Due to the crazy times we are in, the 2019 tax filing deadline is now July 15. Therefore the 2019 IRA cash contribution deadline is also July 15.
The IRS limits the amount you can add to a tax-advantaged IRA each year. So, the final date is approaching to make both a 2019 and 2020 contribution which doubles the amount you can add to your IRA!
Also, for those approaching the magic age of 59 ½, by making a 2019 contribution to a Roth IRA, it starts the 5-year clock back to January 1, 2019. Therefore, the 5-year rule to withdraw gains tax-free is now only 3 ½ years. The ability to add more money AND roll the clock back on the 5-year rule is a win-win!
Note, you can pull your Roth IRA contributions any time without taxes or penalties as they are after-tax funds. To take your GAINS out tax-free the account must be established for 5-years, and you must be over the age of 59 ½.
Just about anyone can contribute to an IRA on a yearly basis. As far as NEW contributions to IRAs, funds must come in as USD per IRS rules.
Contribution limits for 2019/2020
- $6,000 if you are under 50 yrs. old
- $7,000 if you are over 50 yrs. old
- *2019 Contributions can be made until 7/15/2020
Roth IRA Contribution Guidelines for 2019
- If you are single, you must have a modified adjusted gross income under $137,000 to contribute to a Roth IRA, but contributions are reduced starting at $122,000. If you are married filing jointly, your MAGI must be less than $203,000, with reductions beginning at $193,000.
Roth IRA Contribution Guidelines for 2020
- If you are single, you must have a modified adjusted gross income under $139,000 to contribute to a Roth IRA, but contributions are reduced starting at $124,000. If you are married filing jointly, your MAGI must be less than $206,000, with reductions beginning at $196,000.
If you are over the income limits to contribute to a Roth IRA directly, you may be able to contribute to a Roth IRA through a conversion process known as a Backdoor Roth IRA.
So friendly reminder to those that have not yet finalized their 2019 contribution, get it moving now so that you don’t end up kicking yourself later.