Taking advantage of tax-advantaged accounts, such as 401(k) and IRA accounts, can be one of the most effective tactics to get on track to reach your retirement goal. But if you forgot to make an IRA contribution for the 2014 tax year, it’s not too late. You actually have until tax day (April 15th) of this year to make an IRA contribution for 2014.
Like with most issues relating to taxes, the rules relating to IRA contributions aren’t exactly simple. But here are the basics:
- The yearly contribution limit into IRA accounts for anyone under the age of 50 is $5,500. For those 50 and over, the contribution limit is $6,500. Those are the limits for all your IRA accounts combined, so you can’t contribute $5,500 each to two different IRA accounts in the same year.
- For traditional IRA accounts (where your initial contribution is generally tax-deductible but you pay taxes when you withdraw the money in retirement), whether you can get the tax benefits from the IRA depend on whether you (or your spouse) are covered by a retirement plan at work as well as how high your income is.
- For Roth IRA accounts (where your initial contribution isn’t tax-deductible but you don’t pay taxes when you withdraw the money in retirement), whether you can contribute depends on your income. You can make a Roth IRA contribution up to the limit if your tax filing status is “single” and your income is less than $114,000, or if your tax filing status is “married filing jointly” and your income is less than $181,000.
You can find more details on the IRA contribution rules on the IRS website.