*
There is still time for a 2009 IRA. If you didn't make contributions to an IRA in
2009, you can still set up and contribute to an IRA for 2009. The
deadline for doing so is April 15, 2010. An IRA is a great
way to save for your retirement, and with a deductible IRA,
you also cut your current tax bill.
*
If your 2009 deductible IRA wasn't fully funded by December 31, 2009, and you make
any IRA contributions prior to April 15, 2010, designate to the
bank or trustee that these 2010 contributions are for
2009 (up to the maximum allowed). You can then deduct these
amounts on your 2009 income tax return for a quicker tax benefit.
*
Make your 2010 IRA contributions as early this year as possible to maximize the time
you have for tax-deferred growth in the fund.
*
Consider converting a traditional IRA to a Roth IRA this year. The previous rule that
excluded taxpayers with incomes over $100,000 from doing a
conversion to a Roth is eliminated as of January 1, 2010.
You'll have to pay tax on the amount converted,
but qualifying distributions from the Roth IRA are tax-free
thereafter. Furthermore, you won't have to take annual
distributions from your Roth IRA when you reach age 70½ if you
don't want to.
*
Note that while converting a traditional IRA to a RothIRA is now open to everyone, regardless of
income, contributing to a Roth IRA is still not allowed
for higher-income taxpayers. For 2010, Roth IRA eligibility
phases out for singles once income reaches
$105,000
and for joint filers once income reaches $167,000.
*
For 2010, annual minimum distributions from most retirement plans are once again
required for those aged 70½ and older. In 2009, these required
minimum distributions (RMDs) were suspended.
2010 required distributions must be taken by December 31,
2010. Taxpayers who turn 70½ in 2010 may choose to delay
taking their first distribution until April 1, 2011.
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