By Sarah Brenner, JD
IRA Analyst

It’s that time of year again. Tax season is upon us. This is now the time when many individuals consider funding their IRAs. Contributing to an IRA may seem pretty straight forward and in many ways it is! But there can be twists. Here are five IRA contribution rules that may surprise you.

1. File now and fund later: Frequently, during tax season we are asked if an IRA contribution must be made before the tax return is filed. The answer is no. This is not required. You can claim a deduction for your IRA contribution now when you file your taxes and fund it later. Some people even fund their IRA contribution with their tax refund if the timing is right. Just don’t wait too long. If you claim the contribution, be sure you get it done.

2. Tax credits are available: Many people are unaware of the Saver’s Credit. The is a tax credit that is available to lower income workers who make IRA contributions. It is a double tax break because it is available in addition to any deduction that you may have already been received for your IRA contribution. The maximum contribution amount eligible for the credit is $2,000. Since the maximum credit rate is 50%, you can potentially reduce tax liability by up to $1,000.

3. Spousal contributions can help stay-at-home spouses: Being a stay-at-home spouse does not completely count you out when it comes to IRA contributions. If your spouse has taxable compensation, you can make a spousal contribution to your IRA based on your spouse’s taxable compensation. You can build your retirement savings as a stay-at-home spouse.

4. No age limits for Roth IRA contributions: Think you are too old to contribute to an IRA? Not necessarily. While contributions are not permitted to a traditional IRA once you reach the year you attain age 70 1/2, a Roth IRA is a different story. There are no age limits for Roth IRA contributions. You can be any age and make contributions. This could be helpful for retirees who work part-time and do not need the income. Why not make a Roth contribution now for future retirement needs?

5. No extensions for IRA contributions: You may be able to get more time to file your taxes but that will not help you with your IRA contribution. The deadline for making your 2018 traditional or Roth IRA contribution is April 15, 2019. This is true even if you have an extension of time to file your taxes.