Five new ways to fund your IRA

You’ve already checked under the sofa cushions for spare change. Before you look behind the car seats, here are five new ways you can find extra money for your Individual Retirement Account (IRA).

In 2021, the total contributions you can make to all of your Traditional IRAs and or Roth IRAs is $6,000 ($7,000 if you’re age 50 or older). That’s a great opportunity to save for retirement, but where are you going to find that much money?

1. Use your tax refund. That’s almost a no-brainer. And it’s easy.
2. Keep making contributions to your IRA for the previous year until Tax Day. The IRS lets you fund last year’s IRA up until Tax Day. That’s 3½ extra months. Yes, the money in those months also could have gone into this year’s IRA. How do you make up for the difference? See #1 above.
3. Open another IRA. If you only have a Traditional IRA, you may be able to open up a Roth IRA. You still can’t exceed the 6,000 ($7,000 if you’re age 50 or older) maximum total annual contribution in all of your IRAs, but having two IRAs lets you explore different tax scenarios. Check with your financial planner if you have any questions about your eligibility to make contributions to an IRA.
4. Think you don’t make enough to afford IRA contributions? The Saver’s Credit (aka Retirement Savings Contribution Credit) helps low and moderate-income wage earners fund their IRAs with a credit of up to 50% of the first $2,000 contributed. (Most workers will get less than the full credit, but every dollar helps, right?) To be eligible, your adjusted gross income in 2021 must be less than $33,000 for single or filing separately, $66,000 for filing jointly, or $49,500 for head of household.
5. Set up an automatic investment plan. Most banks can automatically transfer a set amount out of your bank account each month and transfer it electronically into your IRA account. No muss, no fuss. Out of sight. Out of mind … Well, you get the point.

If you’re in the opposite situation with a few extra bucks hanging around and remember, if you’re over 50, you can contribute an extra $1,000 each year into your IRA for a maximum yearly contribution of $7,000. Sweet!