Max Out Your 2009 ROTH IRA

If you have’nt maxed out your ROTH IRA, you may want to consider doing so prior to submitting your 2009 taxes. The IRS allows you to make a 2009 ROTH IRA contribution during 2010 as long as you complete it before April 15th 2010 (taxes due date) and you note it on your 2009 taxes.  For those of you  beginners out there, a ROTH IRA is funded with after tax money. The benefit is that as the investment grows over time, once you retire and start to take distributions from it, that money is tax free. This can be very advantageous depending on your tax situation now and when you retire, which is why the IRS puts a cap on the amount you can contribute.

This year you can contribute $5000 to your ROTH IRA if your modified adjusted gross income (MAGI) is below $166,000. If you income exceeds $176,000, they you not eligible to contribute to a Roth IRA for 2009.

If your MAGI is between $166,000 and $176,000, then you can contribute some amount less than their full limit. My advice here is to prepare your taxes first using the $5000 contribution, your return will tell you how much overpayment there was. Then subtract that from the $5000, and make that your ROTH contribution. Deposit those funds into your IRA, then file your taxes with that same number.


The jury is still out as to if ROTH IRA’s will be around forever so it makes sense to get in now while it is still good. If you are looking for a good ROTH IRA provider you make check out an ETRADE ROTH IRA. They have a current promotion where you can get $100 free trades when opening a new ROTH IRA by December 31, 2010.

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