How Do I Fund an IRA?

Individual retirement accounts are a great way to save for your retirement tax-free. What’s not so great is figuring out how you can scrape the money together to take full advantage of it. The IRS allows you to contribute $7,000 in 2024 and 2025 ($8,000 if age 50 and older).

While Roth IRAs have the same contribution limits, we're talking mainly here about traditional IRAs, which offer an upfront tax break.

Once you open an IRA, you can fund the account with cash, a check or a direct transfer from your bank.

» Find the best IRA account for you.

1. Let Uncle Sam help you

Yes, some savers can actually get the government to help them feed their IRA.

Here’s how: You may be able to get a bigger refund on your taxes by claiming a deduction for your contribution to a traditional IRA. Then, use the extra refund money to build up next year’s IRA contribution.

Are you eligible for this tax deduction? If you (and your spouse, if you're married) don't have a retirement plan at work, then generally you're eligible for the full deduction.

But if you or your spouse are covered by a retirement plan at work, you’ll need to earn less than certain amounts to get this little trick to work. You can view the full traditional IRA deduction limits here.

If you earn too much to get this credit, consider a Roth IRA instead. There are income restrictions here, too, but they're more generous. And you'll get some seriously good future benefits instead of a tax break today. Check out our guide on Roth IRAs vs traditional IRAs.

» Did you know? Even without a tax deduction, a nondeductible IRA makes sense for some people.

2. Let Uncle Sam help you again

The government may come to your rescue again, especially if you’re a low- or moderate-income saver. You can claim the Saver’s Credit on your tax return, which offers a tax credit of up to 50% based on traditional IRA contribution.

For example, if you're filing as single and contribute $2,000 to a traditional IRA, you could receive a tax credit of $1,000. For those married filing jointly, it could be a tax credit of $2,000 for a contribution of $4,000. However, you'll need to have an income below a certain level to qualify for the full credit.

» Read more about the Saver's Credit and who qualifies

3. Break it down

Sometimes the hardest part of getting funds for your IRA is just getting started. After all, $7,000 is a chunk of money and it can be difficult to scrape together. In that case, it can be useful to break down that annual goal into smaller amounts — even daily if that’s what gets you to save.

4. Pocket your tax refund

If you get a tax refund (use our free tax calculator to estimate), consider using that money to prop up your retirement savings. You could funnel that extra money into next year’s IRA contribution.

5. Pay your IRA first

Steal a play from your employer’s retirement-plan playbook: Consider tucking away your IRA money before you can spend it. Set up your accounts so that they direct money to your IRA with every paycheck, just like a 401(k) plan does. If you receive a paycheck every two weeks, consider allowing the brokerage to dip into your bank account and transfer your contribution on payday.