Roth IRA Interest Rates: What Your Account Actually Earns

A Roth IRA doesn’t have an interest rate. The account is a tax wrapper, and what it earns depends on what you hold inside it.

The costly mistake is funding a Roth IRA but leaving the money in cash. Here’s what different holdings can earn and how to check yours.

Does a Roth IRA have an interest rate?

• The account sets no rate. Whatever you hold inside it sets the return.
• Cash holdings pay interest. A money market fund or bank savings account pays a variable rate. An IRA CD pays a fixed rate for its term.
• Stock funds pay no interest. Their return comes from dividends and price changes, and it can be negative.

If your balance isn’t growing the way you expected, check whether the money was ever invested.

On This Page

1. Does a Roth IRA Pay Interest?
2. What Is the Average Roth IRA Rate of Return?
3. How Does a Roth IRA Earn Money?
4. How Much Could a Roth IRA Grow at 3%, 6%, and 8%?
5. Is Your Roth IRA Money Actually Invested?
6. Why Is My Fidelity Roth IRA Earning So Little?
7. Can You Get a Guaranteed Rate in a Roth IRA?
8. Sources

Does a Roth IRA Pay Interest?

Not by itself. What makes an account a Roth is its tax treatment. The IRS says you can’t deduct contributions, and qualified distributions are tax-free. The account says nothing about what your money earns. That depends on what you put in it, and where you open the account decides what you’re allowed to put in it.

At a brokerage you can hold stocks, bonds, funds, ETFs, money market funds and CDs. At a bank, a Roth IRA is usually a savings account or a CD. Both can pay interest, so “a Roth IRA never earns interest” is wrong.

For a feel for what stock-heavy portfolios have done, Fidelity reports that the S&P 500’s total return has averaged about 10% a year since 1957. Its figures through December 2025 are 11% over 20 years and 10.4% over 30 years, and 14.8% over the last 10. Total return includes reinvested dividends. NerdWallet puts the long-run stock figure near 10% before inflation, or about 6% to 7% after it.

Those are index numbers, and they come with limits. The funds that track an index charge fees the index doesn’t. A portfolio that includes bonds has historically returned less than all stocks. And the 14.8% ten-year figure comes from an unusually strong stretch, so I wouldn’t plan around it. Cash sits at the other end, and its yield follows short-term interest rates up and down.

You’ll often see a 7% to 10% range quoted as the average Roth IRA return. It only makes sense for an account holding mostly stocks, and it’s far too high for one holding cash.

These are historical index returns, not forecasts for your Roth IRA.

• Interest from cash, CDs and bonds.
• Dividends from stocks and stock funds.
• Price growth when something you own is worth more than you paid.
• Reinvestment, which means earnings stay in the account and start earning too.

That last one is compounding. It works with a CD’s interest, and it works with a stock fund when dividends are reinvested. Investment earnings inside a Roth IRA generally are not taxed annually. Qualified Roth IRA distributions can be tax-free; nonqualified distributions can have tax consequences.

Cash earns interest and nothing else. Money that stays in cash never captures price growth, and it never takes a market loss either. That’s a reasonable trade when you choose it on purpose, for money you’ll need soon. It becomes a problem when nobody chose it.

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Assumptions: $7,500 added at the start of each year; returns compound once a year; no fees; no inflation adjustment. The $7,500 is the 2026 limit ($8,600 if you’re 50 or older), and it’s held flat even though the limit is indexed and will change. Timing matters. The same 6% over 10 years comes to $98,856 if you contribute at the end of each year instead.

After 20 years, the 6% scenario is about $85,000 ahead of 3%. After 30 years, 8% is about $550,000 ahead of 3%.

What a Smooth Return Hides

Real portfolios don’t return 6% every year. Fidelity notes that the S&P 500 gained 18.4% in 2020, after plunging in March of that year. A stock-heavy balance can fall in a single year. As a hypothetical, a 20% drop on a $150,000 balance is $30,000.

That matters most for someone close to using the money. Someone with decades before withdrawals may have more time to recover from losses. Someone withdrawing soon may need to sell during a downturn, and these smooth lines hide that risk. The scenarios show what a return can do over time. They can’t show you the ride.

What Return Should You Assume?

I’d run all three scenarios and build the plan on the cautious or middle one. If the plan only works at 8%, it doesn’t work. Three things move the number:

• Time horizon. Money you’ll need in a few years is mostly a risk decision, and return comes second. Risk tolerance is a good place to sort that out.
• Fees. Half a percentage point sounds small. On $7,500 a year for 30 years, 6% versus 5.5% is $628,513 versus $573,146, a gap of about $55,000.
• Inflation. These figures are in future dollars. A dollar in 30 years buys less than a dollar today.

To test your own numbers, use the Future Value Calculator. It lets you change the contribution, return, fees and inflation.

Picture someone setting up a $200 monthly transfer into a Roth IRA. Three years later, they’ve deposited $7,200, but the account still holds only its cash position. The transfers worked; the investment step never happened. This is an illustrative example, not a client case. It’s easy to miss because the balance rises with every deposit.

Before checking returns, I’d look at the cash line on your statement.

The Five-Line Check

Open your Roth IRA’s positions or holdings page. Screens differ by provider, but you’re looking for the same five things.

1. Total balance. The headline number.
2. Cash. Often labeled “cash available” or “available to trade.”
3. Core or settlement position. The name of the place uninvested cash sits, usually a money market fund or a deposit sweep.
4. What you actually own. Funds, ETFs, stocks, CDs. Check each line.
5. Balance versus contributions. Compare the holdings directly rather than inferring them from the balance; market gains, losses, fees and timing can make that comparison misleading.

Here is what’s at stake, using hypothetical numbers. On a $7,500 contribution, the difference between 3% and 6% for one year is $225 against $450. On a $150,000 balance, it’s $4,500 against $9,000. After three years at those rates, the balances are about $163,900 against $178,700, a gap of roughly $14,700. The 6% is a scenario, not a promise, and invested money can lose value in any year.

Cash can make sense for money you’ll need soon. Just know when you’re holding it.

If It’s Sitting in Cash

Start by finding out why. A few things to check:

• Did the deposit settle, and did you place an order, or did you only transfer money?
• Is a recurring transfer set up without a recurring investment instruction? They’re separate settings at most providers.
• Which tax year was the contribution assigned to?

Then decide on your time horizon and your risk tolerance. What to buy is a separate decision, and I cover it in How to Start a Roth IRA. This page stops at finding out what you own.

Can You Invest the Interest Your Cash Earned?

Say you contributed $7,500 and the account now shows $7,600 because the money market paid about $100. Can you invest all $7,600 without going over the limit?

Yes. The limit applies to what you contribute. IRS Publication 590-A defines an excess contribution as “a contribution greater than the IRA contribution limit.” Interest earned inside the account isn’t money you contributed, so on that definition it doesn’t count toward the limit. For 2026 the limit is $7,500, or $8,600 if you’re 50 or older, across all your traditional and Roth IRAs combined. What would cause a problem is contributing more money. See the 2026 contribution limits for how the combined limit works. If you’re near the limit or unsure how your contributions add up, check with your provider’s records or a tax professional.

Fidelity opens a core position automatically with every account. It processes cash transactions and holds uninvested cash. Deposits land there, and when you buy a fund, the cash comes out of it. For retirement accounts, Fidelity lists two core options: its Government Money Market Fund (SPAXX) and its FDIC-insured Deposit Sweep Program. Which one your Roth IRA has depends on how and when it was opened, so look at the name on your positions page. Interest is calculated daily and credited on the last business day of the month.

A hypothetical example. You deposit $7,500 in January and never buy anything. All year the money sits in the core position. It earns the core’s yield, which changes with short-term rates. It captures no stock-fund growth, and it takes no market loss. By December you have $7,500 plus whatever interest the core paid. Nothing is broken. It’s doing what a core position does.

A bank deposit sweep is a different product from a money market mutual fund, with different protection. I’m not printing a yield here because it changes with rates. Check the current figure on Fidelity’s page for your core fund, with its date. Other brokerages also hold uninvested cash in a default cash option, and the name varies, so check the line in your own account.

Guaranteed has limits. A CD’s guarantee is the rate for the term and, at a bank, deposit insurance on the balance up to FDIC limits. It does not mean your money keeps up with inflation, or that it grows like stocks over decades. And a money market fund, though it aims to hold a stable price, is not FDIC insured. SIPC may protect eligible securities and cash held at a member brokerage if it fails, within applicable limits. It does not protect against market losses.

So the trade is certainty against growth, and the right amount of each depends on when you need the money. For cash you’ll need in the next few years, giving up some growth for certainty can be a fair price. For money you won’t touch for 20 years, the safe-looking choice carries its own risk, which is that it may not outpace inflation. If you’re still choosing where to open the account, Best Roth IRA Accounts compares providers.

Sources

1. IRS: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 (IR-2025-111)
2. IRS: Retirement topics, IRA contribution limits
3. IRS: Publication 590-A, Contributions to Individual Retirement Arrangements
4. Fidelity: Trading FAQs, about your trading account (core position)
5. Fidelity: S&P 500 average return
6. NerdWallet: Roth IRA interest rates
7. r/RothIRA: Never knew I had to invest
8. r/RothIRA: Don’t be a idiot like me
9. IRS: Roth IRAs
10. 24/7 Wall St: Just Because Money’s in Your Roth IRA Doesn’t Mean You’re Investing It (May 16, 2026)