It can pay to save in an IRA. There are tax benefits, and your money has a chance to grow. While the deadline for a 2016 traditional or Roth IRA contribution is the same as the tax-filing deadline—April 17, 2017—you don’t have to wait until the deadline to contribute. Here are some reasons to make a contribution now.

1. Put your money to work.

Eligible taxpayers can contribute up to $5,500 to a traditional or Roth IRA, or $6,500 if they have reached age 50, for 2016. It’s a significant amount of money, but think about how much it could grow to over time.

Consider this: If you’re age 35 and invest the maximum $5,500 2016 IRA contribution for growth, that one contribution could grow to almost $59,000 35 years later. If you’re age 50 or older, you can contribute $6,500, which could grow to more than $69,000 35 years later. We used a 7% long-term compounded annual hypothetical rate of return and assumed the money stays invested the entire time.

The age you start investing in an IRA matters: It’s never too late, but earlier is better. Even if you start saving early and then stop after 10 years, you may still have more money than if you started later and contributed many more years.

2. You don’t have to wait until you have the full contribution.

The $5,500 IRA contribution limit may seem like a significant sum of money, particularly for young people trying to save for the first time.

The good news is that you don’t have to make it all at once. You can automate your IRA contributions and have money deposited to your IRA weekly, biweekly, or monthly—or on whatever schedule works for you. Making many small contributions to the account may be easier than doing one big one.

3. Get a tax break.

IRAs offer some appealing tax advantages. There are basically two types of IRAs, the traditional and the Roth, and they each have different tax advantages and eligibility rules.

Contributions to a traditional IRA may be deductible for the year the contribution is made. There are no income limits for being eligible for a tax deduction, unless you or your spouse participate in a workplace savings plan like a 401(k) or 403(b).  Deductibility is then phased out at higher incomes. Earnings can grow tax free. Taxes are then paid when withdrawals are taken from the account—typically in retirement. There’s no escaping taxes with a traditional IRA: At age 70½, minimum withdrawals are mandatory.

On the other hand, you make contributions to a Roth IRA with after-tax money, so there are no deductions. Contributions to a Roth IRA are subject to income limits.3 Like a traditonal IRA, earnings can grow tax free. But unlike the traditional IRA, withdrawals from a Roth IRA are also tax free, and there are no mandatory withdrawals.

As long as you are eligible, you can have either a traditional or a Roth IRA, or both.

What’s the right choice for you? For many people, the answer comes down to this question: Do you think you’ll be better off paying taxes now or later? If, like many young people, you think your tax rate is lower now than it will be in retirement, a Roth IRA can be the smarter choice.

4. You may think you can’t have an IRA, but make sure.

There are some common myths about IRAs—especially about who can and who can’t contribute.

Myth: I need to have a job to contribute to an IRA.

Reality: Not necessarily. A nonworking spouse, as long as his or her spouse has taxable income up to the contribution limit of $5,500 for 2016, or $6,500 for over 50, can contribute to a Roth or traditional IRA. Alimony is also considered income, so a nonworking person receiving alimony may also be able to contribute to an IRA.

Myth: I have a 401(k) or a 403(b) at work, so I cannot have an IRA.

Reality: You can, with some caveats. For instance, if you or your spouse contributes to a retirement plan—like a 401(k) or 403(b)—at work, your traditional IRA contribution may not be deductible based on your modified adjusted gross income (MAGI). But you can still make a nondeductible, after-tax contribution and reap the potential rewards of tax-free growth within the account. You can contribute to a Roth IRA, even if you have contributed to your workplace retirement account, as long as you meet the income eligibility requirements.

Source:  Fidelity Investments