If you haven’t already funded your retirement account for 2011, do so by April 17, 2012. That’s the deadline for contributions to a traditional IRA, deductible or not, and to a Roth IRA. However, if you have a Keogh or SEP and you get a filing extension to October 15, 2012, you can wait until then to put 2011 contributions into those accounts. To start tax-free compounding as quickly as possible, however, don’t dawdle in making contributions.

Making a deductible contribution will help you lower your tax bill this year. Plus, your contributions will compound tax-deferred. To qualify for the full annual IRA deduction in 2011, you must either: 1) not be eligible to participate in a company retirement plan, or 2) if you are eligible, you must have adjusted gross income of $56,000 or less for singles, or $89,000 or less for married couples filing jointly. If you are not eligible for a company plan but your spouse is, your traditional IRA contribution is fully-deductible as long as your combined gross income does not exceed $167,000.

For 2011, the maximum IRA contribution you can make is $5,000 ($6,000 if you are age 50 or older by the end of the year). For self-employed persons, the maximum annual addition to SEPs and Keoghs for 2011 is $49,000.

Although choosing to contribute to a Roth IRA instead of a traditional IRA will not cut your 2011 tax bill—Roth contributions are not deductible—it could be the better choice because all withdrawals from a Roth can be tax-free in retirement. Withdrawals from a traditional IRA are fully taxable in retirement. To contribute the full $5,000 ($6,000 if you are age 50 or older by the end of 2011) to a Roth IRA, you must earn $105,000 or less a year if you are single or $167,000 if you’re married and file a joint return. Below are tables with this year’s limits:


Roth and Traditional IRA Contribution Limits (2006 to 2013)

Year Standard Contribution With Catch-Up Contribution
2006 to 2007 $4,000 $5,000
2008 to 2010 $5,000 $6,000
2011 $5,000 $6,000
2012 $5,000 $6,000
2013 Indexed with Inflation  
For Rates on our IRA Certificates click here.