A personal greeting from your money

They’re kind of like late holiday cards. Every year at about this time, financial accounts we’d almost forgotten about send us little personalized notes, telling us what they’ve been up to for the past year and wishing us well with our tax returns. Unlike most holiday cards, they’re pretty unattractive, and usually include three or four copies. But it’s the thought that counts, right?

Taken together, those tax forms help tell the story of our income and expenses. But if you tend to leave things to the last minute, they can also be a reminder to take care of some remaining financial business from last year: funding your IRA.

Where most tax-saving efforts are concerned, you’re about five weeks too late to do anything about the 2015 tax year. But retirement savings is different. The last day to contribute to a traditional or Roth IRA for the previous year is “tax day,” the April deadline for filing your taxes. That gives you plenty of time – to sort out your finances, see how much money you have left, or what kind of deduction you need, or whatever.

What’s that, you don’t have an IRA?! We think everyone should have one, even if you already have 401(k) at work. So here’s some more good news: tax day is also the deadline to open a brand-new account. Keep in mind that it can take a while to do the paperwork (even online) and fund the account with your contribution. So be thoughtful about your decisions, but don’t take too long about it.

Finally, you should know that tax day isn’t always on April 15th. Thanks to Emancipation Day in Washington, D.C., this year it falls on April 18th for most of us. It’s April 19th in Maine and Massachusetts due to Patriots’ Day.

While you’ve got plenty of opportunities for last-minute financial planning, there’s a very good reason to do your saving early. The sooner you contribute to an account, the sooner your investment can start growing. By waiting until April, you miss up to a year’s worth of investment earnings. Savvy investors often front-load their savings, maxing out their annual contributions as soon as they can afford to.

And because the earliest you can contribute for the current year is January 1, you could even double up, contributing for last year and this year at the same time. Just don’t wait too long.

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