As the annual tax-filing deadline nears, folks tend to pay extra attention to their individual retirement accounts.
Part of the reason is that contributing to an IRA is the only thing you can do now that still applies to the tax year that ended on Dec. 31.
If you haven't maxed out your IRA contribution for 2010 — that's $5,000 for an IRA, both traditional and Roth, or $6,000 (again for both types of retirement accounts) if you're age 50 or older — you can put money into the account as late as April 18 this filing season.
Traditional IRA owners get the added advantage of a potential tax deduction for their contribution.
Roth IRA owners, while unable to deduct their contributions, still might want to max out for the 2010 tax year before contributing for 2011. Taking full contribution advantage every tax year helps build your nest egg more quickly.
Things to consider when contributing to a traditional IRA or a Roth IRA were tax tips posted earlier this week.
Today's Tax Tip comes from the opposite direction. It looks at when you need to tap an IRA early, specifically how you can take some money out without paying the early distribution penalty.
If you missed any of this week's tax tips or just want to review previous pieces of filing season advice, check out the collection of March tax tips. At the end of that list, you'll find links to the January and February tips.
And on Friday, April 1, a new tax tips list will start, with a tip a day posted through the April 18 filing due date.
Related posts:
- 2010-2011 retirement plan contribution rules, limits
- Contribute to your retirement accounts
- Roth IRAs and your retirement income
- Handy retirement plan rollover chart
- Save on taxes with a self-employed retirement account
- Get ready to retire
- Getting your rocking chairs on the same porch
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