Maximize Your IRA Contributions Before the Deadline

Tax Day isn’t just the final date to file your taxes or request an extension. It’s also the deadline for contributing to most individual retirement accounts (IRAs). Whether you’re looking to grow your retirement savings or reduce your tax liability, here’s what you need to know to make the most of this opportunity.

IRA Deadlines for 2024

Traditional and Roth IRAs: Contributions for the 2024 tax year can be made until April 15, 2025. The limit is $7,000 if you’re under 50 or $8,000 if you’re 50 or older. However, your contribution eligibility and potential tax deductions may vary depending on your income.

SEP IRAs: Small business owners with SEP IRAs have until their business tax return deadline (including extensions) to contribute. Contributions can range from 0% to 25% of total compensation, with a maximum limit of $69,000 for 2024.

SIMPLE IRAs: These accounts, which allow both employer and employee contributions, have two deadlines:

●      Employee contributions for 2024 deferred in December must be deposited by January 30, 2025.

●      Employer contributions must be made by the business tax return deadline for 2024, including extensions. The maximum employee contribution is $16,000, with an additional $3,500 allowed for those aged 50 and older.

Tips to Make the Most of Your IRA Contributions

Select the Right IRA for Your Needs

Choosing between a traditional IRA and a Roth IRA often depends on your tax strategy:

●      Traditional IRA: Contributions may be tax-deductible, but withdrawals in retirement are taxed as ordinary income.

●      Roth IRA: Contributions are made with after-tax dollars, but earnings grow tax-free, and withdrawals are tax-free if you meet specific conditions.

Consider your current and future tax brackets to determine which account aligns with your goals.

Start Early and Save Consistently

Building a substantial IRA balance takes time and discipline:

●      Contribute regularly, whether monthly or annually.

●      Start as early as possible to maximize the benefits of compounding over time.

Leverage Tax Benefits

Contributions to a traditional IRA may be tax-deductible, and you might qualify for the Saver’s Credit, adding even more value to your savings. Planning for these tax benefits now can help you optimize your 2024 return.

Automate Contributions

Consider setting up automatic contributions to your IRA to stay on track with your savings goals. If you’re self-employed, review your estimated tax payments and adjust them based on your deductions and credits.

By understanding the deadlines, choosing the right account, and making strategic contributions, you can make significant progress toward your retirement goals while enjoying potential tax advantages.

Sources:

https://www.fidelity.com/learning-center/smart-money/ira-contribution-deadline

Disclosures:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.