LANSING Mich. (WLNS) – You have until May 17 to contribute to your Roth IRA or your regular IRA. Local Money Expert Stephen Schiestel has more on what you need to know.
This year the IRS has extended the deadline for filing taxes to May 17. This is also the last day you can make a 2020 contribution to both Roth and regular IRAs, so if you haven’t made your contributions yet, you have another week.
The maximum contribution that you can make into these savings vehicles is generally $6,000, or whatever the amount you earned in income is,
For those over 50, you can add an additional $1,000 contribution as a makeup provision.
IRAs allow for two tax benefits. One allows you to make a deduction for the contribution at the time you make it, and the other allows the dollars inside the vehicle to grow over time, tax-free. Only when you start making withdrawals is the amount taxable.
To get the deduction, you need to either: not receive a retirement savings through your employer, or if your income does not exceed a certain limit.
For Roth IRAs, you can make a contribution that grows tax-free, and you can withdraw tax free. You can use Roth IRAs if your income does not exceed a certain limit.
Schiestel recommended putting any kind of saving vehicle on “autopilot,” meaning contributions are made on a regular, recurring basis.
“This way you are able to do one of the key things we all want to do in our financial lives, pay ourselves first,” said Schiestel.