Retirement savers, you’ve still got time to make retirement contributions that could lower your 2023 tax bill and, even better, bump up your retirement savings account.
While most tax-saving moves had to be wrapped up by Dec. 31 to count for your 2023 return, here are three actions you can still make before the filing deadline on April 15.
Contribute to an individual retirement account (IRA)
If you have earned income, you can open an IRA and make a contribution up until tax filing day.
The annual contribution limit for IRAs — both traditional IRAs and Roth IRAs — is $6,500 for 2023. Individuals 50 and over can set aside an additional $1,000.
If your employer’s 401(k) plan permits it, and you were age 50 or older at the end of 2023, you can also make catch-up contributions by adding salary deferrals up to $7,500.
If you’re self-employed, you can put more of your income away by contributing to a Simplified Employee Pension plan, or SEP IRA. The contribution limit for a SEP IRA for 2023 is 25% of your compensation or $66,000 — whichever is less.
There are some limits: If you have a 401(k) or other retirement plan at work, or your spouse does, then your contribution to a traditional IRA may not be deductible at certain incomes. You’ll want to look at the IRA income limits to see if you qualify to deduct your contribution or a portion of it to a traditional IRA.
For example, a single taxpayer with no workplace plan can deduct the full amount of a traditional IRA contribution. A single taxpayer with a workplace plan gets a full deduction with an adjusted gross income of $73,000 or less.
For married couples filing jointly, both spouses can deduct the full amount of a traditional IRA contribution if neither has a workplace plan. If only one spouse has a workplace plan, the other can get a full deduction for IRA contributions if their joint income is $204,000 or less.
Many taxpayers leave money on the table. In 2022, 85% of all US households made no contributions to traditional IRAs or Roth IRAs, according to the Investment Company Institute.
What gives? In general, it comes down to confusion over rules and whether or not you meet eligibility requirements.
Your potential choices with IRAs
Many taxpayers opt for a traditional IRA for the upfront tax break. Contributions to traditional IRAs are often tax deductible, but withdrawals years later in retirement are taxed at the same rates as ordinary income, like wages.
With a Roth IRA, there’s no deduction today, but when you pull the funds out, the withdrawals can be made tax-free. Eligibility to contribute to a Roth IRA is based on your modified adjusted income (MAGI). For tax year 2023, the limits are between $138,000 and $153,000 for single filers and between $218,000 and $228,000 for joint filers.
Max out your Health Savings Account (HSA)
Health savings accounts can be a way to spike up savings for retirement. It’s the only account that lets you put money in on a tax-free basis, build up tax-free, and come out tax-free for qualified healthcare expenses.
“The triple tax advantages that HSAs offer are more tax-efficient than retirement plans,” HSA specialist Roy Ramthun told Yahoo Finance. “They should not be considered a replacement for traditional retirement plans, but can offer a nice complement to them.”
For 2023, if you had self-only high-deductible healthcare plan (HDHP) coverage, you can contribute up to $3,850 to an HSA. If you have family HDHP coverage, you can contribute up to $7,750.
If you are an eligible individual who is 55 or older at the end of your tax year, your contribution limit is increased by $1,000.
In order to put money into an HSA, you must be enrolled in a high-deductible health plan. Some employers match contributions to HSAs similar to employer-provided retirement savings accounts. Your contributions roll over year after year and are yours to take along when you retire or change employers.
And while you don’t need to do this immediately, the strategy is to invest those tax-free funds in something other than cash. That’s where you’ll get the full pop of the tax-free growth when you need those funds in retirement. About 15% of the average retiree’s annual expenses will be health-related, per Fidelity.
Save your tax refund for your future retirement
Consider using some or all of your tax refund to bump up your nest egg. You can include your retirement account routing information on your 1040 tax return.
A personal note: When I was self-employed, writing that check for my retirement accounts was one I generally pushed off until it was time to file my taxes. But thanks to gentle nudging by my accountant, I never missed that deadline in April.
So, mark your calendars now.
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist, and the author of 14 books, including “In Control at 50+: How to Succeed in The New World of Work” and “Never Too Old To Get Rich.” Follow her on X @kerryhannon.
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