Ask the Experts: Is it too late to make an IRA contribution for 2006?

Ask the Experts: Is it too late to make an IRA contribution for 2006?

You can make an IRA contribution for 2006 at any time up until the due date for filing your federal income tax return for the year. For most people, this will be April 16, 2007. This deadline isn’t affected by any extension you may receive to file your return. So, if you obtain an automatic six-month extension, you’ll have additional time to file your tax return, but you won’t have any additional time to make an IRA contribution.

If you do make a contribution in 2007 for 2006, make sure you tell your IRA trustee (or custodian) that the contribution is being made for the prior year. Otherwise, the trustee may assume that the contribution is for 2007 (the year in which it’s received) and report it as such.

Also, before you make a contribution, be sure you’re eligible. Remember that if you’re covered by an employer retirement plan, you may not be able to deduct your contributions to a traditional IRA unless your income is within certain limits. And you can’t contribute to a traditional IRA at all after you reach age 70½. You can contribute to a Roth IRA at any age, but again only if your income falls within certain limits.

If you are eligible to make a deductible contribution to a traditional IRA, keep in mind that you can file your 2006 tax return claiming the deduction before you actually make your contribution. Just be sure you meet the April 16 contribution deadline.

You can contribute up to $4,000 to an IRA (traditional, Roth, or combination of the two) for 2006 ($5,000 if you were age 50 or older by the end of 2006). You may also be able to contribute up to $4,000 to an IRA for 2006 in your spouse’s name ($5,000 if your spouse is age 50 or older), even if he or she had little or no taxable compensation for the year.

If you haven’t yet made your IRA contribution for 2006, why not do it now?