An IRA offers the chance to claim tax benefits for
retirement savings, even if you don't have a workplace 401(k) or you'd prefer
not to use your employer-sponsored retirement account.
You can contribute up to $6,000 to a traditional or Roth IRA
in 2021. And, if you're 50 or over, can make an extra $1,000 catch-up
contribution for a total of $7,000 invested.
If you haven't yet maxed out your 2021 IRA, you may feel as
though you're just about out of time to put money into your retirement account
for the current tax year. But the good news is, that's not the case. You can
actually continue working on your 2021 IRA contributions into 2022. Here's why.
The 2021 IRA contribution deadline doesn't end when the
year does
Unlike 401(k) contributions, the deadline for investing in
your traditional or Roth IRA is not the end of the calendar year.
Instead, you can keep making 2021 contributions to this
account until the deadline for submitting your tax returns for the year. That
will be April 15, 2022, for most people. So even after you ring in the new
year, you could have three-and-a-half more months to work on maxing out your
contribution.
The option to continue working on maxing out your 2021 IRA
even in 2022 is great news if you've fallen behind. Once you miss the deadline
to make traditional or Roth IRA contributions for a tax year, that opportunity
is gone forever. That means you miss out on the subsidies the government wants
to provide to help build your nest egg.
You don't want to give up this chance to get Uncle Sam's
help saving for your later years. And if you have some extra time to max out
your account, you may not have to.
How to max out your 2021 IRA in 2022
If you want to ensure you score your full tax breaks for the
2021 year, the best way to do it is to figure out how far short you are from
hitting your IRA contribution limits and how much to invest each month before
the April or October deadline.
If you've contributed nothing and you want to hit the $6,000
contribution limit for the year, you'd need to invest $1,500 per month in
January, February, March, and April.
Rework your budget to try to get as close as possible to
those necessary monthly contributions, then set up automatic transfers to your
brokerage account to hit your target each month. If you do, you'll go a long
way toward building more financial security in your later years. And you'll be
glad you took advantage of the extended time to get available help in growing
the nest egg you need for your future.
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