It’s not too late for single moms to make an IRA contribution for 2016. There’s still time, whether you go with the tax-deductible traditional IRA or the Roth IRA (which is not deductible this year but offers many other advantages). You have until Monday, April 18 to contribute – and, if you’re eligible, it’s a good idea to do it.
Single moms often put off retirement savings. After all, with all of your kid-related expenses, it can be tough to get ahead. And when you do, you probably (like most single moms) fund your kids’ college accounts first. But overlooking your retirement savings can be a big financial mistake – one that you can start fixing today. Even if you can’t afford to make the maximum contribution, making any contribution will start you on your way. (We’ll talk a lot more about this once tax season is over!)
For now, know that saving for your future can also cut your income tax bill. If you’re going the traditional IRA route, making the maximum $5,500 contribution ($6,500 if you’re 50 or older) could slash $1,000 (maybe more) off your 2016 tax bill. And even though a Roth IRA contribution won’t impact this year’s taxes, it’s still a great tax-advantaged retirement savings vehicle.
Be aware, the tax deduction begins to phase out as your income increases, and it changes if you’re also contributing to a retirement plan through work. Check here for the deduction limits for your traditional IRA contribution.
For Roth IRAs, contributions may be limited based on your income. Those limitations start to kick in if your adjusted gross income (AGI) is $117,000 if you’re filing as Single, Head of Household, or Married Filing Separately (and did not live with your spouse at any time during 2016).