If you haven’t made a contribution to your IRA account for 2019, you still can!
The IRS tax day was moved this year from April 15th to July 15, 2020. You have until July 15th to file your 2019 income taxes.
Another great benefit is that you have until July 15th to make contributions to your IRA accounts for 2019. IRA stands for “Individual Retirement Account”.
Note: There are tax implications between contributing to a Traditional IRA versus a Roth IRA. There are also contribution limits and tax benefits based on household income. Therefore, speak with a tax advisor or conduct your own research. You may be eligible to contribute to both.
You can contribute to an IRA if you have earned income for the year. The Traditional IRA allows you to get tax benefits immediately. Basically, you are not paying taxes to the IRS now for the money. You will pay taxes when you withdraw in your retirement years. The thought is that you will be in a lower tax bracket when you retire since you will not be earning a full-time income.
For the Roth IRA, your money has already been taxed by the IRS before you contribute. You are not receiving any tax benefits now. Contributions to this account have already been taxed. Therefore, you will not pay any taxes on this account when you take money out during your retirement years.
If you are younger than 50, you can contribute up to $6,000. If you have 50 and older, you can contribute up to $7,000 for 2019. The contribution limits may increase for 2020 so check that out for next year.
If you have already contributed your limits for 2019, you can always start on your contribution amounts for 2020.
If you do not have that much money, contribute what you can. Every little bit adds up over time. I am a part-time employee. As an adjunct professor, I only get paid per class as contracted. Therefore, I made my own personal rule to contribute at least 10% of my gross pay to my IRA account. I won’t hit the full $6,000 contribution limit myself this year.
Also, don’t wait until July 15th to make the contributions. Be sure to start at least 3-4 days early so that the money is deposited into your IRA brokerage account and also clears your bank. That way, everyone is clear that money is directed for 2019 contributions.
Once again, be sure to consult with a tax advisor to maximize your contributions according to your individual financial situation.
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