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Contribution Deadline for IRAs
Posted By Jim On 03/22/2007 @ 9:25 am In Retirement,Taxes | 10 Comments
The rule for contributing to an IRA, whether it’s a Traditional, Roth, or whatever else type of IRA you may have, has always been that you must contribute the funds before the filing deadline for taxes that year. If you want to contribute to your IRA for 2006, you must do so before the April 17th deadline (normally 15th, but this year because of holidays it’ll be the 17th) or when you actually file your return. So what’s noteworthy here? For the longest time I thought that it didn’t matter when you filed your return, you just needed to contribute before the deadline, but if you believe that, as I did, you’d be wrong – something TurboTax clued me in on. If you file your tax return on Feb 20th, you must contribute before Feb 20th, not April 17th.
Why? I’m not entirely sure why other than to prevent yourself from messing things up. With a Traditional IRA, you get to deduct the contribution from your income because you’re deferring that until disbursement, so if you were to note on your return that you are contributing $4,000 and don’t, that could result in a sticky situation. You’d have to amend your return and deal with that whole process. I don’t see a similar problem with a Roth IRA but the rules still apply.
Whatever the reason, just make sure you make the contribution before your actually file and try not to wait until the deadline (and make sure to contribute to or open up a Roth IRA !) – you never know what could happen.
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