With the extensive traveling and spending this time of the year, things tend to get hectic when it comes to your pocketbook. Throughout all of the chaos, you may not have time to think about matters such as taxes or investments. However, it’s in your best interest to take the time to manage your Roth IRA account to ensure you’re getting the most out of your contributions. Your Roth IRA is a tax-free bank account targeted toward your future retirement. With the various benefits that come along with this type of account, it’s worth considering making frequent monetary contributions throughout the year.
If you forgot to contribute to your account earlier in the year, you are still eligible to do so.
Don’t Forget
Keeping up with your retirement account may not be top priority on your list of things to do, especially those of a younger age. More often than not, people forget to contribute to their Roth IRA, forcing them to pay $5,500 up front at the time of the deadline. Consider setting up automatic payments towards your Roth IRA to ensure that you contribute before the new year sneaks up on you.
The Deadline is Closer Than It Appears
Although the year is nearly over, you’re still able to contribute to your Roth IRA. The IRS allows for Roth IRA contributions up until the tax deadline – April 15th. Rather than waiting to place a lump-sum in by the deadline, contributing before the end of the year gives you time to gradually contribute the remaining amount necessary.
Strategize Spending and Saving
The holidays mean more spending on gifts, travel, and vacation time. During the season of giving, it may be hard to manage your money. Avoid finding yourself in a situation where you overspend on holiday shopping and don’t have enough left to contribute to your Roth IRA. Contributing well before the end of the year will allow you to budget your holiday spending, but also ensure that you have enough saved for your retirement account when the time comes.
No Tax Advantage
Due to the fact that Roth IRA contributions are made with post-tax funds, there is no tax advantage in waiting until the deadline to make a contribution. Unlike a traditional IRA account, all of your contributions are non-tax deductible, meaning that it is better to file your payments sooner than later. Consider contributing to your Roth IRA before the new year so you are prepared for the contributions you will need to make in 2019.
Saver’s Credit
If you make your contribution before the deadline, you may be eligible for a retirement savings contribution credit, also known as saver’s credit. A saver’s credit is a monetary incentive for people to invest in their retirement. Based upon your contributions toward your Roth IRA, you may be able to receive a credit of up to $4,000 under a joint file. It may be beneficial to take advantage of the potential tax-free growth that can come from contributing to your Roth IRA early. This earned credit can help you save more money toward your retirement or any other large payments you need to save for.
Get the Guidance You Need With Marc Egort, CPA
Don’t make the mistake of overspending near the end of the year – make sure to save and contribute toward your investments the right way. The professionals at Marc Egort, CPA, P.A. provide the proper services to guide you towards optimal savings. Contact us today, to learn how to effectively contribute to your Roth IRA.