What Is an IRA Share Account?


IRA share accounts are IRAs that are sold through credit unions. Credit unions are like banks, but are privately held companies. They require all banking customers be members. While membership may be free, it might be limited to people within the community or people working for a specific company or in a particular industry. When you invest in an IRA share, make sure you understand how this investment works.


  • An IRA share certificate is an investment you purchase that entitles you to part ownership in the credit union. When the investment is purchased inside an IRA, it's called an IRA share certificate. These share certificates allow you to earn interest based on the performance of the credit union and its investments.


  • The significance of a share certificate is that it pays dividends to your IRA. These dividends are similar to interest from a bank certificate of deposit. The share certificate's earnings are not taxed inside an IRA. Instead, you may use share interest earnings to purchase more shares in the credit union. Many credit unions have a minimum dollar amount that must be invested in a share.


  • The benefit to you, as an investor, is that your share certificate pays a stable rate of return and is guaranteed by the issuing credit union as well as the National Credit Union Administration (NCUA). The NCUA functions similar to the FDIC for banks. The NCUA protects your deposit in the credit union and guarantees that you will receive all of the money promised to you by the credit union.


  • The disadvantage to a share certificate is that the dividend earnings tend to be low. Like bank CDs, the share certificate is designed for stable returns over long periods of time. Because of this, investment returns are often lower than what you would receive if you invested in stocks and even some bond investments. If the return on your share certificate trails the rate of inflation, you will lose real value in your IRA even though the rate of return is positive.


  • "Practicing Financial Planning for Professionals (Practitioners' Edition), 10th Edition"; Sid Mittra, Anandi P. Sahu, Robert A Crane; 2007
  • IRS: Publication 590
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