Tax season should make you think of saving for retirement

Since you’re already thinking about how you can reduce your taxes, consider the following ideas to boost your retirement savings.

couple reviewing documents together

Your traditional IRA contributions may be tax deductible

If your income is below IRS limits, or you don’t have a retirement plan at work, your contributions to a traditional IRA can be tax deductible, potentially reducing your overall tax liability. And you may be able contribute now (before the April filing date) to reduce your taxes for the previous year.

Employer-sponsored retirement plans can further reduce your taxable income

If your employer offers a retirement plan and you’re currently contributing to it, your contributions can reduce your taxable income. Contributions made on a pre-tax basis reduce your current taxable income. Since your taxable income is reduced, you’ll pay less in taxes overall, and you won’t be taxed on your retirement plan contributions until they are withdrawn.

Your employer’s plan may also allow Roth contributions. These contributions are made on an after-tax basis and do not reduce your current taxable income. However, the earnings on your Roth contributions and any withdrawals can be tax-free if you are over age 59½ and have had the account for at least five years.

There are tax credits for some retirement savers

If you meet income limits, the Retirement Savings Contributions Credit (Saver’s Credit) can lower your income tax bill when you are contributing to a retirement account.

Know the tax rules

Each of these opportunities has tax rules regarding eligibility, contribution amounts, and taxation of distributions. As with all tax information, you should consult with a tax advisor regarding any tax-favored retirement products and your specific situation.

Saving for your retirement could help you save on income taxes now and perhaps in the future. So, if you haven’t gotten started with saving for retirement or you’re not taking advantage of these retirement accounts, what are you waiting for?

The information provided here is for general informational purposes only, and should not be considered an individualized recommendation or personalized investment, tax or legal advice.

LP-000090 (3-22)

© 2023 Horace Mann Educators Corporation

CUSTOMER SERVICE Call 800-999-1030

  • Auto and Property
    M – F, 7 a.m. - 8 p.m. Central time.
  • Life, Annuity and Group
    M – F, 7 a.m. - 7 p.m. Central time.