Spring has finally sprung. Well, at least by the calendar. And that means, an important deadline is fast approaching – Tuesday, April 15, 2014. That’s tax day, or for those looking to save for their retirement, the deadline for making your Individual Retirement Account (IRA) contribution for the 2013 tax year. Whether you have an existing traditional IRA or Roth IRA or haven’t yet opened one, you won’t want to miss this important opportunity to save for the future. Of course, you can contribute to your 2013 IRA even sooner if you file your taxes before April 15.
According to irs.gov, for tax year 2013 you can contribute up to $5,500 a year or your taxable compensation for the year, whichever is less. If you were age 50 or older by December 31, 2013, you could contribute the lesser of $6,500 or your taxable compensation.
One of the benefits of having a traditional IRA is that if you meet certain requirements, your contributions could be tax deductible. That means you may be able to lower your tax burden for 2013 and put aside money for the future. Keep in mind, however, that with a traditional IRA, your taxes are deferred until you reach retirement, whereas a Roth IRA offers tax-free withdrawals in retirement, but without the benefit of tax-deductible contributions. Depending on your situation, you may be able to contribute to both a traditional and Roth IRA.
Don’t have an IRA? There’s still time to open one.
If you don’t currently have an IRA, you can still open one and make your 2013 tax year contributions provided you do so before the April 15, 2014 deadline.
To learn more about contribution limits and restrictions for opening IRAs, talk to your tax advisor or visit irs.gov.