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We have $6,000 to put in and max our Roth IRA per year for my wife and I. Should I consider opening the Roth before I file my taxes this year or wait? I don't know if there are any benefits or disadvantages of doing either. Is a year for a Roth considered a regular year or a tax year (meaning starts and ends on the deadline for taxes)?
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Greetings johannesw77:
We have $6,000 to put in and max our Roth IRA per year for my wife and I. Should I consider opening the Roth before I file my taxes this year or wait? I don't know if there are any benefits or disadvantages of doing either.

You have until April 15, 2003 to contribute to a Roth for the year 2002. The disadvantage of not making a contribution for 2002 is you lose that year to contribute. Once it's gone, it's gone for ever. Say if you wanted to contribute every year for the next 20 years up to 2021, when you'd retire. If you skip 2002, you'll only actually contribute for 19 of those years. You make this contribution for the 2002 tax year, you have that extra year back. This way, you can start saving for the 2003 tax year contribution. It may only be $3000 now, but you'll be $3000 ahead of the game.

HTH

Bookm
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So I did guess right. A roth IRA year starts and ends on tax deadline. Thanks Bookm! I better hurry up and set up our Roth before April!
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So I did guess right. A roth IRA year starts and ends on tax deadline.

Not so.

For your Year 2002 contribution, you have to qualify based on your Year 2002 situation. However, the time you you can contribute is from January 1, 2002, through the deadline for filing your federal tax returns, excluding extensions, which for most people would put this at April 15, 2003. Note: the Roth IRA contributions can be made after you file your taxes, if you wish, as long as they are made by the deadline date.

That means that from the period of January 1, 2003, through April 15, 2003, you could make either your Year 2002 contribution, your Year 2003 contribution, or both.

Any time you contribute between January 1 and April 15, you should make it clear which tax year the Roth IRA contribution is for--most Roth IRA custodians will assume the contribution is for the current calendar year unless directed otherwise.
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I don't know if there are any benefits or disadvantages of doing either.

If you are married and filing jointly and made less than $50k, you qualify for the saver's credit of between 10 and 50% of the lesser of your contribution or $2000.

See the following for more details.

http://briggs.lawoffice.com/fsl5cs/alerts/alerts431.asp

billyturtle
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