The Last Day To Fund an IRA or Health Savings Account for 2014
Next Wednesday is April 15th. All of us in the U.S know that’s tax day, but it’s also another very important date to remember. April 15th is the last day to fund an IRA or Health Savings Account for 2014. I was on the fence whether to put money into a Roth IRA or into my solo 401k, but we have the rest of the year to work on the 401k and only a few days left to add to our 2014 holdings, so that’s what I did.
Sometimes It’s OK To Invest By Emotion
I have no idea what the tax rates might be when I retire. I do know taxes are high right now because we are considered high earners. In theory, I should have put money into the 401k to defer income taxes, but I didn’t.
I’ve always been drawn to Roth IRA’s because no matter how much they earn in interest over the years, you never have to pay another cent in taxes on any of this money. Yes, I know there are ways to roll money into Roth’s at a later date. Yes, I understand the math behind tax deferred accounts, but emotion made me put money into a Roth this month, and I’m OK with that. Whatever tax rates do down the road, investing in index funds today with just about any modality is smarter than missing out on deadlines because of not being able to decide.
Fund the HSA First
I will take one exception to the declaration in the above paragraph. If you have a health savings account or are eligible for one, get it funded now if at all possible. Even if that means eating beans and rice for a month or not buying any clothes this year, go ahead and fund that account with as much as you can up to the limit.
HSA’s are the only way you can potentially never pay income tax on invested money used for qualified medical expenses. If you are the in the 0.00097% of people who will never have an out of pocket medical expenses, you can still use your HSA as a regular retirement account after age 65 where it’s taxed just like a 401k.
Remember the Deadline
Remember to get your contributions in soon. It generally takes a couple of business days to process. Don’t be that person who waits until the last minute and misses out on great retirement savings. I’ve had experience with Betterment and Vanguard for retirement and HSA Administrators for a health savings account, and all were really easy. Do it today or Monday. Your retired self with thank you a million times over.
Are you waiting until the last minute for 2014 contributions? Would you invest in a Roth IRA or a 401k first?
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I diversify. However, I put more in the IRA, as I believe this is much better compared with 401(k). Thanks for reminding us, I almost forgot it!
Good reminder. I always do my regular IRA in the first few weeks of the month. And HSA throughout the year. Max out the 401K my the end of March.
Our investment dollars automatically go into our 403b. I would like to contribute more to our Roths in the future.
I put money in a 401K and IRA. When I retire I should have a nice blend of taxable and nontaxable income.
I’m completely convinced that someday the government will do something to tax our 401k accounts. I know they are supposedly tax free but the government wants so much of our money that I can’t imagine it won’t look at the trillions of dollars in those accounts and somehow decide to take part of it. Oh, they won’t call it a tax. It will be called a distribution fee, or administrative fee or something like that but someday, they will get part of it. That being said, we do have some of our retirement in Roths but the majority is in traditional IRAs. That way, the money is out of the hands of government for as long as possible. (Can you tell I’m very distrustful of the government?)