Time is Running Out To Fund Your IRA …..

Don’t Forget ….

You have only until Tuesday, April 17 to fund your Traditional IRA or Roth IRA account for the 2011 tax year.  This is a “use it or lose it” opportunity to put money where the IRS won’t tax it for many, many years, or will never tax it, in the case of Roth IRA contributors. 
 
But, you need to act now to take advantage of this opportunity.

Contribution limits for 2011 are $5,000 if under age 50, or $6,000 for those 50 or older in 2011. IRA rules can be complex, so for help in funding your account, or to review eligibility guidelines, speak with your tax preparer or call or email our office as soon as possible.

Why Contribute to Your IRA?

  • Almost everyone who has earned income can contribute. You can contribute to an IRA  regardless of whether you are covered by and participate in a retirement plan at work. For example, even if you contribute to your 401(k) plan at work, you can also fund your IRA. Even non-working spouses can contribute.
  • There are three types of contributions – deductible traditional IRA contributions, non-deductible traditional IRA contributions, and Roth IRA contributions. The type of contribution you are eligible to make depends on your income and other factors. For guidance, speak to your tax preparer or call or email our office.
  •  If you are eligible to deduct your traditional IRA contribution, your tax savings can reach more than one-third of the amount of your contribution. That means the government may be funding over $2,000 of your $6,000 IRA contribution.
  • There is still enormous value to making a non-deductible traditional IRA contribution. You’ll defer taxes on earnings for many years, saving you money and helping you take advantage of long-term compounding. (Your after-tax contributions will not be taxed again at withdrawal).
  • Put psychology to work for you; most people who fund their IRAs consider the savings “out-of-bounds” and resist the temptation to spend the money, unlike cash in your bank account which is considered fair game.
  • And of course, your Roth IRA contributions and earnings will grow forever free of tax, giving you an accessible, tax-free pool of money to draw on in retirement and leave for your heirs.
  • By funding your IRA each year, you get closer to turning your long-term financial dreams into reality. Plus, annual contributions let you take advantage of dollar-cost averaging and help even out market variability.

Are you saving enough each year?   If not, funding an IRA is a great way to play catch-up. Plan on saving 15% or more of your gross income each year to stay ahead of the curve.

About Mari Adam

Mari Adam, Certified Financial Planner™ and President of Adam Financial Associates Inc, has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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