I know it may seem like a ways out, but the deadline for 2010’s Roth IRA contribution will be here before you know it. This is just a friendly reminded that April 15, 2011 will be the last day for contributions, and for most of us the contribution will be $5,000. You may have thought since we’ve entered the new year that we’re on a new investment schedule with Roth IRA’s, but that’s simply not true.
IRA deadlines, contribution and income limits, etc are set by calendar years, but the actual Roth IRA deadline is oriented around the tax year, not calendar year.
The Roth IRA Deadline Is April 15
Who knows their reasoning, but the IRS has decided to make the cut off for your contributions April 15th rather than the end of the calendar year. I’m sure accountants of the world aren’t happy about this, but as an investor who may have been too lazy to take advantage of investing in the previous year, it’s a golden reward.
If you have a bad previous year or simply forgot you’ve still got almost four months after the new years to get your act together and invest in your retirement account. You could even make meeting the Roth IRA deadline one of your new years resolutions.
Why Invest in Your Roth?
If you’re even close to thinking that you shouldn’t invest in a Roth IRA, especially those young folks out there, I ask you – where else will you get better tax treatment on your dollars when investing long term for retirement? The Roth IRA is a great option for investors so by not investing in your Roth IRA you’re literally throwing money out the window (especially if you’re investing in taxable investments).
Since your Roth IRA contributions are already taxed, every dollar of your Roth IRA earns tax-free forever (unless of course you decided to remove your tax free earnings early). Since there isn’t the constant nickel and diming by the government anytime you make a few bucks your dollars will grow faster since compound interest will take hold of 100% of your money.
So if you haven’t already started saving for your Roth IRA this year there’s still time. Get a second job, walk a few dogs, or write a few articles online and save up $5,000 to contribute to your account before April 15th rolls around.