Making Your 2014 IRA Contribution: It’s Not Too Late…But Soon It Will Be
By Mary Lukow, Assistant Manager, Chebanse Facility
2014 is over – gone forever – in the past. In fact, it’s so far in the past that you’ve probably already stopped accidentally writing it on the date line of your forms and checks! However, even though the calendar says that 2014 is history, you can still make a 2014 contribution to your IRA. If you have not yet made an IRA contribution for 2014, you actually have until April 15, 2015 to get that done.
Why does this matter to you? It’s pretty simple. Making regular contributions to your IRA can be a significant help as you prepare for your retirement. It is always good to save money, but it is even better to save your money in an IRA due to the tax benefits associated with IRAs. With a traditional IRA, you do not pay taxes on the amount you contribute to the account nor do you pay taxes on the accruing interest until the point of time when you begin to take money out of your retirement account. For Roth IRAs, you pay income tax on the money that you contribute but then your money is allowed to grow tax-free and there is no tax liability when you reach retirement age and begin to withdraw funds from your account.
You may just be starting out in your career and thinking that retirement is an eternity away. Believe it or not, it will be here before you know it and you will be glad that you started contributing to your retirement account early. Or you may be seeing the light at the end of the tunnel in your working life, thinking that it is too late to make much of a difference anymore. Actually, you can still build up a nice little nest egg if you contribute the maximum allowed for a few years. This year you are allowed to contribute up to $5000 to your IRA if you are under the age of 50 and up to $6500 if you are 50 or older. Either way, the truth is that making an IRA contribution is a great step toward funding your retirement. And after all, you know what they say – if you don’t plan to retire, don’t plan to retire!
As always, we encourage you to consult your tax preparer to determine which retirement investment is best for you and to determine how to manage your contributions.
