For many people, IRA contributions are tax deductible, said Susan Wright, consumer education specialist with New Mexico State University's Cooperative Extension Service. Investors who contributed a smaller amount in 1998 can make up the difference now.
Married couples can qualify for a partial deduction at certain adjusted gross income levels.
Households with earners who do not have an employer retirement plan can earn any amount and obtain a full IRA deduction. Even if IRA investors don't qualify for a tax break, an IRA is still a smart way to save toward retirement, she said. IRAs allow money to grow without being eroded by taxes. IRA contributions and earnings compound tax deferred until retirement. Over time, the difference in earnings between taxable and tax-deferred investments can equal thousands of dollars.