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Fund Last Year’s IRA before April 15

Didn’t fully-fund your IRA or Roth IRA last year? You can still get it in before April 15th. When contributing, make sure that you specify you want this to count for your 2008 IRA, not you 2009 one. If you’re concerned whether you’ll get it in on time, talk to someone at your investment company about your concerns and see what they can do.

Why would I want my IRA contribution to count for last year?

1. You can contribute more tax-free this year.

IRAs have annual contribution limits, for 2008 they were $5000 for those under 50 and $6000 for those 50 or older (or 100% of your income, if it’s less than the limit). If you didn’t hit your limit in 2008, contributing more toward it now means that you’ll still be able to fully fund your IRA (as possible) in 2009. For example, if you only put in $2000 in 2008 and you’ve got another $1000 to contribute now, then you’d be able to put away your 2009 max plus that $1000.

Obviously the money won’t have the same gains/losses as if you’d actually put it in the account next year, but having more saved overall for retirement is always a plus.

2. You can contributions to a standard IRA as a discount on your taxes.

Besides being able to save more overall, you’ll also be able to take a tax deduction for any money contributed to a standard IRA. Roth IRAs are funded with post-tax money, so they don’t provide any deduction.

If you’ve already filed your taxes, you won’t get the tax break, but you’ll still get the first advantage, being able to contribute more in 2009.

What if I didn’t have an IRA last year?

You can still open one before April 15th and have it apply for last year. Again, talk to your broker/investment adviser to make sure that the money will be deposited before the 15th or make the appropriate online selection of applicable.


Brian April 6, 2009 at 12:34 pm

When I filed my taxes I had to report my contributions to my Roth. I’ve since found more money which could be applied to last year, does that mean I would have to amend my tax return?

mrsmicah April 6, 2009 at 12:51 pm

Yes, Brian, you would have to file an amended tax return.

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