It’s Not Too Late to Boost Retirement Savings for 2018

Some retirement accounts will accept contributions for 2018 up until the April tax deadline.

Question: Is it too late to contribute to my retirement savings for 2018?

Answer: It’s too late to contribute to a 401(k)—you had to make those contributions by the end of the calendar year. But you still have until April 15, 2019, to make 2018 contributions to several other types of retirement savings accounts:

A Roth or traditional IRA. You can contribute up to $5,500 for 2018 to an IRA (or $6,500 if you were 50 or older in 2018). If your 2018 modified adjusted gross income was less than $135,000 if single, or $199,000 if married filing jointly, you can contribute to a Roth IRA (the contribution limit starts to phase out if you earned more than $120,000 if single or $189,000 if married filing jointly). With a Roth, you can withdraw the money tax-free after age 59 ½. There is no income limit to put money into a tax-deferred traditional IRA—although if you have a retirement plan at work, there are income limits to be able to deduct your contributions on your taxes. See How Much Can You Contribute to a Traditional IRA in 2018 for more information. Also see the IRS’s IRA Contribution Limits guide.

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Spousal IRA. You generally need to have earned income from a job to put money into an IRA for the year, but if your spouse works and you don’t, he or she can contribute to an IRA on your behalf. You can both contribute up to $5,500 for 2018 (or $6,500 each if you were 50 or older), but the total contributions can’t be more than your joint income from working for the year. See Contributing to a Spouse’s IRA in Retirement for more information.

IRA for a kid. If you have a child who earned income from a job in 2018, he or she can contribute to a Roth IRA. (The earnings will be tax-free after the child reaches age 59 1/2, or he or she can tap the contributions anytime without taxes or penalties.) There’s no minimum age requirement to contribute to an IRA, but the child can’t contribute more than he or she earned from working in 2018 (up to the $5,500 limit). If the child is a minor, you usually need to sign forms to set up a custodial Roth IRA. See Helping Young Workers Open a Roth IRA for more information about the long-term impact of contributing to a Roth when children are young.

Self-employed retirement savings plan. If you earned any income from freelance work or self-employment in 2018, you have until April 15, 2019, to make tax-deductible contributions to a solo 401(k) or Simplified Employee Pension (SEP)—in addition to making IRA contributions. See Comparing Self-Employed Retirement Plans for more information.

Contribute to a health savings account. An HSA isn’t technically a retirement savings plan, but it is a great way to save for medical expenses in retirement. You can withdraw money tax-free for deductibles, co-payments and other out-of-pocket health care costs at any age, and after age 65 you can also withdraw HSA money tax-free to pay premiums for Medicare Part B, Part D and Medicare Advantage plans (but not premiums for medigap). If you make withdrawals that aren’t for eligible expenses, you’ll have to pay taxes and a 20% penalty. But that penalty goes away at age 65. After that, when you tap the money for non-medical expenses you’ll just have to pay taxes—similar to 401(k) withdrawals. To qualify to make contributions to an HSA, you must have had an HSA-eligible health insurance policy, with a deductible of at least $1,350 for single coverage or $2,700 for family coverage, for at least part of 2018. If you had an HSA-eligible health insurance policy for the full year, you can contribute $3,450 if you had single coverage or $6,900 if you had family coverage (plus $1,000 if you were 55 or older in 2018). If you had an HSA-eligible policy for only the first few months of the year, say, then your contribution limits are prorated based on the number of months you had an eligible policy. See 10 Things You Need to Know about HSAs for more information.

Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.