Retirement Planning Common Questions |
It's January, and I forgot to contribute to my IRA. Is it too late?
Answer:
No. Generally speaking, the IRS allows you to make your IRA contribution for a particular tax year up until April 15 of the following year. This rule applies to both traditional IRAs and Roth IRAs, giving you some flexibility in terms of the timing of your annual IRA contribution. In 2008, you can contribute a total of $5,000 a year to all the IRAs you own ($4,000 in 2007). In addition, if you're age 50 or older, you can make an extra "catch-up" contribution of $1,000 a year in 2008 and 2007.
Note that you can make your annual IRA contribution in a series of payments rather than in one lump sum. For example, let's say you want to invest the maximum amount in your IRA for 2008. You can either make a lump-sum contribution of $5,000, or you can set up a savings plan whereby you invest a fixed amount each month in your IRA. Because you're allowed to spread your 2008 IRA contribution over a 15½-month period (January 1, 2008, through April 15, 2009), you can invest as little as $322.58 per month and still end up contributing the full $5,000.
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Common Questions
- Can I avoid the 10 percent penalty tax for early withdrawals from a traditional IRA?
- Can I convert my traditional IRA funds into a Roth IRA?
- Can I set up a traditional IRA?
- I need money--can I take funds from my IRA?
- It's January, and I forgot to contribute to my IRA. Is it too late?
- Should I withdraw money from my IRA to pay for my child's college tuition?
- What are my options if I inherit an IRA or employer-sponsored plan?
- What are required minimum distributions and how are they calculated?
- What are the rules for IRA contributions?
- What's a premature IRA distribution, and what happens if I make one?
- Can I roll a retirement plan distribution into an IRA?
