There are special days for all sorts of things – National Pizza Day (February 9th – I had BBQ Chicken), International Talk Like a Pirate Day (September 19th), and even International Tabletop Day (April 28th this year for you board gamers out there). So I am pleased to inform you that this year, April 17th is National Qualified Retirement Contribution Day!
Wait . . . you say that day sounds familiar to you? Nah, there’s nothing else going on that’s important on that day at all.
Okay, perhaps you know that date because it also just happens to be when taxes are due. Every year, the day taxes are due is the last day you can make contributions to qualified retirement accounts, such as your 401(k), 403(b), IRA, Roth IRA, SEP, etc. for the previous calendar year. Here are three key points to think about as we get closer to that April 17th deadline.
1. Make sure that when you make contributions, they are marked with the correct tax year to be applied in. For most of the year, that’s the current year you are in, but there is overlap in January through early April where it could be a contribution for either. If you haven’t maximized your contributions in the prior tax year, it is advantageous to mark those overlap month contributions for the prior year, thereby increasing what you can contribute in the new tax year.
2. If you file your taxes early enough and you are receiving a refund, consider using your return to boost your retirement savings. A few hundred dollars may not seem like much, but it can grow quite a bit if it’s performance compounds over time. It does mean trading an immediate want for a long-term need, but your future self will thank you for the extra resources later on.
3. If you are married and either you or your spouse is unemployed, as long as the working partner earns enough income to make contributions, you can make a “spousal IRA” contribution following the same rules as though they were working during the tax year in question. Again, make sure you mark which year the contribution is for.
It’s not easy to save for a long-term future. The sacrifices it can involve, the things you may have to give up in order to do so, it can be painful, especially when there are already so many demands on you at work, at home, and from whatever life throws at you. When temptation knocks at my door on whether to save more or spend it, I think about a quote from Fred Rogers about what we value and the choices we make.
“You rarely have time for everything you want in this life, so you need to make choices. And hopefully your choices can come from a deep sense of who you are.”
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Finally, if you feel that working with a financial coach could help you stay on track in reaching your personal financial and investment goals, schedule a free consultation or email me at firstname.lastname@example.org – I would love to meet you!