January Key Focus
MAKE A FULL IRA CONTRIBUTION IN 2011
Happy New Year!! This is the first business week of 2011. So
what does that mean for you? Probably a whole lot of
catching up on paperwork and other tasks that were put on
hold during the holiday season. But it also signals the start of
your 2011 financial plan, which should at least consider
making an IRA (or Roth IRA) contribution if you are
eligible. And if an IRA contribution is a part of your plan,
you should be making that contribution as soon as possible.
Sure, you have all the way until April 15, 2012 to make your
2011 IRA contribution, but should you wait that long?
If you can afford to make your full IRA contribution at the
beginning of the year every year, you should try and do so.
Think about it. If you made a contribution on January 2nd
each year as opposed to April 15th of the following year,
isn’t that like getting an extra year of tax deferred growth on
every contribution you ever make? And if you are making a
Roth IRA contribution, that growth could be income tax free
as well. In any one year it might not make a huge difference,
but added up over time, making your contributions early in
the year should leave you with substantially higher retirement
For 2011, the maximum IRA contribution is the lesser of
your earned income or $5,000. If you are 50 or older by the
end of the year, you can contribute an extra $1,000 for a total
of $6,000. Traditional IRA contributions may not be made in
the year you turn 70 ½ or later, but Roth IRA
contributions may be made until any age (as long as you have
You might be thinking to yourself, “But wait, it’s only
January 3rd. I haven’t earned enough income in 2011 yet to
make my full IRA contribution.” Well, there’s good news for
you. You don’t need to have the earned income by the time
you make your IRA contribution as long as you have it by the
end of the year. So if you will have $5,000 ($6,000 if you are
50 or over by the end of the year) of earned income by the
end of 2011, you can still make your full contribution now.
So don’t wait! Go make those IRA and Roth IRA
contributions and get your 2011 financial plan jumpstarted
the right way!