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The benefits of contributing to an IRA early in the year

Posted by Jill Boynton  January 18, 2011 10:39 AM

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A new year brings about a renewed vigor for many people to better their financial situation. If you want to start the year off with a bang for your financial buck, then make your 2011 IRA contribution now.

Many people wait until the end of the year, or even until they pay their income taxes in April of the following year, to make IRA contributions. But making a contribution now means your money has more time to grow. You get an extra year of tax-deferred (or in the case of a Roth IRA, tax-free) growth.

So if you have the cash and you know you are qualified to make a contribution, go ahead and fund your IRA or Roth IRA now. Even if you haven’t earned enough income to match the contribution yet you can do so, as long as you know you’ll earn it by the end of the year.

If you can’t make the whole contribution now (the maximum is $5,000, with an extra $1000 allowed for those age 50 or older by the end of the year) at least get started. Contribute what you can now and add more later. Or set up direct deposit from your paycheck or bank account so you don’t have to think about it later in the year.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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ABOUT MANAGING YOUR MONEY
Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.

About the contributors

D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit www.morganstanleyfa.com/ringer
Financial Planning Association™ of Massachusetts has 900 members who specialize in the financial planning process. Many of its members engage in philanthropic pro bono work in their communities, recommend legislation, elevate public awareness, promote financial literacy, and advocate for sound economic and tax policies.
Odysseas Papadimitriou is the founder of CardHub.com, a credit card and gift card marketplace, and WalletHub.com, a personal finance site. He has more than 13 years of experience in the personal finance industry, and previously served as senior director at Capital One.

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