Investment Account Contribution Deadlines

At the end of last year, we discussed year-end financial planning items to review, including year-end deadlines for certain investment account contributions. However, there are a number of account types with deadlines that are not the end of the year, but the tax filing deadline (for tax-year 2022, it's April 18, 2023).

In this week’s post, I review contribution deadlines for various investment accounts.

Deadline vs. applicable tax-year

Before we review specific accounts and their contribution deadlines, it is important to understand that the contribution deadline is different from the applicable tax-year. For example, an individual (who is under 50 years old) can contribute up to $6,000 to a Roth IRA for tax-year 2022, but the contribution can be made up until April 18, 2023.

One practical reason why it is helpful for the deadline to be separate from the applicable tax-year, is that is can take time to determine if an individual meets the requirements. For example, with a Roth IRA, there is a modified adjusted gross income limit. However, depending on the individual’s sources of income and adjustments, they may not know with precision what their modified adjusted gross income is (and if they can make a Roth contribution) for several months after the end of the tax year.

Contribution deadlines that are the same as the normal tax filing deadline

The list below is not all-inclusive, but here are some popular account types with deadlines that are the same as the normal tax filing deadline:

• Traditional IRA – Contributions can be made to a traditional IRA up until the normal tax-filing deadline (for tax-year 2022 it’s April 18, 2023). As we have discussed previously, a traditional IRA provides certain tax benefits to people saving for retirement. Depending on the investor’s circumstances, contributions may be deductible (see the post linked above for a more detailed explanation of when contributions are deductible). If all contributions were tax-deductible, then all withdrawals are fully taxable as regular income.

• Roth IRA – Contributions can also be made to a Roth IRA up until the normal tax-filing deadline (for tax-year 2022 it’s April 18, 2023). A Roth IRA is funded with after-tax money. The funds grow tax-free and all qualified withdrawals are tax-free. As mentioned earlier, there are modified adjusted gross income limits that determine who can contribute to a Roth.

• Health Savings Account (HSA) – Contributions can also be made to a health savings account (HSA) up until the normal tax-filing deadline (for tax-year 2022 it’s April 18, 2023). A health savings account provides certain tax benefits when savings for health care expenses. Contributions are tax-deductible. Growth and qualified distributions are tax-free.

Account types with different contribution deadlines

Again, the list below is not all-inclusive, but here are some popular account types with deadlines that are NOT the same as the normal tax filing deadline:

• 529 plan - 529 plan contributions must be made by the end of the year, in order to qualify for a state tax deduction for that tax-year. This in the case in most states, although there are some exceptions.

• Employee contributions to workplace retirement plans – Employee contributions to most workplace retirement plans must be made before the end of the year (December 31), to “count” for that year.

• Employer contributions to workplace retirement plans – Employer contributions to most workplace retirement plans must be made by the extension deadline (which depends on the corporate structure of the organization). This applies to employer contributions to a 401k (including matching contributions), SIMPLE IRA, and contributions to a SEP IRA.

If you have any comments, questions, or ideas for future posts, please let me know

I hope you found this post helpful and educational. If you have any comments, questions, or ideas for future posts, please let me know. You can reach me directly via email at crawford@ulmerfinancial.com.