IRA catch up provision/statute

[nycguy567]

i didnt contribute to my IRA this year and wont because i'm in graduate school. from what i know, the annual limit is 5k contribution. can i contribute 10k next year into my IRA for this year and next years'?

[swanson719]

No. You can contribute 5K per FISCAL year. Meaning you can file your taxes in January, get your return in February, then put it and the rest of 5K into a Roth as long as it's done by April 15. If you are 55 or older you can contribute 6K per fiscal year.

If you miss a year due to lack of funds, you missed a year. There is no recourse, or way to catch up via a Roth IRA.

[happygirl]

Swanson: What is considered a fiscal year. Can I contribute 5k before December for 2009, then contribute another 5k in January for 2010?

Thanks and sorry for butting in to your question nycguy.

[nycguy567]

did a lil more research. i cant contribute more than my income ($0) in a given year....

[disneysteve]

the annual limit is 5k contribution. can i contribute 10k next year into my IRA for this year and next years'?

Yes, you can do that as long as you put at least 5K in before April 15, 2010. That would go toward your 2009 contribution. Then anytime between January 1, 2010 and April 15, 2011, you can put in another 5K for your 2010 contribution.

You are correct that you must have earned income equal to or greater than the amount you put in your IRA.

[creditcardfree]

Swanson: What is considered a fiscal year. Can I contribute 5k before December for 2009, then contribute another 5k in January for 2010?

Thanks and sorry for butting in to your question nycguy.

Yes, you can do this. As long as you have earned income equal to the contribution for that year.

For example, if you earned $10K in 2009, you can put your $5K in anytime up until April 15th, 2010. But, if you only expect to have earned income of $2,000 for 2010, you would only be able to contribute $2K (as your 2010 contribution) anytime from Jan 2010 through April 15, 2011.

The OP, will have $0 of earned income, so is therefore ineligible to make a contribution. Unless, OP, is married and the spouse has enough earned income to cover the $5K contribution. I don't work, but my DH, makes enough money to allow both of us to make full Roth contributions.

[nycguy567]

what difference would it make, assuming i had more than 5k earned income, whether i contribute in 09 or the 2010 catch up window?

[nycguy567]

sorry, whats DH? designated hitter?

[disneysteve]

what difference would it make, assuming i had more than 5k earned income, whether i contribute in 09 or the 2010 catch up window?

For money put in and designated toward your 2009 contribution, it doesn't matter a bit if it goes in January 1, 2009 or April 15, 2010. It still counts toward your 2009 contribution.

The only sense in which it does matter a bit is that the earlier you put the money in, the earlier you start benefiting from the tax-free growth so it is a good idea to fund the account as soon as you are able.

[creditcardfree]

sorry, whats DH? designated hitter?

Dear Husband

It is just a way to abbreviate. Sorry to have confused you.

[nycguy567]

For money put in and designated toward your 2009 contribution, it doesn't matter a bit if it goes in January 1, 2009 or April 15, 2010. It still counts toward your 2009 contribution.

The only sense in which it does matter a bit is that the earlier you put the money in, the earlier you start benefiting from the tax-free growth so it is a good idea to fund the account as soon as you are able.

well wouldn't that depend on whether its a cash balance in the IRA or in some sort of security with exposure to interest rates and the stock mkt? if i put in $x and there's exposure to the stock mkt, and it tanks, i wouldnt have been better off investing so early. not notpicking, just fleshing out the details.