution limit for a traditional and Roth IRA is $7,000 for 2025. Those 50 and older can contribute an additional $1,000 per individual, for a total of $8,000 per year.

For 2026, the annual contribution limit is $7,500, and those 50 and older can contribute an additional $1,100 per individual, for a total of $8,600 per year. The contribution limits for SEP IRAs are typically higher.

If you choose an IRA CD with a bank or credit union backed by the Federal Deposit Insurance Corp., or FDIC, your money in the IRA CD is insured for up to $250,000 per depositor, per account ownership category, per insured institution. This means that if the bank goes under for any reason, your retirement funds are covered up to that amount.

CD Basics

A CD or a certificate of deposit is a type of savings or deposit account that usually offers a fixed interest rate for locking up your money for a certain period of time, known as the term. An investor deposits funds for the specified terms (usually a few months to a few years), and cannot add to the account or withdraw funds from the account until the CD matures.

In exchange, for keeping your money in a CD, the bank will offer a higher interest rate compared with a traditional savings account. But the chief appeal for retirement-focused investors is that CDs can provide a steady rate of return, versus other securities in a portfolio which may entail more risk.

You may be able to find variable-rate and promotional-rate CDs as well.

Recommended: How Investment Risk Factors into a Portfolio

IRA Basics

An IRA or individual retirement account is a tax-advantaged account designed for retirement planning. There are different IRA types to choose from, such as a traditional IRA, Roth IRA, or SEP IRA. By contributing to this type of account, you can have your money grow tax-free or tax-deferred, depending on the type of IRA you open.

Think of an IRA as a box in which you place your retirement investments. With an IRA, investors have the flexibility to invest in a variety of securities for their portfolio.

For this reason, it might make sense for some investors to include CDs as part of their asset allocation within the IRA.

Increase your savings
with a limited-time APY boost.*


*Earn up to 4.30% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.60% APY as of 11/12/25) for up to 6 months. Open a new SoFi Checking & Savings account and enroll in SoFi Plus by 1/31/26. Rates variable, subject to change. Terms apply here. SoFi Bank, N.A. Member FDIC.

Pros and Cons of IRA CDs

IRA CDs have unique characteristics that can benefit account holders as they think about how to handle their retirement funds. The upsides include:

•   Compared to investing in the stock market where investment returns can be volatile and unpredictable, IRA CDs are low-risk cash investments.

•   CDs guarantee a fixed return.

•   With an IRA CD, there are similar tax benefits that come with a traditional IRA. Investors can enjoy tax benefits such as growing your account with pretax dollars while having your earnings accumulate tax-deferred until you reach retirement.

There are some cons associated with IRA CDs to keep in mind:

•   With an IRA CD, you have to keep your money locked away for a period of time that varies depending on the maturity date you choose. During this time, you cannot access your funds in the event you need capital.

•   If you decide to withdraw cash prior to the IRA CD’s maturity, you will incur early withdrawal penalties. After age 59 ½ there is no penalty for withdrawing cash.

•   While putting your retirement funds in an IRA CD is a safer and lower-risk option than investing in the stock market, the returns can be quite low. If you are in retirement and are concerned about the stock market’s volatility, an IRA CD could be a safer option than other securities. But if you are many years away from retirement, an IRA CD may not yield enough returns to outpace inflation over time.

Pros of IRA CDs

Cons of IRA CDs

Low-risk investment Money is locked away until maturity
Guaranteed return Penalty for early withdrawal
Tax-deferred growth Returns can be low vs. other retirement savings options

Who Should and Should Not Invest in an IRA CD?

IRA CDs are a safe way to invest money for retirement. However, they are best suited for pre-retirees who are looking for low-risk investments as they approach retirement age.

If you are many years away from retirement, an IRA CD is probably not the best option for you because they are low-risk and low-return retirement saving vehicles. In order to see growth on your investments you may need to take on some risk.

If you decide an IRA CD is the right option for you, you also must determine if you are comfortable with keeping your money stowed away for a period of time. Account holders can choose the length of maturity that best suits them.

How to Open an IRA CD

The first step is to open an IRA at a bank, brokerage, or other financial institution. Decide if a traditional, SEP, or Roth IRA is right for you. You can set up the IRA in-person or online. Once you open an IRA account, you can buy the CD.

Choose the CD that fits your minimum account requirements and length of maturity preference. Typically, the shorter the CD maturity, the lower the minimum to open the account. When considering maturity, you also should compare rates. Often, the longer the maturity, the higher the rate of return.

The Takeaway

If you’re looking to add diversification to the cash or fixed-income part of your portfolio, you might want to consider opening an IRA CD — which simply means funding a CD account within a traditional, Roth, or SEP IRA. Bear in mind that CDs typically offer very low interest rates, though, and your money might see more growth if you chose other securities, such as bonds or bond funds.

If you’re thinking about how to earn a steady rate of return on your savings, consider an account with SoFi.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.60% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

What is the difference between an IRA CD and a regular CD?

A standard CD is a separate account you open at a bank or credit union. An IRA CD is where the CD is funded within the IRA itself.

Can you withdraw from an IRA CD?

With a regular CD, you withdraw the funds penalty-free when the CD matures. With an IRA CD, however, you can withdraw the funds penalty free starting at age 59½, per the rules and restrictions of the IRA.

What happens when an IRA CD matures?

Once your IRA CD matures, you’ll receive the principal plus interest. Then you can either leave the IRA CD as is or renew it. You cannot withdraw the funds from an IRA CD until age 59 ½, as noted above.

Are IRA CDs safe?

Yes, IRA CDs are considered low-risk. If you open an IRA CD with a federally insured institution, your funds can be covered up to $250,000 per depositor, per account ownership category, per insured institution.

Who offers IRA CDs?

IRA CDs can typically be found at traditional and online-only banks as well as credit unions and brokerage firms.


Photo credit: iStock/LeszekCzerwonka

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOBK-Q224-1920326-V1
CN-Q425-3236452-53

Read more
TLS 1.2 Encrypted
Equal Housing Lender