If you haven’t contributed funds to an Individual Retirement Arrangement for tax year 2010, or if you’ve put in less than the maximum allowed, you still have time to do so. You can contribute to either a traditional or Roth IRA until the April due date for filing your tax return for 2010, not including extensions.
Be sure to tell the IRA trustee that the contribution is for 2010. Otherwise, the trustee may report the contribution as being for 2011 when they get your funds.
Generally, you can contribute up to $5,000 of your earnings for 2010 or up to $6,000 if you are age 50 or older in 2010. You can fund a traditional IRA, a Roth IRA (if you qualify), or both, but your total contributions cannot be more than these amounts.
Note: IRA contribution limits remain the same in 2011 – $5,000, or $6,000 if age 50 or older.
Traditional IRA: You may be able to take a tax deduction for the contributions to a traditional IRA, depending on your income and whether you or your spouse, if filing jointly, are covered by an employer’s pension plan.
Roth IRA: You cannot deduct Roth IRA contributions, but the earnings on a Roth IRA may be tax-free if you meet the conditions for a qualified distribution.
Maximizing your retirement savings is a critical goal for an individual’s financial plan. Review of your financial retirement plan should be completed annually allowing for maximum savings. Each year, the IRS announces the cost of living adjustments and limitation for retirement savings plans. In 2010 and 2011, however, the contribution limits for defined benefit and defined contribution plans did not change as the Consumer Price Index did not meet the regulatory thresholds.