If You're 50 or Older, You Can Still Put $8,000 Into a 2025 IRA Before April 15

A common misconception about IRAs is that for any given tax year, you have until Dec. 31 of that tax year to make your contribution. After all, the deadline for making contributions to most 401(k) accounts is Dec. 31. (Employers have a little more time in which to make matching contributions, as do some self-employed folks.)

For IRAs, though, you have until April 15 (or the general tax-filing deadline for that year) to make your contribution. So right now, you still have time to make a contribution that can count for the 2025 tax year.

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Why contribute to an IRA?

It's smart to make good use of IRAs, as they can help you save for retirement more effectively via tax benefits. If you contribute to a traditional IRA, you'll get a front-loaded benefit: You can deduct the amount you contributed from your taxable income. Have taxable income of, say, $80,000 and contribute, say, $6,000? Boom -- your taxable income falls to $74,000, and along with it, your tax bill shrinks.

With Roth IRAs, you get a back-end tax break: There's no deduction available, but if you play by the rules, you'll get to withdraw your money from your IRA tax-free in the future. That can be a very big deal if your contributions have grown at a good clip for a decade or three.

Contribution limits for IRAs are not as generous as those for 401(k)s, but they're still meaningful. For 2025, the IRA contribution limit is $7,000 -- plus $1,000 if you're 50 or older. For the 2026 tax year, those limits are $7,500 and $1,100. So, depending on your age, you can contribute $7,000 or $8,000 to your IRA for the 2025 tax year.

Better still, opening an IRA is fast, easy, and free. Check out our list of the best IRA brokers to get started before Tax Day. All you need to do is open an account, which you can generally do online, and submit your contribution.

How to invest

While you generally have limited investing choices with a 401(k) account, you can invest in just about any stock or bond (and some other things) via an IRA account. Don't let that overwhelm you. You can do quite well over a long period by just sticking with one or more simple, low-fee index funds, such as:

• Vanguard S&P 500 ETF (NYSEMKT: VOO)
• Vanguard Total Stock Market ETF (NYSEMKT: VTI)
• Vanguard Total World Stock ETF (NYSEMKT: VT)

The first will invest you in 500 of America's largest and best companies, which make up approximately 80% of the U.S. stock market's value. The second option offers nearly the entire U.S. stock market, and the third option offers the world's stock market.

You might also add some solid dividend payers to your mix, and perhaps some promising growth stocks, as well. Just be sure to make your 2025 contribution soon -- by April 15.

Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF and Vanguard Total Stock Market ETF. The Motley Fool has a disclosure policy.