With the year coming to a wrap, it may feel like you are swimming in deadlines. Fortunately, you still have some time to contribute to your Roth IRA.
“You have all the way up until the tax deadline,” said certified financial planner Laurie Allen to CNBC. “And if it doesn’t get delayed like it has been in previous years, that’s going to be April 15.” Of course, the extra few months doesn’t mean that you should slack. There are advantages to getting your contributions in earlier, especially given the amount of expenses that tend to pile up for the end of the year.
Roth IRAs allow for post-tax contributions, meaning that you get all of your gains tax-free, assuming that you follow the withdrawal rules. There’s no reason not to max out your contributions and invest early and often, as compounding interest will benefit people who contribute more earlier in their lives. It is also important to spread your contributions out over the course of the year rather than make a lump sum deposit. “We encourage our clients to make contributions throughout the whole year so they can hit the market on different places,” Allen says.
Roth IRAs allow for $6000 of yearly contributors for people under 50, and are ideal for young investors who can take advantage of compounding interest and start building a solid retirement fund early in life.
Though you still have some time to make your contributions, it can more strategically sound to make a monthly contribution plan or spread your contributions out throughout the year. Allen notes, “You don’t want to stress about it right around the holidays when you’re trying to buy Christmas presents, pay taxes or anything like that.”
For more news, information, and strategy, visit the Retirement Income Channel.