Time remains to contribute to an IRA for 2012 [UPDATED]Published 10:03am Monday, March 18, 2013 Updated 12:05pm Monday, March 18, 2013
There’s still time to make a regular IRA contribution for 2012. You have until your tax return due date to contribute up to $5,000 for 2012 ($6,000 if you were age 50 by Dec. 31, 2012). For most taxpayers, the contribution deadline for 2012 is April 15, 2013.
Note: The contribution amounts all increase by $500 for 2013, $5,500 regular and $6,500 for those age 50 and over.
You can contribute to a traditional IRA, a Roth IRA, or both, as long as your total contributions don’t exceed the annual limit. You may also be able to contribute to an IRA for your spouse for 2012, even if your spouse didn’t have any 2012 income.
You can contribute to a traditional IRA for 2012 if you had taxable compensation and you were not age 70 by Dec. 31, 2012. However, if you or your spouse was covered by an employer-sponsored retirement plan in 2012, then your ability to deduct your contributions may be limited or eliminated depending on your filing status and your modified adjusted gross income (MAGI).
You can contribute to a Roth IRA if your MAGI is within certain dollar limits (even if you’re 70? or older).
For 2012, if you file your federal tax return as single or head of household, you can make a full Roth contribution if your income is $110,000 or less. Your maximum contribution is phased out if your income is between $110,000 and $125,000, and you can’t contribute at all if your income is $125,000 or more. Similarly, if you’re married and file a joint federal tax return, you can make a full Roth contribution if your income is $173,000 or less. Your contribution is phased out if your income is between $173,000 and $183,000, and you can’t contribute at all if your income is $183,000 or more.
Even if you can’t make an annual contribution to a Roth IRA because of the income limits, there’s an easy workaround.
If you haven’t yet reached age 70, you can simply make a nondeductible contribution to a traditional IRA, and then immediately convert that traditional IRA to a Roth IRA.
Keep in mind, however, that you’ll need to aggregate all traditional IRAs you own when you calculate if there is taxable portion of your conversion.
Finally, keep in mind that if you make a contribution to a Roth IRA for 2012 — no matter how small — by your tax return due date.
Bonnie Denzel is a financial advisor with Dorn and Co., in Fergus Falls.