Have you maxed out your traditional or Roth IRA for 2007? If not, you have until Tax Day to get it done, so you better get crackin’. Given that the maximum allowable contribution for 2007 is $4,000 ($5,000 if you’re age 50 or more), and assuming that you contribute once a month from now through April, you’ll need to squirrel away just shy of $667/month to reach the max ($833/month if you’re 50 or older).
Even if you can’t hit that mark, you should do what you can to pump money into your IRA. After all, IRA contribution limits are a “use-it-or-lose-it” proposition. If you fail to contribute in any given year, you can’t carry the unused portion of your contribution limit forward to the next year. And remember…
You can withdraw your Roth IRA contributions (but not earnings) at any time, for any reason, without taxes or penalty. Thus, even if you have other savings priorities (e.g., building up an emergency fund) you can safely stretch your budget and stuff a Roth with money.
(Note that this sort of withdrawal flexibility applies only to Roth IRAs, not traditional IRAs.)
Five Cent Nickel
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