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Don’t Forget April IRA Contributions


Today is April 1st. And that means you have 15 days left to file taxes if you haven’t already! It also means you still have until April 15th to make individual retirement account (IRA) contributions that can be counted, for tax purposes, as being made last year (2008). Why does that matter?

Both traditional and Roth IRAs are tax-protected investment accounts. Because the government provides special tax incentives for saving money for retirement in both kinds of IRAs, there are also limits on how much money you can put into an IRA each year.

The smartest way to invest for your retirement is to avoid paying taxes when you take the money out (as Roth IRAs allow you to do) or to avoid paying taxes on money you contribute (as traditional IRAs and 401k plans allow). If you didn’t contribute to an IRA in 2008, you should consider doing so now, and then contributing more in 2008. Put another way, if you didn’t fund an IRA last year, you have until April 15th to double the allowed contributions you can make this calendar year!

So get those savings in! Opening an IRA account is easy to do with just about any online broker. Compare the best online stock brokers here.

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.