Make Your IRA Contribution ASAP!

Mar 22, 2010 by

Tax Day, April 15th, will soon be here. In preparation, it is time to make sure that you have made your 2009 IRA or Roth IRA contribution. The last day you may make a contribution for the 2009 year is April 15th, 2010. After January 1st, 2010, you may also make your contribution for the 2010 year. So, if you have forgotten, you could potentially make a contribution for both years right now.

It is important to make an IRA contribution every year that it is possible. While of course there are always arguments about the virtues of compound interest, the real reason it is important to make IRA contributions every year is that there are both contribution and income limits. If you wait until you are making more money, you may never be able to contribute. Likewise, if you hope to catch up later, your ability to do so will be limited by the contribution cap.

What’s an IRA (Individual Retirement Account)? See my entry about this topic.

2009 and 2010 Contribution Limits

Every year, the contribution and income limits change. For 2009 and 2010, people under the age of 50 during the entire respective year are limited to $5,000, while people who were 50 or older during at least part of the respective year may contribute $6,000.

Traditional IRA 2009 and 2010 Income Limits

In 2009, a full contribution could be made by married people filing jointly with an Adjusted Gross Income of less than $89,000 and single heads of households with Adjusted Gross Incomes of less than $55,000. Partial contributions could be made by married people filing jointly with an Adjusted Gross Income of less than $109,000 and single heads of households with Adjusted Gross Incomes of less than $66,000. Married people filing separately may not contribute if their income is over $10,000.

In 2010, a full contribution could be made by married people filing jointly with an Adjusted Gross Income of less than $89,000 and single heads of households with Adjusted Gross Incomes of less than $56,000. Partial contributions could be made by married people filing jointly with an Adjusted Gross Income of less than $109,000 and single heads of households with Adjusted Gross Incomes of less than $66,000. Married people filing separately may not contribute if their income is over $10,000.

Roth IRA 2009 and 2010 Income Limits

In 2009, a full contribution could be made by married people filing jointly with an Adjusted Gross Income of less than $166,000 and single heads of households with Adjusted Gross Incomes of less than $105,000. Partial contributions could be made by married people filing jointly with an Adjusted Gross Income of less than $176,000 and single heads of households with Adjusted Gross Incomes of less than $120,000. Married people filing separately may not contribute if their income is over $10,000.

In 2010, a full contribution could be made by married people filing jointly with an Adjusted Gross Income of less than $167,000 and single heads of households with Adjusted Gross Incomes of less than $105,000. Partial contributions could be made by married people filing jointly with an Adjusted Gross Income of less than $177,000 and single heads of households with Adjusted Gross Incomes of less than $120,000. Married people filing separately may not contribute if their income is over $10,000.

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