- The IRS has extended the 2020 tax deadline to May 17, 2021.
- The extension gives Americans more time to contribute to HSAs and IRAs for the year 2020.
- Adding 2020 contributions now could help you grow your savings and save more in 2021.
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The IRS extended 2020 tax deadline until May 17, 2021. This extension gives Americans an extra month to file their taxes. And, it extends the deadline for contributing to your 2020 limits on HSAs and IRAs.
It is possible to contribute to your IRA or HSA until the tax filing deadline, usually April 15th. The IRS has confirmed that the deadline for HSA and IRA contributions is extended as well as the filing deadline in a March 29 statement.
In 2020, traditional Roth and IRA contributions were capped at $ 6,000 per year, or $ 7,000 for people 50 years of age or over. Max HSA at $ 3,600 per year for individuals and $ 7,200 for families in 2020, with an additional catch-up contribution of $ 1,000 for people 55 and over.
If you haven’t hit those limits yet and have some extra cash, you have a once-in-a-lifetime chance this year.
Contributing to an HSA or IRA for the previous tax will save you more
It’s not every year that you get an extra month to contribute to your IRA or HSA, and any extra cash you have now could come in handy in the long run as those accounts grow.
Your HSA isn’t just for health costs now – it can help you too save more for health costs in retirement. Funds do not expire and can be invested to grow over the long term. If you don’t have an HSA yet, you can’t open one, you will need an high-deductible health care plan to qualify.
An IRA, however, is available to any eligible person. You can open and contribute to an IRA until the tax deadline, as long as it is funded with money earned in 2020. Traditional IRA contributions are tax deductible, Roth IRA contributions are not, since they provide tax-free income in retirement.
Contributing to reach your 2020 limit can free up the amount you can contribute in 2021 and help you save more overall.