When Is the Deadline for IRA Contributions?

Quick Answer

You do not have to make your final yearly IRA contribution by December 31st. Instead, you have up to Tax Day—typically April 15th—to make your final contributions for the tax year.

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You have until your taxes are due (typically April 15th) to make your final IRA contributions for the year. You do not have to make your final yearly contribution by December 31st. Using that extra time up until Tax Day may allow you to max out the contribution limit for your plan if you fell behind this calendar year.

IRA Contribution Deadlines and Limits

Individual retirement accounts, or IRAs, are accounts used for investing for retirement. There are many different types of IRAs, such as traditional, Roth, spousal, SEP and SIMPLE.

You can contribute funds to your IRA each year up to a limit set by the IRS. When it comes to pinning down when to make IRA contributions and how much to contribute, there are some key things to remember. These include:

  • The latest date you can contribute: Tax Day, usually April 15th of the following calendar year. For 2023, you have until April 18th to contribute since the 15th falls on a Saturday.
  • Contribution limits: $6,000, or $7,000 if you're 50 or older.
  • How much to save: The typical rule of thumb for retirement savings is to save 15% of your annual gross income.

Remember, if you delay contributions until the following year, you may cut into your ability to save in those early months. Try to ensure your budget allows for you to save enough for retirement every month.

Benefits of Using an IRA for Retirement Savings

Using an IRA as a way to save for retirement comes with many benefits. Like 401(k)s, they provide a tax-advantaged space to save for retirement with the potential for growth—and perhaps losses.

IRAs have some specific benefits unique to the account type. These include:

  • Retirement savings without employer: IRAs provide a savings opportunity for those without access to a workplace retirement account.
  • Tax advantages: Roth IRAs are not taxed at withdrawal, saving you money when you retire. Traditional IRA contributions, on the other hand, may be tax-deductible (depending on your income if you are also covered by a workplace retirement plan), so they can help you save on taxes during your working years.
  • Good complement to a 401(k): If you have maxed out your 401(k) or met your company match and want an additional source of retirement income, stashing extra cash in an IRA is a smart savings decision.
  • Penalty-free withdrawals with a Roth IRA: You can withdraw your Roth IRA contributions penalty-free at any time (this is not the case with a traditional IRA). But this may not be the best idea in the long run.
  • Savings for non-working spouse: A spousal IRA makes it possible to save for a non-working spouse, which could increase your collective savings.

Evaluate your personal financial situation to see if using an IRA to save for retirement offers a financial advantage. A financial planner may be able to help assess your situation and choose an account type.

What to Do if You Contribute Too Much to Your IRA

If you take extra time to contribute to your IRA, make sure to keep track of your contributions so as not to exceed your limits. If you do accidentally contribute too much to your IRA, there are steps you can take to avoid taxes and penalties.

The IRS sets annual contribution limits, which include:

2022 IRA Contribution Limits
Under Age 50 Age 50+ All Ages
Traditional IRA, Roth IRA or a combination of the two $6,000 $7,000 No more than your total taxable compensation for the year if less than the maximum dollar amount.

Source: IRS

If you accidentally exceed these limits, you could face a tax penalty for each year the extra money stays in the account. The penalty is 6% per year, which year after year can add up to a substantial amount.

The best course of action is to remedy any overpayment as soon as possible. How to do so may depend on what time of year it is:

  • Remove excess contributions before Tax Day. You can take out the extra contributions and any earnings on them before Tax Day. You may also choose to assign the excess as a contribution for the next year. Don't forget to report earnings on the excess money when you file taxes.
  • Amend your return before October 15th. If you realize you mistakenly contributed excess to your IRA after filing your taxes for the year, you can submit an amended return with Form 5329 showing that you have withdrawn or reassigned the excess correctly. You have until October 15th of the year in which you filed to do this.
  • Pay taxes after October 15th. Unfortunately, if you miss both tax dates, you will be responsible for the tax penalty of 6% on your contributions and earnings for each year they remain in your account.

If you opt to withdraw your excess contributions, you may face a 10% early withdrawal tax from traditional IRAs. In this case, reassigning your contributions to the following year may be the best way to avoid taxes and penalties.

The Bottom Line

Taking advantage of extra time to stash cash in your IRA can mean more money over time. Retirement accounts compound, meaning your savings should grow by the time you are able to retire.

But don't forget, that also means that the sooner the money is in your account, the more earning potential it has. Setting a regular monthly amount you contribute up to the amount your budget allows will help maximize your savings. And when you need to wait a while, take advantage of the time that next year's first few months offer to pad your IRA under last year's contribution allowance.