February 22, 2016
With the April 15th tax filing deadline coming up, many are considering making a prior year contribution for 2015 into their Traditional or Roth IRAs. If you earned money during 2015 and are under 70.5 years old, it’s at least worth considering whether it’s in your best interest to contribute either some money to yours or even potentially max out your prior year contribution. Tax advantaged vehicles can be an attractive way of compounding wealth for those who don’t plan on needing their savings until later in their life after they reach 59.5 years old, and, depending on your current situation, making a prior year contribution may even reduce the amount you owe the IRS for 2015. With that said, maxing out your contributions to IRAs may not be the most appropriate solution for you, depending on whether you have other retirement savings options through a plan at work, whether you have other intentions for your income in the short-run (i.e. a preference to pay off debt), or whether you may have plans to use your savings sometime before the traditional retirement age (i.e. starting a business). Working with a competent, fee-only financial advisor can help to clarify your personal goals and develop the best strategy to help you improve your odds of successfully getting where you want to be.
My short blog entry is only meant as a reminder of the upcoming deadlines; it is not advice specific to your personal financial situation. You should consult with your financial planner and tax professional before taking action. Additionally, the IRS.gov website is a great resource for more information about retirement contributions: https://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-IRA-Contribution-Limits