Tips for Maximizing Contributions to Your Retirement and Educational Savings Accounts

Do you regret not contributing more to your Traditional IRA or ROTH IRA in 2009? Perhaps you wanted to contribute more to your child’s Educational Savings Account (ESA) but as the year drew to a close, you just didn’t have the money.

If you’re suffering from one of the above afflictions, don’t despair! You can still make contributions for the 2009 tax year to qualified retirement or educational accounts prior to April 15th, 2010 or the date you file your 2009 tax return (whichever comes first).

If you never reached the maximum contribution limits on a qualified account, you should consider designating any contributions you make this year (before you file your taxes), as contributions for the “2009” tax year.

Example: If you only put $4000 in your IRA during the 2009 calendar year, you may be able to contribute an additional $1000 (current maximum allowed is $5000 per year under age 50) for 2009, plus another $5000 for the 2010 calendar year. In this situation you have effectively contributed $6000 in one calendar year.

Even better, if you contributed nothing to your IRA in 2009, you may still be able to contribute up to $5000 for last year plus $5000 for this year. If you were fortunate enough to receive a year end bonus from your employer, you would be well served to fully fund your IRA from last year before allocating any 2010 contributions.

See also 2010 Retirement Account Contribution Limits

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