When Is the Best Time of Year to Make IRA Contributions?

If you’re looking to put a financial New Year’s resolution into action, contributing to your retirement accounts is a good place to start. Especially if you have the means to hit the contribution limits on an IRA.

But when’s the best time of year to max out your IRA? Often, in the investing world, there’s a case to be made that earlier is better. But when it comes to IRA contributions, it isn’t always so simple. Here’s what to know.

The case for slow and steady

Let’s start with the position that might seem counterintuitive: That you shouldn’t rush to max out your IRA. There are a couple of cost-basis and tax-related arguments for taking your time.

The first argument against frontloading your IRA contributions is that doing so brings a risk that you’ll invest your contributions for the year at a relatively high cost basis. In other words, there’s a danger that you might buy into your stocks, funds or other investments at a high price point for the year, which could decrease your investment profits (or even put them in the red in the event of a market downturn later in the year).

This is an especially pressing concern when stock indexes like the S&P 500 are near all-time highs, as they were in the first weeks of this year.

Making smaller contributions over a longer period of time allows you to take advantage of dollar-cost averaging, meaning that your cost basis for your IRA investments for the year will be more or less equal to the average price of those investments for the year. This can mitigate the risk of buying in at a high point.

One important thing to remember about the tax deduction from traditional IRA contributions is that there’s no big rush to claim it. To get the maximum tax deduction from IRA contributions for a given year, you don’t need to make all of your contributions by December 31 — you have until tax day (i.e., until April of the following year) to make contributions.

With this in mind, making small contributions throughout the year (rather than frontloading the maximum contribution) may give you a bit of “wiggle room” to reduce your tax bill at the last minute, in the event that your tax liability unexpectedly increases during the year.

For example, suppose you buy a health insurance plan through your state marketplace, and your income is low enough to qualify for the Advance Premium Tax Credit (APTC), which lowers your premiums. If your income unexpectedly increases during the year, you may no longer qualify for the APTC, in which case you may need to pay some of it back at tax time.

In that case, it would be nice to be able to conjure up an additional tax deduction to offset that unexpected bill. If your income during the year increased enough that you can make a last-minute contribution to your IRA, and you haven’t hit the limit yet, then you’ll be doing yourself two favors by making a last-minute contribution — you’ll offset the unexpected tax bill, and you’ll also give your retirement savings an extra boost.

This last-minute contribution trick may also come in handy if your modified adjusted gross income (MAGI) rises during the year to a level where you’re disqualified from another tax deduction you were counting on, such as the student loan interest deduction, which is eliminated at a MAGI of $100,000 for single filers or $200,000 for joint filers for tax year 2025.

If you frontload the maximum IRA contribution, on the other hand, and then you get an unpleasant surprise at tax time like the examples described above, you’ll have already used up your IRA deduction, and you may just have to eat that unexpected tax bill.

The case for making contributions as soon as possible

However, there are also some arguments for maxing out your IRA as soon as possible — especially if you’re considering a maneuver like a backdoor Roth IRA.

In the section above, we discussed a lot of nuances about how tax and cost-basis factors might influence your decision on when to contribute to your IRA, especially if you have a low-ish income but think it might increase over the course of the year.

But you have to weigh those nuances against a basic investing principle: Generally speaking, the earlier you invest money, the more time it’ll have to grow, and the higher your returns will be.

The S&P 500 index has had an average annual return of about 10% per year before inflation over the last century. In some years, it returns more than that, in other years, it returns less. It doesn’t necessarily maintain a steady growth rate throughout the year, but nonetheless, it and other stock indexes generally tend to rise in value fairly consistently over the long term.

If the S&P 500 and other indexes have a good year in 2026, then investors who made their IRA investments early in the year will generally earn higher returns than those who contributed throughout the year.

As we discussed above, the dollar-cost averaging strategy can reduce your risk of making your investments at a relative high (particularly if the stock market hits some turbulence in 2026), but the “as soon as possible” strategy has the potential to produce the highest possible return in the event that the markets do well.

The tax deduction on traditional IRA contributions is subject to income limits if you or your spouse has access to an employer-sponsored retirement plan like a 401(k). But if you don’t, then your traditional IRA contributions will be deductible no matter how high your income is.

That said, if you’re a high earner in this situation, you may still be disallowed from making Roth IRA contributions if your income is higher than $168,000 (single) or $252,000 (married filing jointly) for 2026.

Some taxpayers in that situation may be interested in funding a backdoor Roth IRA — a somewhat complicated maneuver where you open a new traditional IRA, make non-deductible contributions to it, and then convert it to a Roth IRA and pay taxes on any investment profits it earned between opening and conversion.

The backdoor Roth IRA can be a good workaround for investors who want to fund a retirement account that will allow them tax-free withdrawals in retirement, but are disallowed from doing so in the normal way as a result of high income. But it has one notable disadvantage compared to making traditional IRA contributions: Traditional IRA contributions generally reduce your tax bill, while the backdoor Roth maneuver generally increases it.

With that in mind, if your income is high enough that you’re considering a backdoor Roth IRA, it probably makes sense to max out your traditional IRA contributions first, and then do the backdoor Roth thing afterwards. In this scenario, it may make sense to max out a traditional IRA as soon as possible.

So which strategy is best?

Everyone’s situation is different, and we at NerdWallet can’t give you personalized advice about the best way to contribute to your retirement accounts.

But given the pros and cons described above, the slow-and-steady approach could, generally, be more advantageous for investors with low or moderate incomes — especially those whose income may rise throughout the year, due to a new job, a promotion or some other windfall.

Also, it’s worth noting the contribution limits for traditional IRAs in 2026 are $7,500, or $8,600 if you’re over age 50. If you’re on a tight budget, you may not be in a position to throw that kind of money into a retirement account very early in the year anyway. You may need to prioritize paying bills or building up an emergency fund instead.

The advantages of the frontloading strategy, on the other hand, are biggest for investors with high incomes to start with — especially those who earn enough to be ineligible to contribute to a Roth IRA the normal way.

If you do want personalized advice about the best way to handle your IRA contributions, talking to a financial advisor may be a good move.