What comes to mind when you think of April? Most of us think of taxes, but we should also associate it with Roth IRAs. April is the month with deadlines for contributions and mandatory withdrawals.
The deadline for your 2010 Roth IRA contribution is April 18, 2011. This year, April 15 falls on a holiday in the District of Columbia (Emancipation Day). You get a little extra time to make your 2010 contribution if you haven't done so.
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For tax years 2010 and 2011, you can contribute up to $5,000 to your Roth IRA. If you have multiple Roth IRAs, you can contribute up to a total of $5,000 across the various accounts.
If you turned 50 in 2010, your Roth IRA contribution limit for 2010 is $6,000. If you will celebrate your 50th birthday during 2011, your 2011 contribution limit is $6,000. You get 15½ months to make your Roth IRA contribution for a given tax year. You can make your 2011 Roth IRA contribution at any time until April 15, 2012.
Have you already made your Roth IRA contributions for 2010 and/or 2011? Good for you. Hopefully, you contribute the maximum annually and make your contribution at the start of the year. The earlier that money is invested, the longer it can work for you.
Be sure to indicate the year of the Roth IRA contribution on the check. This seems pretty basic, yet is too often overlooked. Write "2010 Roth IRA contribution" or "2011 Roth IRA contribution" or something equally simple and clear on your check. If you're making your contribution electronically, be sure this gets communicated. If you don't tell your custodian what year the contribution is for, it will be accepted as a contribution for the current year per IRS guidelines.
Keep these deadlines in mind and click on the link below to watch a short video from our Investing Basics course. And remember, April will be here before you know it.
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Paul Nichols is the President of Financial Abundance, Inc., a Registered Investment Advisor based in Central Pennsylvania with offices in State College and Lewisburg in Centre County. Please don't hesitate to call our office at 814-867-5745 or send Paul an email at firstname.lastname@example.org with any questions that you may have.
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