Money contributed to an employer-sponsored retirement plan, such as a traditional 401(k), isn’t included in your taxable income. In 2016, you can contribute up to $18,000 or $24,000 if you’re 50 or older, by the end of the year. If you haven’t maxed out, ask your employer if you can make an additional contribution before December 31.
If you have self-employment income from a side job, you can sock away even more. You can contribute up to 20% of your net self-employment income to a Simplified Employee Pension, up to a total contribution limit of $53,000 for 2016. (Unlike 401(k) contributions, there’s no December 31 deadline for SEP deposits. You can make 2016 deposits anytime before the due date of your tax return.)
Another option: Depending on your income, you can also deduct contributions to an IRA, up to a maximum of $5,500 in 2016 (and $6,500 for workers 50 or older). You can make 2016 IRA contributions anytime before April 17, 2017. Roth IRAs, however, do not offer this upfront tax break because withdrawals are tax-free in retirement.
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