Did you know that you have until April 17, 2012 to set up a new IRA or add money to an existing IRA and have it count for 2011? Although you must make all elective deferrals to employer-sponsored 401(k) plans by December 31, 2011, the April deadline for new IRAs or existing IRAs is good news for those taxpayers who need some extra time to add to their 2011 contributions. You can normally contribute up to $5,000 to a Roth or traditional IRA. If you’re 50 or over, the amount increases to $6,000.
It is normally best to try and make the maximum annual contribution to an IRA because of the tax advantages of investing through an IRA. Contributing to an IRA has a use-it-or-lose-it nature because you can’t make up for years that you did not contribute the maximum amount. For instance, if you contributed only $2,000 in 2010, you cannot make up the difference in 2011. But you can start making the maximum contribution THIS year!
For more information, speak with a tax professional.