Tax season is almost here — are you maximizing your retirement savings?
By While it may feel like winter will never end here in Kentucky, April will be here before we know it. This means the April 15 deadline to file your taxes is right around the corner. If you’re snowed in, now is a great time to gather your documents and ensure you’re making the most of every tax-saving opportunity — especially when it comes to your retirement contributions.
I’ve shared tax filing tips before, but this year, I want to focus on one item in particular: IRA contributions.
What is an IRA?
An IRA (Individual Retirement Account) is a tax-advantaged retirement account that you fund independently of an employer-sponsored plan like a 401(k). The two main types of IRAs are:
- Traditional IRA – Funded with pre-tax dollars, reducing your taxable income now. Taxes are paid when you withdraw in retirement.
- Roth IRA – Funded with after-tax dollars, meaning your money grows tax-free, and qualified withdrawals in retirement are not taxed.
How does this help at tax time?
If you contribute to a traditional IRA, your contributions may be deductible, lowering your taxable income for the year. Roth IRA contributions don’t provide an immediate tax break, but they set you up for tax-free qualified withdrawals later. You have until April 15 to make IRA contributions for the 2024 tax year, with limits set at $7,000 (or $8,000 if you’re 50 or older).
Which IRA is right for you?
If you expect to be in a higher tax bracket in the future, a Roth IRA allows you to pay taxes now while your money grows tax-free.
If you’re currently in a higher tax bracket (especially above $150,000 for individuals or $236,000 for married filing jointly), a traditional IRA could help reduce your taxable income now, deferring taxes until retirement.
Let’s Build Your Retirement Strategy
Not sure which IRA option is best for you? The right choice depends on your current income, future tax expectations, and long-term goals. Let’s create a strategy that helps you maximize your savings and minimize your tax burden.
Schedule a consultation today to ensure your money is working for you now and in the future.
In 2025, the IRA contribution limit varies depending on age, with additional catch-up contributions allowed for those 50 and older. Roth IRA contributions are subject to income and eligibility requirements, with phase-out ranges based on filing status and income. Traditional IRA deductions also depend on income and whether you’re covered by a workplace retirement plan. Contributions must be made by the tax filing deadline, and exceeding the limit may result in penalties.
Family Financial Partners does not provide legal, accounting or tax advice, but we do coordinate our services and work together with our clients’ legal and tax professionals. For specific assistance, the services of an appropriate professional should be sought.
Article by Dillon Harper, Wealth Advisor at Family Financial Partners — a financial services firm in Lexington, Kentucky.