Your Late IRA Contributions Have a Procrastination Penalty

There’s a 15-month window to make your IRA contribution for any given tax year. The earlier you make it, the more you benefit from the compounding effect.

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(Image credit: Getty Images)

If you had a choice between getting $100 or $80, which would you choose? The answer seems self-evident, but many investors are, in essence, opting for the lower figure when they procrastinate in making contributions to their IRA or other investment accounts.

There is a span of 15½ months in which you can make your annual contribution to an IRA, from January 1 of the applicable tax year through April 15 (the tax return deadline) the following year. While more investors are taking advantage of early contributions, Vanguard research found that many more are still holding their contributions until right before the deadline.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Julie Virta, CFP®, CFA, CTFA
Senior Financial Adviser, Vanguard

Julie Virta, CFP®, CFA, CTFA is a senior financial adviser with Vanguard Personal Advisor Services. She specializes in creating customized investment and financial planning solutions for her clients and is particularly well-versed on comprehensive wealth management and legacy planning for multi-generational families. A Boston College graduate, Virta has over 25 years of industry experience and is a member of the CFA Society of Philadelphia and Boston College Alumni Association.