Think beyond cash equivalents for your IRA. (Photo credit: katsrcool (Kool Cats Photography))

Here’s a common mistake Individual Retirement Account owners make: They transfer cash from their checking account into an IRA, meaning to go back another day and invest it, but they forget about it. Guilty!

The problem crops up at tax time when taxpayers are making last minute IRA contributions to cut their tax bills, and max out the prior year’s contribution limits. Vanguard Investment Strategy Group found that during tax season (loosely defined as January to April) the percentage of IRA contributions allocated to money market funds increases. The conclusion: Contribution deadlines appear to lead to poor investment decisions in retirement accounts.

Why should taxpayers be paying attention to this now? It’s IRA funding time. You have until April 15 to contribute up to $5,500 to an IRA for 2013. If you have the ability to save more, you can go ahead and make your 2014 contribution too—the sooner you get the money in, the longer you have the benefit of tax-deferred (with a traditional IRA) or tax-free (with a Roth IRA) compounding. If you’re 50 or older during the calendar year, you can contribute an extra $1,000 (for a total of $6,500 a year) as a catch-up contribution; do this every year to boost your retirement kitty.

Looking at contributions for tax year 2012 made in April 2013, Vanguard found that more than two-thirds of these last-minute IRA contributions made to money market funds remained in the money market funds four months later. “What seems like a prudent temporary decision can become an ill-advised longer-term investment choice,” Vanguard’s IRA Insights report says. At least some folks do slowly get around to moving the money to other investments. The percentage in money market funds 30 days after contributions was a whopping 81%.

So don’t let inertia rule. Instead of stashing your contributions in a money market fund, Vanguard suggests taking a page from improvements made in the 401(k) retirement account world. When salary deferrals go into your 401(k) each paycheck, they automatically go into whatever investment options you’ve preselected–or what your employer has selected as a default if you haven’t affirmatively made a choice. In 2007, the percentage of 401(k) plans using balanced or target date funds as the default option for contributions overtook money market funds, and now more than 80% of plans do it this way, up from just 11% in 2003.

The lesson is to invest in something—other than just a money market fund. For 2013, average total return for Vanguard’s largest money market fund (Vanguard Prime Money Market) was a mere 0.02%. Even contributions made into President Barack Obama ’s newly announced myRAs would get better returns; they’re expected to be pegged to the Thrift Savings Plan Government Securities Fund (which had an annual return of 1.47% in 2012). Once the account balance of a myRA reaches $15,000, you’d be required to roll it into a Roth IRA. Then you’re on your own—hopefully the money won’t just sit in a money market.

See also: Forbes 2014 Tax Guide