The Deadlines for your 2009 and 2010 IRA Contributions
As we roll into tax time, it’s important to know how much you are able to contribute to your IRA’s in both 2009 and 2010 and the deadlines to contribute by. You are able to contribute to your IRA’s for 2009 up to the 2009 tax deadline of April 15, 2010. Additionally, you can contributed to your 2010 IRA’s starting January 1, 2010 (which has a deadline of April 15, 2011).
Why is this important? First, it’s not too late to contribute for 2009, you have a few months. Second, if you wanted to, starting January 1, you could contribute both your 2009 and 2010 contributions at the same time, up through April 15.
2010 IRA Maximum Contribution to Equal 2009 Maximum IRA Contribution
The IRS confirmed the 2010 maximum IRA contribution amounts back in October, but I wanted to bring it back to your attention in light of common confusion around the contribution deadlines that I just highlighted.
What about the IRA Catch-up Contribution Amount?
This only applies for those over the age of 50, but they are able to contribute a combined $6,000 (an additional $1,000) to their IRA’s.
What if I have a Roth & a Traditional IRA?
The contribution limits are the combination of the two, and you can have both, if you’d like. It’s actually a smart strategy, in my opinion, to have both available to you because it allows you to diversify your tax strategy. Traditional IRA’s allow you to get a tax break now, while Roth IRA’s result in a tax break in retirement.
What if I don’t have an IRA yet?
Check out TradeKing. I have both my Traditional and Roth IRA at TradeKing, because the IRA’s have no fees and their trade prices are only $4.95.
What are the IRA Income Limits?
For traditional IRA’s, there is no income limit. However, that’s not true for the Roth (until 2010). For the year 2009, married individuals who file jointly can contribute $5,000 ($6,000 if 50 or older) to a Roth IRA if their modified adjusted gross income (MAGI) is below $166,000. If their MAGI is between $166,000 and $176,000, then they can contribute some amount less than their full limit. If their income exceeds $176,000, they are not eligible to contribute to a Roth IRA for 2009
For single individuals, this Roth IRA phase-out limit is lower: $105,000 to $120,000 for 2009.
However, in 2010, there is, in effect, zero limit on your income in relation to your Roth IRA contributions. So, no matter what your income is, you could actually roll your 2009 traditional IRA over to a Roth IRA without penalty. Your 2010 Roth IRA contribution would not have income limits on it either.
Keep in mind, I’m not a tax professional. If you need help on this stuff – I’d recommend that you’d find one.
- How much do you plan on investing in your 2009 IRA contribution?
- What about your 2010 IRA contribution?
- Have you ever maxed out your IRA contributions in addition to your 401(k)?
- Do you have both a Roth and Traditional IRA? Which do you contribute to more?