Last Minute IRA Contributions

The tax deadline is a powerful incentive for opening new IRA accounts

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Retirement savers haven until April 15 to make 2009 IRA contributions. The maximum 2009 deposit is $5,000 for workers under age 50 and $6,000 for those age 60 and over.

[See Who Should Convert an IRA to a Roth IRA.]

Almost half (45 percent) of all annual IRA contributions are made in the 28 days leading up to the tax deadline, according to Fidelity IRA data. And a quarter of all new IRA accounts are opened in the month of April. The average amount contributed to a Fidelity IRA was about $3,200 in 2009, up approximately $200 from 2008.

When you contribute to a traditional IRA between January 1 and April 15, you should tell the financial institution which year the contribution should be applied to for tax purposes. If you do not tell the IRA sponsor which tax year the deposit is for, the sponsor may assume and report to the IRS that the contribution is for the current year and you will not get a deduction on your 2009 taxes.

[See 7 Penalty-Free Ways to Tap Your IRA Before Retirement.]

Investors can file a tax return claiming a traditional IRA deposit before the contribution is actually made. But generally the deposit must meet the April 15 deadline to count on last year’s tax return. IRA contributions for 2010 must be made by April 15, 2011.