Contribute the maximum to retirement accounts

There may be no better investment than tax-deferred retirement accounts. They can grow to a substantial sum because they compound over time free of taxes.

Company-sponsored 401(k) plans may be the best deal because employers often match contributions.

Try to increase your 401(k) contribution so that you are putting in the maximum amount of money allowed ($18,000 for 2016, $24,000 if you are age 50 or over). If you can’t afford that much, try to contribute at least the amount that will be matched by employer contributions.

Also consider contributing to an IRA. You have until April 18, 2017 to make IRA contributions for 2016, but the sooner you get your money into the account, the sooner it has the potential to start to grow tax-deferred. Making deductible contributions also reduces your taxable income for the year. You can contribute a maximum of $5,500 to an IRA for 2016, plus an extra $1,000 if you are 50 or older. Use our IRA Calculator to see how much you can contribute.

If you are self-employed, the retirement plan of choice is a Keogh plan. These plans must be established by December 31 but contributions may still be made until the tax filing deadline (including extensions) for your 2016 return. The amount you can contribute depends on the type of Keogh plan you choose.