Roth IRA Contribution Deadline for 2009

by RJ

in Investing

Good news! The Roth IRA contribution deadline for 2009 hasn’t passed.

You’re allowed to contribute towards the 2009 limit, which is $5,000 for us Gen Y’ers, until you file your taxes or April 15, 2010.

Why Is This Deadline Important?

A Roth IRA, is an investors best friend. You put money in after tax, and it grows tax-free. With a few exceptions, you have to wait to you’re 59 ½ to withdraw any money. The tax savings, is a HUGE benefit compared to investing outside of an IRA.

Also, as a Gen Y’er, there might be only a few years left that you’re qualified to start a Roth IRA. The IRS phases out contributions for those with an income over $105,000 in 2009.

Should I Start A Roth over a 401K?

One reason, you might choose to invest in a 401K over a Roth IRA, is that your employer matches contributions. If you haven’t contributed up to your employer match, you’re better off investing in a 401K if that’s all you can do.

If you are contributing up to your employer’s match in your 401K and are looking to save more, a Roth IRA is a great place to invest. (For help on where to invest, I created a flowchart). Reasons for investing in a Roth IRA instead of your 401K, include:

  • IRA’s are more mobile. You don’t need to rollover an IRA every time you switch jobs.
  • IRA’s allow you to pick the investments. In a 401K, the employer provides the investments for you.

What If I File for an Extension?

If you file for an extension, the Roth IRA deadline for 2009 is still April 15, 2010. The deadline isn’t extended.

Can I Start a Roth IRA Today and Contribute to 2009?

Yes. You can start or contribute to an existing IRA.

Where Is An Easy Place to Start?

If you’re just starting out, one place you can look is T. Rowe Price. If you commit to investing just $50 every month, trades are free.

If you have more than $3,000 to invest, you can start an account at Vanguard.

If you need help on what to invest in, I did a three-part series on the Roth IRA, that can help answer your question.

Conclusion

As always, if you have any other questions about the Roth IRA deadline or investing in general, let me know.

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{ 2 comments }

GBGamesNo Gravatar April 12, 2010 at 4:31 pm

***Also, as a Gen Y’er, there might be only a few years left that you’re qualified to start a Roth IRA. The IRS phases out contributions for those with an income over $105,000 in 2009.***

I’m not sure I understand these statements. Is there a maximum age limit to starting a Roth IRA? If your income is less than $105,000, is there any concern about phased out contributions?
.-= GBGames´s last blog ..Three Ways to Achieve Your Goals More Easily =-.

RJNo Gravatar April 13, 2010 at 1:27 pm

Sorry about the confusion. There is no max age limit to starting a Roth IRA. However, there are income limits. Hopefully as you get older and your business takes off, you will exceed these limits. :) That’s what I mean by only a few years left.

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