Don’t miss the 2013 IRA deadline and cost yourself saving more for retirement.
In the haste of getting all your tax documents in order to meet with your tax preparer, don’t forget about making your IRA contributions for the 2012 tax year.
If you didn’t know, even though you haven’t opened an IRA account yet, you can still do so and still be eligible to make a contribution for 2012 – this applies both to traditional and Roth IRAs.
Taxpayers will have until Monday, April 15 to make their 2012 IRA contributions. Even if you are just now opening an account you want to contribute toward last year first. Once the deadline passes you cannot contribute for that tax year in the future.
Please note: just because you have until the 15th of April to add to your IRA, does NOT mean you should wait until the 15th of April. Let me give you a quick story to attest to that.
Client Story and IRA Deadline
Two years ago, it was the same routine to where they’re scrambling to get me a check on the last day possible.
Luckily, they did make the deadline.
However, there was a bit of a problem……..
Apparently, the client had forgot to transfer funds into the checking account from which they wrote the check for the IRA contribution and the check bounced. Guess what happens when you write a check for your IRA and it bounces? You don’t get a second chance.
Ultimately, since the check bounced, they were unable to make a contribution for that year. Had they came in much sooner, everything would have been fine.
Funny enough with that same individual, I went to them with
“Since you already have the money available now, why don’t we go ahead and make a contribution for this year so we don’t have to wait until next year and have a possible repeat occurrence?”
Although the client agreed with me, they still said they wanted to wait until later on. Guess what happened the following year?
You guessed it. The same exact thing: last minute contribution.
At least this time, the check cleared and they were able to make the IRA contributions for that year. Moral of the story is, don’t wait until the last minute. Although you have until the 15th of April, get it in there much, much sooner.
SEP IRA and Simple IRA Contribution Deadline
It should be noted that if you are a business owner and have either a SEP IRA or Simple IRA, your contribution deadlines differ. Typically, you have until the tax filing deadline of the business to get the employer contributions invested into the plan. With the Simple IRA, the employees portion that is deducted directly from their paychecks have to be in there within a reasonable time after the last pay period of year end (think January 21st).
Where to Open an IRA?
If you haven’t opened an IRA but want to before the April 15th deadline there is still time. All you need to do is find a solid investment brokerage firm that will become the custodian (holder) of your IRA. Unfortunately there are a lot of brokers to choose from out there and making a selection can be time consuming.
Don’t worry, we’ve done the hard work for you. Check out our in-depth article on the Best Place to Open a Roth IRA. A few quick recommendations: Scottrade (a great broker with inexpensive trades and the ability to visit a brick and mortar location), Betterment (a different kind of IRA that is a lot easier to manage and will give you $25 to open an account), and ShareBuilder (for those that are just starting and need help developing the habit of investing regularly).