It’s Not Too Late to Contribute to Your 2012 IRA

Written by: Christy Rakoczy

An IRA is an individual retirement account that serves as an important method of saving money for retirement. Whether you have a 401(k) at work or not, you should be contributing to an IRA in order to maximize the amount of money you save for your future. If you haven’t already contributed for 2012, now is the time.

You Can Still Contribute to Your 2012 IRA

Although 2012 ended on December 31, the IRS has different rules for making contributions to your IRA. According to the IRS rules, you can make contributions to your 2012 IRA through April 15, 2013. In other words, you can make contributions right up to the deadline for filing your taxes.

The ability to make contributions up through April 15 is a big benefit for most people. When you do your tax planning, you may not know exactly what you are going to owe until you get close to the end of the year and until you have added up all of your income from all of your sources. As such, you may not know whether you will be under the IRS income limits for contributing to the IRA until after January 1 when your taxes have been done. The fact that you can contribute to your IRA after the 1st means that you don’t lose out.

In addition, once your taxes have been calculated, it is easy to see how an IRA contribution will reduce them. This can give you more incentive to contribute for 2012 as you work with your tax planner to figure out your annual tax liability.

Why You Should Contribute If You Haven’t Already

If you haven’t already contributed to your 2012 IRA, you should definitely do so before you file your taxes for 2013. Each year, you are permitted to contribute up to $5,000 to your IRA or up to $6,000 if you are 50 or over. The amount you can contribute does, however, start to decline once you reach $58,001 (single) or $92,001 (married filing jointly).

Regardless of whether you get the full $5,000/$6,000 contribution or some reduced amount based on your income, you cannot go back and make up a year. In other words, if you do not invest your $5,000 in 2012, you cannot simply go back and invest $10,000 in 2013 to make up for the missed year. Each year you do not invest, therefore, you lose the opportunity to save tax free money for retirement.

Don’t lose that opportunity- make a commitment now to invest in your 2012 IRA since it is not too late.


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It’s Not Too Late to Contribute to Your 2012 IRA

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