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>> From my understanding, the limitation to contributions per year falls on tax years as supposed to calender years. For 2004, the limit to contributing to Roth IRA is $3,000. Falling on the tax year means that I have until April 2005 to put in the money for 2004, and April 2006 to put in $4,000 for 2005. Is this correct? <<

Close. You are correct on the amounts. But the limitation is neither on calendar years, nor tax years, but on the combination of both. You actually have 15 1/2 months to contribute for any calendar year. For example:

* from 1/1/2004 through 4/15/2005 for 2004;

* from 1/1/2005 through 4/17/2006 for 2005. (Here you will have until April 17, not April 15, because April 15 falls on a Saturday, so the "tax deadline" falls on the first business day after April 15.)

Note that this overlap means that when there is overlap (i.e. between 1/1 and 4/15 in any given year) you should first contribute for the previous tax year if you haven't already contributed it to the maximum. One exception to that is if you didn't qualify to contribute in the previous year but expect to qualify in the current year.

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