Did You Know That IRA Contributions Can Lower Your Tax Bill? If you haven’t already funded your retirement account for 2013, April 15, 2014 is the deadline for contributions to a traditional IRA and to a Roth IRA. However, if you have a Keogh or SEP and you get a filing extension to October 15, 2014, you can wait until then to put 2013 contributions into those accounts. To qualify for the full annual IRA deduction in 2013, you must either: 1) not be eligible to participate in a company retirement plan [401K plan], or 2) if you are eligible, you must have adjusted gross income of $59,000 or less for singles, or $95,000 or less for married couples filing jointly. If you are not eligible for a company plan but your spouse is, your traditional IRA contribution is fully-deductible as long as your combined gross income does not exceed $178,000. For 2013, the maximum IRA contribution you can make is $5,500 ($6,500 if you are age 50 or older by the end of the year). For self-employed persons, the maximum annual addition to SEPs and Keoghs for 2013 is $51,000. Although choosing to contribute to a Roth IRA instead of a traditional IRA will not cut your 2013 tax bill—Roth contributions are not deductible—it could be the better choice because all withdrawals from a Roth can be tax-free in retirement. Withdrawals from a traditional IRA are fully taxable in retirement.
Posted on: Wed, 06 Nov 2013 13:23:06 +0000
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