Her are tips for you about setting aside money for your
retirement in an Individual Retirement Arrangement.
1. You must be under age 70 1/2 at the end of the tax year in order to
contribute to a traditional IRA.
2. You must have taxable compensation to contribute to an IRA. This
includes income from wages, salaries, tips, commissions and bonuses. It also
includes net income from self-employment. If you file a joint return, generally
only one spouse needs to have taxable compensation.
3. You can contribute to your traditional IRA at any time during the
year. You must make all contributions by the due date for filing your tax
return. This due date does not include extensions. For most people this means
you must contribute for 2012 by April 15, 2013. If you contribute between Jan.
1 and April 15, you should contact your IRA plan sponsor to make sure they
apply it to the right year.
4. For 2012, the most you can contribute to your IRA is the smaller of
either your taxable compensation for the year or $5,000. If you were 50 or
older at the end of 2012 the maximum amount increases to $6,000.
5. Generally, you will not pay income tax on the funds in your
traditional IRA until you begin taking distributions from it.
6. You may be able to deduct some or all of your contributions to your
traditional IRA.
7. You may also qualify for the Savers Credit, formally known as the
Retirement Savings Contributions Credit. The credit can reduce your taxes up to
$1,000 (up to $2,000 if filing jointly).
