Don’t miss the IRA contribution deadline! Make sure you make your 2009 IRA contribution before April 15! With stocks performing so well these days, fully funding your IRA for 2009 (and 2010) could mean a tremendous boost toward saving for retirement. If your investment portfolio took a hit like everybody’s else’s did, then you don’t have time to spare.
IRA Contribution Limits
If you’ve been contributing $50 or $100 to an IRA each month, there’s room to contribute a lot more. Putting $600 or $1,200 in your IRA annually is nice, but you can direct up to $5,000 into your IRA for tax year 2009 (and up to $6,000 if you turned 50 in 2009). This $5,000 (or $6,000) limit can be split between a traditional IRA and a Roth IRA. The maximum contribution may be reduced if your modified adjusted gross income, or MAGI, is really high.
Make sure you meet the IRA eligibility requirements before you contribute to the IRA. This will prevent you and your tax preparer any unnecessary headaches. Also, you received earned income for the year before you make your IRA contribution.
As for your 2010 IRA contribution … you have until April 15, 2011 to make it, but you can also make it this year and cross it off your to-do list. There’s really no point in waiting until April 2011 to make that 2010 contribution – if you wait that long, you’ll potentially lose 15 months of interest and compounding.
Friendly reminder: You also have until April 15th to 0pen an IRA, too.
Remember that tax-filing extensions do not apply to your IRA contributions. Your contributions must be deposited by your tax filing due date.
Just like your tax return, a postmark date is considered timely, if you have sent your contribution in the mail by April 15, you have met the IRA contribution deadline date, even if your financial institution receives the contribution after April 15 (deadline IRA contribution). This is highly discouraged, though. You do not want to take the chance in funding your IRA for your retirement.
If you wait to fund your IRA from Jan 1 to April 15 of the following year, make sure to let your financial institution know the tax year to which the IRA contribution will be applied. Writing the tax year in the memo field of your check should be sufficient information for the financial institution. If you don’t let them know, they may apply it to the wrong tax year. It could probably still be fixed, but it’s not worth it to find out.