To set up your investment contributions on autopilot mode, simply divide your maximum contribution by the number of months (or paychecks). Roth IRAs are one of my favorite investment instruments because they offer great tax benefits, especially now that the IRS has eliminated income limits for Roth IRA conversions, making it easier for virtually everyone to access Roth IRAs. Of course, making a global contribution could also hurt you again if your investments collapse soon after your contribution. If you have any high-interest debt, not paying it off is probably your most expensive option, so I would contribute to my IRA at the end of the year and get rid of the debt first.
However, the vast majority of people can't do it, so they invest money on a monthly basis. The third way to maximize your IRA contributions is to combine the two methods listed above (averaging is another common method). While you won't have to pay any early retirement penalties or taxes until you get more out of what you've put in, you won't be able to contribute in an additional way in the coming years to make up for the money you withdrew. In addition, funding your Roth IRA on a monthly rather than annual basis allows you to take advantage of the average cost in dollars, which refers to buying smaller amounts of shares several times a year instead of in a single sum.
To get the most benefit from DCA, it would be best for the customer to contribute to the IRA on a monthly basis. If it's one of those years when stocks go down, you'd better invest in your IRA at the end of the year. Another way to do this is to set monthly contributions for the amount you can afford and then try to make contributions for that tax year before the tax filing deadline. For example, let's say you want to maximize your IRA contributions, but it's May and it hasn't started yet.
If you already have a larger established IRA, you would invest it all during the first month of the year. For example, the withdrawal rules for a Roth IRA account allow you to withdraw contributions at any time, but there are specific rules about when you can withdraw profits. Learn more about spousal IRAs, which allow you to contribute to an IRA for your spouse, even if you don't have your own income from work (this is only allowed for married couples filing jointly). The biggest drawback of spreading your contribution throughout the year is that you're delaying taking advantage of the tax-protected growth offered by Roth IRAs.
