Don’t Forget To Fund Your IRA By April 15th

Here’s an important reminder: April 15 is the deadline for funding your IRA for 2012. (If you have a SEP IRA, you have until October 15 if you filed an extension on your personal tax return.)

You may contribute up to $5,000 to a traditional IRA or a Roth IRA for the 2012 tax year. If you were 50 or older in 2012, your contribution limit is $6,000. (If you own multiple IRAs, your total IRA contributions for 2012 cannot exceed $5,000/$6,000.)

Please note that income phase-outs may limit Roth IRA contributions. Single filers and heads of household can make a full Roth IRA contribution for 2012 if their MAGI is less than $110,000; the phase-out range is from $110,000-125,000. For joint filers, the MAGI phase-out occurs at $173,000-183,000; couples with MAGI of less than $173,000 can make a full contribution. (See IRS Publication 590 for details.)

If you have a SEP IRA, you can contribute up to $50,000 or 25% of your compensation for 2012, whichever is less. The 2012 compensation cap is $250,000. If you are a sole proprietor, your maximum 2012 SEP IRA contribution is the lesser of $50,000 or 20% of your net earnings from self-employment.

Again, April 15 is the contribution deadline for tax year 2012. (That is a postmark deadline.) Be sure to write the tax year in the memo field of your check to remind the financial institution that your contribution is for TY 2012. You can’t file an extension for IRA contributions; those made after the deadline will apply to the following tax year.

While you’re at it, you might also want to fund your IRA for 2013 as well. For 2013, the $5,000 limit has been raised to $5,500.