Beat the Tax Deadline with a Contribution to Your Roth IRA | Personal-finance

April 20, 2021

It's a sweet deal that comes with a ton of perks. But you can only reap the benefits when you take every chance possible to make annual contributions. Since the IRS pushed the tax filing deadline to May 17, it's not too late to add more money to your 2020 Roth IRA.

Increase your 2020 Roth IRA contributions

Although you're probably anxious to start your 2021 Roth IRA contributions, it's best to max out your prior year's contributions first before time runs out. You'll have the entire year to focus on 2021. Take advantage of your final chance to wrap up 2020 in a financially responsible way.

What are your 2020 retirement savings goals? Remember, your Roth IRA contributions are capped at $6,000 if you're under 50. There's a catch-up contribution bonus of $1,000 if you're 50 and over. Therefore, take a look at what you've already contributed for 2020. If you've put in $4,000 for the year already, you can only contribute up to $2,000 (if you're under 50).

Now that you know the maximum amount that you can contribute, think about how much money you want to add to your Roth IRA prior to the tax deadline. You can set up recurring deposits to your Roth IRA to automate your contributions. Once you've hit your 2020 goals, you can start 2021 with an action plan that will allow you to achieve your goals with more ease.

You may not be eligible forever