The 2011 IRA Contribution Window is Still Open

The 2011 IRA Contribution Window is still open

We all know IRAs are an important piece of the retirement puzzle.  That is why you should not miss an opportunity to contribute to yours and maximize your chance to reach your goals!

The IRA Contribution window for a given year starts on the first of January and closes on tax day of the following year.  For 2011 that meansIRA 2011 Contribution that January 1st, 2011 was the beginning and April 17th, 2012 is the close.  That means you still have time to make your 2011 contributions!  For all of you that file for tax extensions those do not apply to IRAs so be sure to make your 2011 contributions no later than April 17th.

A quick tip on prior year contributions so the money is not allocated into 2012 is to make your custodian aware of your intentions.  If you do not specify then the custodian will assume it is for 2012, because the contribution was made in 2012.  If you are unsure of the process be sure to contact your custodian for full details. For more information feel free to contact a personal banker!

The beginning of 2012 is fresh in our minds, but we have not yet forgotten 2011.  Do you have an IRA?  If so, are your contributions where you want them to be?  You can still add money for 2011 up until the tax deadline!

For those of you who have not yet setup an IRA read on for some basic knowledge to help you get going with an IRA to get 2012 off to a great start!

Which IRA Type is best for you?

  Traditional IRA CD Roth IRA CD   SEP IRA CD
Contributions  Tax deductible depending on income level  Contributions are not tax deductible Tax deductible depending on income level
2011 Contribution Limits  Under 50 years old – $5,000
Over 50 years old – $6,000
 Under 50 years old – $5,000
Over 50 years old – $6,000
 25% of employees compensation or $49,000 whichever is less
Earnings  Taxes are deferred until funds are withdrawn  Earnings may be Tax exempt  Taxes are deferred until funds are withdrawn
Withdrawals  Without IRS penalty at age 59 ½; before 59 ½ there is a 10% IRS penalty  Without IRS penalty at age 59 ½; before 59 ½ there is a 10% IRS penalty  same as traditional
Mandatory
Distribution Age
 70 1/2  None  70 1/2
FDIC Insurance  Up to $250,000  Up to $250,000  Up to $250,000

Frequently Asked Questions

Can I contribute $4,000 to my Traditional IRA and an additional $4,000 to my Roth IRA?

No.  The contribution limit is a ‘per individual’ limit.  Therefore, your aggregate contributions cannot exceed $5,000, or $6,000 if you reach age 50 by year-end.  (These are limits for 2011 and 2012)

Can I split my IRA contribution between my two Traditional IRAs?

Yes.  Providing your aggregate contribution does not exceed $5,000, or $6,000 if you are at least age 50 by year-end.

I am 39 years old, and eligible to make a contribution of up to $ 2,000 to a Roth IRA.  Can I contribute the difference to a Traditional IRA?

Yes.  You may contribute the difference of $3,000 ($5,000- $2,000) to your Traditional IRA.  In fact, many individuals split their IRA contributions between both types of IRAs, to receive the benefits of both types of IRAs, i.e. the deductibility for the Traditional IRA contribution- if eligible, and the potential tax-free growth of the Roth IRA.  (This is the limit for 2011 and 2012)

Can I establish a joint-IRA for my wife and myself?

No.  IRAs cannot be maintained as joint accounts.  Each individual must maintain his or her IRAs in separate accounts

I began receiving required minimum distributions from my company’s retirement plan.  Can l roll over these amounts into my IRA?

No.  Rollovers to IRAs of Required Minimum Distributions (RMDs) from a retirement plan are not permitted.

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