2009 IRA contribution

If you haven't contributed funds to an Individual Retirement Arrangement for tax year 2009, or if you've put in less than the maximum allowed, you still have time to do so. You can contribute to either a traditional or Roth IRA until the April due date for filing your tax return for 2009, not including extensions.

Be sure to tell the IRA trustee that the contribution is for 2009. Otherwise, the trustee may report the contribution as being for 2009 when they get your funds.

Generally, you can contribute up to $5,000 of your earnings for 2009 or up to $6,000 if you are age 50 or older in 2009. You can fund a traditional IRA, a Roth IRA (if you qualify), or both, but your total contributions cannot be more than these amounts.

Note: IRA Contributions limits remain the same in 2010 at $5,000 or $6,000 if age 50 or older.

Traditional IRA: You may be able to take a tax deduction for the contributions to a traditional IRA, depending on your income and whether you or your spouse, if filing jointly, are covered by an employer's pension plan

Roth IRA: You cannot deduct Roth IRA contributions, but the earnings on a Roth IRA may be tax-free if you meet the conditions for a qualified distribution

You can file your tax return claiming a traditional IRA contribution before the contribution is actually made. However, the contribution must be made by the due date of your return, not including extensions. If you report a contribution to a traditional IRA on your return, but fail to contribute by the deadline, you must file an amended tax return by using Form 1040X, Amended U.S. Individual Income Tax Return. You must add the amount you deducted to your income on the amended return and pay the additional tax accordingly.

Maximizing your retirement savings is a critical goal for an individual's financial plan. Review of your financial retirement plan should be completed annually allowing for maximum savings. Each year, the IRS announces the cost of living adjustments and limitation for retirement savings plans. In 2010, however, the contribution limits for defined benefit and defined contribution plans did not change as the Consumer Price Index did not meet the regulatory thresholds.