Your Finance: Maximime HSA contributions for help at tax time

Most tax-favored retirement and health savings programs give Most tax-favored retirement and health savings programs give you until April 15, 2014, to make contributions that count against your 2013 tax year. Photo Credit: iStock

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Don't think of the next seven weeks as a grim time of tax-season drudgery; think of them as your special, limited-time offer to enrich your future.

Most tax-favored retirement and health savings programs give you until April 15, 2014, to make contributions that count against your 2013 tax year.

Here's how to figure out where to send your precious dollars this year.

Feed your health care savings account (HSA): This advice may surprise some retirement-focused experts, but it's the best first choice of where to stash cash.

These privately held accounts are meant to offset the expenses consumers face when they have high-deductible health care plans, and they come with a benefit you can't find anywhere else: The contributions are tax-free, and the money, when it comes out, is tax-free, too.

Furthermore, there's no law that says you have to spend your HSA money annually. You can save it for retirement and use it to offset hefty post-retirement health care costs.

Roth, Roth, Roth: Financial pros say that in almost every case you cannot top the advantages of a Roth IRA. Over time, the money earned within the Roth (and withdrawable tax-free) dwarfs the amount of the initial contributions.

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A 25-year-old who faces the same income tax rate in retirement as during his working years would end up with 20 percent more money to spend in retirement if he opts for a Roth IRA instead of a traditional IRA, according to new research from T. Rowe Price. (The research assumed a 7 percent return pre-retirement and a 6 percent return in a 30-year retirement.)

A traditional IRA: There are a few reasons why you might choose a traditional tax-deferred IRA instead of a Roth.

If you earn more than $127,000 as a single person or $188,000 as a couple filing jointly, you aren't allowed to contribute to a Roth IRA. And if you're covered by a retirement plan at work and earn that much, you won't be able to deduct your contribution from your 2013 taxes, either.

Double up: There's another point of research on which most retirement savings experts agree: The earlier you save, the better.

That means that instead of waiting until March 2015 to make your 2014 contribution, you should do it now.

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You can make both your 2013 and 2014 contributions now; that would be $11,000 if you're younger than 50 and $13,000 if you're over 50.

If that's too big a check for you to write right now, set up an automatic contribution so that your 2014 contribution is done by the end of the year.

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