From Bill's Corner...
It's IRA time. There is so much more to think about
than just rates of returns when choosing IRA (individual retirement arrangement)
options. Traditional IRAs and Roth
IRAs are powerful vehicles for building long-term tax deferred wealth.
Contributions can be made any time during the calendar year
to your traditional or Roth IRA contributions. However, if you contribute
between January 1 and April 15, you should tell the custodian, bank or
brokerage firm which year (the current year or the previous year) the
contribution is for. You can still make a contribution for the prior calendar
year if make your deposit by the tax filing date of April 15th. Filing
a tax extension does not allow for an extension for traditional IRA or Roth IRA
contributions.The IRS gives no extensions or exceptions to this rule, so
don't forget!
The maximum amount that can be contributed to all IRAs for the
2009 tax year is $5,000. If you
are 50 or older, you can make an additional "catch-up" contribution of
$1,000. You cannot contribute
$5,000 to a traditional IRA and $5,000 to a Roth. The maximum is a combined $5,000. Keep in mind, your
compensation may determine eligibility to fund the Roth. The traditional IRA
contribution may be deducted on your taxes; the Roth IRA contribution is not
deductible.
In order to make a contribution, you need earned income
which includes: wages, self-employment income or commissions; even alimony
counts. However, interest, capital
gains, dividends and unemployment payments do not count as earned income.
Earning a high salary does not limit traditional IRA
contributions. However, your tax
deductibility may be limited. In other words, anyone may make a contribution,
but high-income earners may not be unable to deduct it. Regarding a Roth IRA,
the IRS may discriminate against a high salary. In fact, high incomes may disallow a Roth IRA contribution
altogether. For 2009, the
phase-out range for a married couple filing jointly begins at $166,000
($105,000 for single taxpayers).
These are just a few of the rules regarding IRA
contributions. The government
changes the rules all the time, and it is you're responsibility to know the
rules. Contact me if you have questions or need help.
Last month I shared a picture of a winter sunrise over Duxbury Bay. I heard from so many of you how much you enjoyed the photo. Thanks!
