Key takeaways
- The earlier in the year you can contribute to your IRA, the more time your money has to grow.
- Make sure you’re aware of IRA contribution deadlines.
- Consider your expenses and needs when deciding how to time your IRA contributions.
Contributing to an individual retirement account (IRA) each year is one of the best ways to save for retirement.
You can make contributions to your IRA the first day of the new year and at any point throughout the year. In fact, you have until the following year’s tax-filing deadline to finish funding your IRA. But the sooner you invest, the more time your money has to compound and grow.
When is the best time to fund your IRA?
For any given year, you have until the following year’s tax-filing deadline to make your IRA contributions. For example, you can make contributions to your 2025 IRA up until April 15, 2026.
The best time to fund your IRA is typically at the start of the year. This gives your money more time to grow.
However, you may have more pressing priorities at the start of the year to address, like building an emergency fund or paying off very high-interest debt. In that case, you may want to make your IRA contributions later in the year.
The No. 1 benefit to making early IRA contributions
You can contribute to your IRA at any time during the year, but studies show that contributions made earlier in the year have more time to compound. With compounding, your IRA investments generate a return. Once that happens, gains in your account are reinvested so your total balance can grow over time.
Someone who made a single contribution each January for 30 years would end up with nearly $42,000 more than someone who made the same contribution in April the following year, according to Vanguard, based on a $7,000 contribution limit and 6 percent annual returns. Each person contributes the same amount over 30 years, but the earlier contributions result in a higher ending balance due to the effects of compounding.
Of course, not everyone can afford to fully fund their IRA with a single contribution in January, but making contributions as soon as you’re able should help boost your savings over time. You might also consider making consistent contributions over time, which is a technique known as dollar-cost averaging.
If you typically get paid a bonus around the end of the year, that may allow you to max out your IRA during the first month of the year. In 2025, IRAs max out at $7,000 for savers under 50 and $8,000 for savers 50 and older.
Early contributions give you one less thing to think about later on in the year, too. Otherwise, you’ll need to remember to fund your IRA before the deadline, and you’ll have to keep making room for IRA contributions in your budget.
Income considerations may force a delay
One reason to consider delaying IRA contributions is if you aren’t sure what your income is going to be for the year. Your income, along with other factors, can impact whether or not your contribution to a traditional IRA is eligible for a tax deduction. Contributions to a Roth IRA aren’t allowed at all beyond certain income thresholds, although you can pursue a backdoor Roth IRA.
In 2025, the maximum income level where you can still make a full Roth IRA contribution is $165,000 for individuals and heads of household, and $246,000 for married couples filing jointly.
FAQs
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Bottom line
How and when to contribute to an IRA will ultimately depend on your specific circumstances. If you aren’t sure how best to proceed, consider working with a financial advisor to determine your best course of action.
Contributions made earlier in the year have more time to compound than ones made at the deadline, but you may need to have clarity on your annual income in order to determine whether your contributions are eligible for a tax break or if you can contribute to a Roth IRA at all.
— Maurie Backman contributed to an update.
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