You have until the original due date for filing your federal 1040 to make a contribution to your individual retirement account (IRA). This year, due to Patriotâ€™s Day, the IRS has moved the due date for filing to April 18, 2017 (normally it is April 15). Depending on the type of IRA, you may receive a federal tax deduction for the contribution.
Tax-advantaged retirement plans like IRAs allow your money to grow tax-deferred â€” or, in the case of Roth accounts, potentially tax-free. However, the annual contributions to the IRAs are limited, and any unused limit canâ€™t be carried forward to make larger contributions in future years. The 2016 limit for total contributions to all IRAs generally is $5,500 ($6,500 if you were age 50 or older on December 31, 2016). If you make smaller contributions before the deadline, you will not be able to make additional contributions after the deadline to reach the annual limit.
This means that, once the contribution deadline has passed, the tax-advantaged savings opportunity is lost forever. So it may be a good idea to use up as much of your annual limit as possible.
Types of IRAs
If you havenâ€™t already maxed out your 2016 limit, consider making one of these types of contributions by April 18:
There are also state tax consequences that you should consider before making a contribution. Want to know which option best fits your situation? You can reach me at HZemel@BerdonLLP.com or contact your Berdon advisor.
Hal Zemel, a Tax Partner at Berdon LLP, New York Accountants, has nearly 25 years in public accounting and advises businesses in the manufacturing, distribution, advertising, and real estate sectors.