TD Ameritrade Poll: Most Americans Plan To Save Or Invest Their 2011 Tax Refunds

Most Americans who anticipate a tax refund this year won’t be spending it flippantly, according to a recent survey conducted by TD Ameritrade Holding Corporation (NASDAQ:AMTD). Just over 50 percent of Americans expect to get a refund on either their state or federal tax return this year, and among them, 63 percent plan to save or invest at least part of the money they receive.

Just 14 percent of respondents expecting a tax refund this year said they would use the money to splurge on luxuries like a new mobile phone or travel, but roughly half expect to use some of the money to pay down debt (51%) or pay for necessities like food or utility bills (48%). ¹

“While this pragmatism may be a result of current economic conditions, it’s nevertheless good to see that people are more likely to save their tax refund rather than perhaps spending it unwisely,” said Lule Demmissie, managing director, investment products and retirement at TD Ameritrade, Inc. (“TD Ameritrade”). “Contributing lump sums like year-end bonuses or tax refunds is one way to bolster a retirement account.”

This year, April 17* is the deadline for filing federal and state income tax returns. And, investors should remember that it's also the deadline to make contributions for the 2011 tax year to a Traditional or a Roth Individual Retirement Account (“IRA”) and take advantage of the tax benefits these retirement accounts can provide, such as:

• federal tax-free growth and tax-free withdrawals (for those investors meeting IRS requirements, like age) ( Roth IRA)
• the ability to deduct contributions on your income taxes now and pay the taxes when you make qualified withdrawals in retirement ( Traditional IRA)

During tax time, investors have already gathered most of the information and paperwork needed to re-evaluate their retirement plans. Demmissie points out that investors should consider using this opportunity to review their portfolio, revise any part of their strategy that may not be working for them, and build on their plan.