Got a Tax Refund? Here’s How You Could Put It Toward Your Retirement

November 25, 2025

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Note: All tax information contained in this article is as of the publication date. Be aware that tax rules are always subject to change, and the IRS website is your official source for the latest forms and guidance.

If you’re expecting a tax refund this year, there are many ways you could put that money to work. One option to consider is dropping it into your retirement savings account.

When it comes to building your nest egg, every contribution you make today can help bring you one step closer to securing your retirement future.

But first, do you need to use your tax refund for something else?

Before we get into how you could put your tax refund toward your retirement, check to make sure you don’t need the money to cover any near-term purchases or expenses.

For example, perhaps, you’re planning on buying a home or investment property soon, and you would rather use the refund to help build up your cash reserves.

By taking a moment to look at your overall financial picture, it could help you decide how much of the refund to set aside for retirement. And if you’re able to put some or all of your refund toward your savings, here are two options to consider.

Contribute to an IRA

Making regular contributions to your IRA is one smart way to build your retirement fund. If you haven’t already maximized your annual contribution, consider putting a portion or your entire refund into your IRA.

Just be aware of the annual contribution limits:

For 2026, the standard annual contribution limit for an IRA is $7,500 ($7,000 in 2025).
If you’re 50 or older, you can make an additional catch-up contribution of up to $1,100 in 2026 ($1,000 in 2025). This means you could make a total contribution of up to $8,600 for the 2026 tax year ($7,500 + $1,100).

Keep in mind: IRA contribution rules and limits are always subject to change. It’s a good idea to check in with the IRS each year for the most up-to-date information.

Learn more: Traditional vs. Roth IRA: Which Is Right for You?

Maximize your 401(k) contribution

If you’re not already maximizing your 401(k) contributions, your tax refund could be put to use there, too. You might be wondering: How could I put my tax refund toward my 401(k) when contributions are automatically deducted from my paychecks?

Good question. One potential way is to increase the amount of your automatic contributions (usually done by contacting your employer’s human resources department). When you do this, you’re telling your employer to take more money out of your paycheck for your 401(k). You’re essentially using your tax refund to cover the contribution increase.

On top of this, let’s say your employer offers to match your contributions (usually up to a certain amount). Using your tax refund to hike up your regular contributions might help you get those matching dollars to supercharge your retirement account.

Be aware that 401(k) plans are also subject to annual contribution limits.

The standard annual contribution limit to a 401(k) plan is $24,500 for 2026 ($23,500 for 2025). Individuals who are 50 or older could make an additional catch-up contribution of $8,000 in 2026 (if your 401(k) plan allows it). In other words, you could contribute up to a total of $32,500 ($24,500 + $8,000).

For more information on catch-up contributions, visit IRS.gov.

Important: Under a change made in SECURE Act 2.0, 401(k) plan participants age 60 to 63 will have a higher catch-up contribution limit. The higher catch-up contribution limit for 2026 is $11,250 (instead of $8,000).

If you have questions about whether you’re eligible to make catch-up contributions, check with your 401(k) plan provider or a tax professional.

Retirement account contributions could provide potential tax benefits

One of the upsides of saving for retirement with an IRA and/or a 401(k) is the potential tax benefits. If you contribute to a traditional IRA or 401(k) with pre-tax dollars, you could reduce your tax bill for the year. Plus, your money can typically grow tax-deferred until you withdraw it in retirement.

On the other hand, with a Roth IRA, if you contribute after-tax dollars today, your withdrawals in retirement are generally tax-free as long as certain conditions are met (see the IRS’s Roth IRAs webpage for more information).

Good to know: Your eligibility to deduct a traditional IRA contribution depends on a number of factors, such as your tax-filing status, income, and whether you have a retirement plan through an employer. Visit the IRS website on IRA deduction limits for more information.

The importance of making your tomorrow a priority today

A tax refund may feel like “free money,” but remember, it’s simply what you overpaid in taxes to the federal government. If you’re getting a refund, think about how you might want to use it. Putting that money toward your retirement, for example, is one smart way to put those dollars to work. Whether you decide to park that money in your IRA or 401(k), your future self will thank you.

This article is for informational purposes only and is not a substitute for individualized professional tax advice. Individuals should consult their own tax advisor for matters specific to their own taxes. This article was prepared by and approved by Marcus by Goldman Sachs, but does not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions. Goldman Sachs Bank USA and Goldman Sachs & Co. LLC are not providing any financial, economic, legal, accounting, tax or other recommendations in this article. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice. Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates. Neither Goldman Sachs Bank USA, Goldman Sachs & Co. LLC nor any of their affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements of any information contained in this document and any liability therefore is expressly disclaimed. You are not permitted to publish, transmit, or otherwise reproduce this information, in whole or in part, in any format without the express written consent of Goldman Sachs. This foregoing restriction includes, without limitation, using, extracting, downloading or retrieving this information, in whole or in part, to train or finetune a machine learning or artificial intelligence system.