IRA and Roth IRA Contribution Q&A

Wednesday, March 28, 2012

By Jeffery Levine, IRA Technical Expert  
Follow Me on Twitter: @IRAGuru4EdSlott

With Tax Day right around the corner, it is the perfect time to answer the most popular questions involving IRA and Roth IRA contributions. Below are five of the more popular questions, but feel free to email your own question to [email protected]. It may be answered in an upcoming Slott Report Mailbag.

Question: What’s the last day I can make an IRA or Roth contribution for 2011?

Answer: The last day to make an IRA or contribution for 2011 is April 17, 2012. Normally, the last day to make an IRA or Roth IRA contribution is April 15th, but this year, thanks to the 15th being a Sunday and the 16th being a holiday (Emancipation Day) in Washington D.C., everyone gets a bonus two-day extension. You must notify the IRA custodian of the prior year contribution.

Question: Does my contribution have to be in my IRA/Roth IRA by April 17th in order to qualify for a 2011 contribution?

Answer: No. If you are sending a check to your financial institution, the check must be postmarked by the 17th, but can be received and processed by the financial institution afterwards. However, check with your IRA custodian to see what their procedures are.

Question: How much can I contribute to an IRA or Roth IRA for 2011?

Answer: The IRA/Roth IRA contribution limit for 2011 was $5,000. If you were 50 or older by the end of the 2011 you can contribute an extra $1,000 for a total of $6,000.

Question: Can I contribute $5,000 ($6,000 if 50 or older) to an IRA and another $5,000 to a Roth IRA?

Answer: No. The $5,000 ($6,000 if 50 or older) IRA contribution limit is a cumulative limit that applies to combined IRA and Roth IRA contributions. Contributions in excess of this amount are subject to a 6% penalty for each year they remain in the account and any excess must be removed from the Roth IRA first, then from the traditional IRA.

Question: Can I make an IRA/Roth IRA contribution for 2011 and 2012 at the same time?

Answer: Yes. If you haven’t made your 2011 IRA/Roth IRA contribution yet, you can “double up” and contribute $10,000 ($12,000 if 50 or older in both years) to your IRA/Roth IRA now, covering your contribution for both years. You must notify the IRA custodian of the contribution for the prior year.
 

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