SoFi

There is no shortage of options when deciding where to put your retirement money. Strategies and tools are available to all investors, no matter where you may be in your retirement planning journey.

These options range from DIY to completely hands-off. Investors can break down their choices into three main decisions: the account, the investments, and finally the bank or platform.

Here are your options for your retirement investing strategy—and how to choose between them.

Where To Invest Retirement Money: First, Choose an Account

A typical first choice for an account to save and invest for the long-term is a designated retirement account. There are many different types of retirement plans, including Roth IRAs and employee-sponsored 401(k)s, most of which provide tax incentives to invest for the long haul.

It is important to remember, though, that retirement accounts are just that—accounts. For example, a 401(k) and a Roth IRA are not investments but instead, accounts that hold investments. Said another way, they provide a place where you can invest, but are not themselves an investment. This can be confusing, as many workplace retirement plans also automatically invest contributions made to the account.

Therefore, the decision on which retirement account to use will largely depend on what makes the most sense for your personal tax situation, and which you have access to. Here are some common options.

1. Workplace Retirement Plan

For individuals with access to one, a workplace retirement plan can be a convenient option that offers the benefit of automatic paycheck deduction. Many workplace plans, such as 401(k), 403(b), and SIMPLE (Savings Incentive Match Plan for Employees) IRA accounts, provide an easy place where retirement saving and investing can happen automatically.

As a bonus, many workplace plans offer a company match: when you contribute to your account, they do too. Many investors think of a company match as additional salary or “free money” that will help them reach their goals.

2. Tax-deferred Retirement Account

Tax-deferred retirement accounts, which include traditional IRAs, 401(k)s, and solo 401(k)s and SEP IRAs, offer tax deferral—meaning that you contribute with pre-tax dollars. When you open an IRA (or other similar account), income taxes on all contributions are deferred until you withdraw money, usually in retirement.

One benefit of tax deferral is that an individual might be more likely to have a lower (effective) income tax rate as a retired person, so there may be an advantage to delay taxes.

3. Roth IRA

Neither a Roth IRA or a Roth 401(k) offer tax deferral, so money entering into the account will be subject to income taxes. But that means that the money can be withdrawn tax-free, upon retirement or at other qualified times.

A Roth IRA could be a compelling option for someone looking to supplement their existing workplace plan, or someone who may not have access to an account through work. That said, Roth IRA accounts have income limitations, meaning that a high salary may disqualify you from using one.

There is one universal benefit to using a retirement account—as opposed to a non-retirement investment account—whether it’s tax-deferred or not: Tax-free investment growth. In a non-retirement account, money earned through investing will be subject to an additional tax on investment earnings. Within a retirement account, there is no such tax on any money earned through investing.

4. Non-retirement investment account

Non-retirement investment accounts, such as brokerage accounts or general investing accounts, offer more flexibility in accessing your money than retirement accounts typically do. Typically, an individual can incur penalties if money is removed from their retirement account before age 59 ½. If an investor is planning to retire before this age or would like the flexibility to do so, a non-retirement investment account might be appealing.

Additionally, a non-retirement investment account isn’t subject to the annual contribution limits of a retirement plan like a 401(k) or a Roth IRA (the latter of which is $7,000 for 2025 and $7,500 for 2026 for those under age 50). Some investors may choose to max out retirement accounts and open up a taxable investment account in order to fully fund their retirement goals.

Choose an Investment Strategy

Once an investor has decided where to put retirement money, it is time for the next step, which is how to invest that money. While many workplace retirement plans automatically invest money, it should be viewed as a separate step in the process.

Typically, investors choose (at minimum) a mix of stocks and bonds within their long-term investment portfolios. When contemplating bonds vs. stocks, it’s helpful to think of the differences in this way: Stocks tend to be higher growth, but that growth comes with more risk. On the other hand, bonds have historically lower rates of growth, but are considered to be less risky. An individual may want to determine their personal mix of stocks and bonds by assessing their goals, investing timeline, and risk tolerance.

Once an investor has determined their preferred mix of stocks, bonds, and any other major asset classes (called asset allocation), it is time to determine how to fulfill these allocations. There are several options, ranging from the completely DIY (buying individual stocks, for example) to the completely uninvolved (such as having a professional manage your portfolio).

Individual Stocks

Those who have an inherent interest in picking individual stocks could certainly do so, though it is not a requisite to building an investment portfolio. As you consider if and how to choose your first stock, it also makes sense to look into whether you’re more interested in a concentrated vs. diversified investment portfolio.

Index Funds and ETFs

A common way to invest for retirement is by using mutual funds or exchange-traded funds (ETFs). These funds are, essentially, baskets that hold lots of investments. That basket could hold stocks, bonds, something else entirely, or some combination of different investment types.

Some investors may find buying big baskets of investments easier than attempting to choose individual investments, like stocks. Individuals whose retirement plan automatically invests may already have a combination of funds.

Both mutual funds and ETFs can be either actively managed or “index.” Index funds—whether mutual funds or ETFs—are a popular choice because they are low-cost and often represent a broad swath of the market. For example, it’s possible to buy a low-cost index fund that invests in the entire US stock market. With just a handful of index funds, it may be possible to build a fully diversified portfolio.

Recommended: Are Mutual Funds Good for Retirement?

Target-date Funds

Similarly, there are options that utilize a passive, index fund strategy but that build a portfolio on your behalf. First, retirement target-date funds (also called lifecycle funds) are funds that typically hold other funds (as opposed to individual stocks and bonds) in amounts that are appropriate for your investing timeline—that’s why you pick one that corresponds to your approximate retirement date.

Target-date funds are popular within workplace retirement plans, but it also may be possible to buy into one at the brokerage bank of your choosing. Be sure to check and see whether the fund consists of index funds, which are typically lower cost, or holds managed funds, which generally have higher fees.

Robo-advisor Service

Another hands-off option is to use a digital “robo-advisor” service that manages a portfolio of index funds on your behalf. This option might appeal to those who want a bit more assistance in maintaining a retirement investing strategy. Most of these services encourage a passive, long-term investment strategy.

Generally, you’ll answer questions about your goals, investing timeline, and risk tolerance, which indicates to the service your most suitable investment mix. Then, this strategy is built and maintained for you. Typically, this service comes with an additional cost on top of the cost of the funds used.

The Takeaway

For investors deciding where to put retirement money, choosing a preferred account type and an investment strategy are two ways to get started. With tax-deferred options like 401(k)s and other choices like traditional and Roth IRAs, an investor is likely to find at least one retirement plan account that suits their lifestyle and goals.

In considering possible investment strategies, it’s useful to think about how hands-on one wants to be. Putting together a stock portfolio requires more direct involvement, whereas utilizing robo-advisor services might require less.

Deciding where to invest and with what strategy will help guide an investor’s third and final decision regarding the bank or investing platform.

No matter where and how an individual decides to invest their retirement money, they’re not likely to welcome unnecessary fees. Service fees and other costs embedded in accounts can seriously erode any potential profit earned on an investment.

For investors interested in a DIY approach for retirement investments, a low-cost brokerage bank or trading platform, like SoFi Invest®, may be appealing. With SoFi Invest, members can build out a diversified investment strategy—including stocks and ETFs—without high costs.

For individuals who favor a hands-off approach, a robo-advisor could be the right fit. SoFi Automated Investing builds and maintains a diversified portfolio for investors guided by their personal money goals and smart digital algorithms. Portfolios are built using low-cost ETFs.

SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, LLC and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“SoFi Securities”).
Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above, please visit https://www.sofi.com/legal/.
Fund Fees
If you invest in Exchange Traded Funds (ETFs) through SoFi Invest (either by buying them yourself or via investing in SoFi Invest’s automated investments, formerly SoFi Wealth), these funds will have their own management fees. These fees are not paid directly by you, but rather by the fund itself. these fees do reduce the fund’s returns. Check out each fund’s prospectus for details. SoFi Invest does not receive sales commissions, 12b-1 fees, or other fees from ETFs for investing such funds on behalf of advisory clients, though if SoFi Invest creates its own funds, it could earn management fees there.
SoFi Invest may waive all, or part of any of these fees, permanently or for a period of time, at its sole discretion for any reason. Fees are subject to change at any time. The current fee schedule will always be available in your Account Documents section of SoFi Invest.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOIN0423027
CN-Q425-3236452-55

Fortunately for retirement savers, the IRS allows some flexibility in funding traditional or Roth IRAs. You have until tax day of the following year to make contributions.

In other words: Your last day to make an IRA contribution for tax year 2025 is April 15, 2026. If you file an extension on your return, your ability to contribute to an IRA is not extended, however.

Knowing how long you have to make an IRA contribution is important, as it can help you save a little more, and potentially reap some tax benefits.

What Is the IRA Contribution Deadline?

A conventional tax year extends from January 1 of the year through December 31 (corporate tax years can be different). However, the deadline for individuals making the maximum annual IRA contribution doesn’t follow that timeline; generally you have until tax day in April of the following year.

In most years, the deadline for filing your tax return is April 15. However, if the 15th falls on a holiday or weekend, the deadline is generally pushed to the next business day.

The deadline also applies to both annual contributions and catch-up contributions for regular IRAs. A catch-up contribution of $1,000 is allowed for taxpayers aged 50 or older.

Again, if you file an extension on your tax return, that will not give you extra time to contribute to an ordinary IRA. That said, the rules related to contribution deadlines and extensions are somewhat different for other types of IRAs, like SEP and SIMPLE IRAs designed for those who are self-employed or own small businesses. (see below).

Traditional, Roth, SEP, and SIMPLE IRA Contribution Deadlines for 2025

Contributions limits and deadlines vary, depending on the type of IRA you have.

How IRA Contributions Work

Contributions refer to the funds you deposit in a retirement account like an IRA (but also a 401(k) or 403(b)). Most retirement accounts have rules that govern the maximum amount you can contribute per year and the tax implications for contributing to one type of account vs. another.

•   Generally speaking, traditional IRAs, as well as SEP and SIMPLE IRAs, are considered tax-deferred accounts. That means your contributions are typically tax deductible in the year you make them (though some restrictions apply if you or your spouse is covered by a workplace retirement account). But you will owe taxes on withdrawals.

•   The money you contribute to a Roth IRA is an after-tax contribution, and is not tax deductible. Qualified withdrawals after age 59 ½ are tax-free, however.

Roth accounts have more restrictions than other types of IRAs. One important distinction is the income cap: For tax year 2025: Single filers whose modified adjusted gross income (MAGI) is $165,000 or higher, and those who are married, filing jointly with a MAGI of $246,000 or higher, are not eligible to open a Roth IRA.

Other Types of IRAs

In addition to the ordinary traditional and Roth IRA options, self-employed people, sole proprietors, and those with small businesses can set up SEP or SIMPLE IRAs.

•   A SEP IRA, or Simplified Employee Pension IRA, is a retirement plan that can be set up by employers, sole proprietors, or the self-employed. Employers make contributions for employees (employees don’t contribute). Employers are not required to contribute to a SEP every year.

•   A SIMPLE IRA, or Savings Incentive Match Plan for Employees IRA, is similar to a 401(k) but for businesses with 100 or employees or less. Both the employer and the employees can contribute to a SIMPLE IRA.

Both SEP and SIMPLE IRAs are tax-deferred accounts, similar to a traditional IRA. Contributions in most cases are tax deductible, but the account holder must pay ordinary income tax on withdrawals. The rules and restrictions governing withdrawals vary, so you may want to check the details at IRS.gov or consult a tax professional.

Pros and Cons of Maxing Out Your IRA Early or Late

Maxing out your IRA, i.e., making the full annual contribution allowed, could help you save more for retirement. And as with any contribution amount, there can be tax benefits depending on the type of IRA you’re funding.

Whether it makes sense to contribute earlier in the year or wait until the contribution deadline depends on your financial situation.

Here are some of the advantages and disadvantages of maxing out an IRA earlier vs. later.

What If You Contribute Too Much to Your IRA?

If you contribute too much money to your IRA, the IRS can treat it as an excess contribution. Excess IRA contributions can happen if you:

•   Aren’t keeping track of contributions throughout the year

•   Miscalculate the amount you can contribute to a Roth IRA, based on your income and filing status

•   Make an improper rollover contribution

If you make excess IRA contributions, the IRS can apply a 6% penalty for each year the excess amounts remain in your account. You can avoid the 6% tax by withdrawing excess contributions and any earnings from those contributions by the tax filing deadline or extension deadline if you filed one.

The Takeaway

If you have any type of IRA, it’s important to mark your calendar each year with the contribution deadline so that you can plan the cadence of your contributions in relation to other expenses. Because most types of IRAs allow additional time for contributions, this can help you save more — and possibly reap additional tax benefits.

Prepare for your retirement with an individual retirement account (IRA). It’s easy to get started when you open a traditional or Roth IRA with SoFi. Whether you prefer a hands-on self-directed IRA through SoFi Securities or an automated robo IRA with SoFi Wealth, you can build a portfolio to help support your long-term goals while gaining access to tax-advantaged savings strategies.

FAQ

What is the last day to contribute to an IRA for tax year 2025?

The traditional and Roth IRA contribution deadline for the 2025 tax year is April 15, 2026. If you’re an employer, or self-employed individual contributing to an SEP IRA, you’d have until tax day to contribute, unless you filed a tax extension. In that case, you’d be able to use the extension deadline instead.

Can I contribute to an IRA after December 31?

Yes, you can contribute to an IRA for the current tax year up until the federal tax deadline, which is typically April 15 of the following year. In years where the federal tax deadline falls on a holiday or weekend, the date is pushed up to the next business day.

Can I open an IRA in 2026, but contribute for 2025?

Yes, you can open a new IRA in 2026 and still make a contribution for the 2025 tax year. However, you must both open the account and fund it with your 2025 contribution by the April 15, 2026 tax deadline. Contributions made after April 15, 2026, can only be for the 2026 tax year and must be made by the tax deadline in 2027.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.