Expert insight

Our top five IRA tips for 2022

March 09, 2022

Maria Bruno

Head of U.S. Wealth Planning Research

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1. Contribute the maximum amount.
2. Take advantage of “catch-up” contribution opportunities.
3. Contribute sooner rather than later.
Making IRA contributions early can be a beneficial strategy
This chart shows a hypothetical example. The “early bird” investor contributes on January 1 of the tax year; the “last-minute” investor contributes on April 1 of the following year. This example assumes that each investor contributes $6,000 for 30 years and earns a 4% return annually after inflation. After 30 years, the early bird investor has accumulated $173,418 in earnings--$16,908 more in earnings than the “last-minute” investor who accumulates $156,510. Each investor contributes a total of $180,000 over the 30-year period, and the $16,908 difference in earnings can be seen as a “procrastination tax” for the last-minute investor. Projected balances are as of April of the ending year when the last-minute investor makes the final contribution. This hypothetical example does not represent the return on any particular investment and the rate is not guaranteed.
4. Contribute a tax refund.
5. Don’t park the contribution in a money market account.
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