4 strategies to help you get the most out of your IRA

When planning for retirement, you may want to consider a tax-advantaged Individual Retirement Account, or IRA. There are two kinds of IRAs. With a traditional IRA, your contributions may be tax-deductible, and you generally pay taxes when you later withdraw money from the account. A Roth IRA allows you to contribute after-tax dollars if you meet income restrictions; the money can grow tax-free in the account and you won’t pay taxes when you withdraw prior contributions or a qualified distribution.

So how can you take full advantage of an IRA’s benefits? Here are some strategies to consider.

1. Max out your IRA

If you haven't already made your annual contribution, you can make a contribution up until your tax filing deadline for that year (not including extensions). You can contribute a combined maximum of $7,000 for both traditional and Roth IRAs for 2025. If you’re age 50 or older, you can contribute up to $8,000 for 2025.

2. Contribution timing

Some of us may wait until tax time to do our contribution for the prior year. Another option is to establish a savings plan for the year ahead – for example, contributing a little bit every month to add up to the annual amount you are targeting. Or you could contribute as early as possible in the year to take advantage of additional time invested in the market for potential compounding.

3. Contribute for a nonworking spouse

You may be able to double your opportunities to save by making a contribution to your spouse’s IRA, even if he or she doesn't have any taxable compensation. If you're married, have enough taxable compensation, and file a joint tax return, you may be able to contribute to both your IRA and your spouse’s.

4. Consolidate multiple retirement accounts

If you've changed jobs over the course of your career, you're likely to have accumulated retirement funds within an employer-sponsored retirement plan. Consolidating these types of retirement accounts can help you simplify your retirement planning, keep track of your holdings, and see whether your investment strategies align with your goals.

That being said, retirement accounts do not all have the same investment options and fees, so you’ll want to review your options and consider the pros and cons of consolidating your retirement accounts to see if it is appropriate for your situation.

Next steps

Whether your retirement is in the near future or years away, you can look holistically at your retirement strategy and determine if you're on track to meet your goals. Speaking with your financial advisor or a tax professional can help you decide what’s appropriate for you.

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