Save a little more for retirement.

Time to boost your IRA balance. In 2013, you can contribute up
to $5,500 to your Roth or traditional IRA. If you will be 50 or older by the
end of 2013, your contribution limit is actually $6,500 this year thanks to the
IRS’s “catch-up” provision. The new limits represent a $500 increase from 2012
January is an ideal time to max
out your annual IRA contribution.

If you are in the habit of making a single annual contribution to your IRA
rather than monthly or quarterly contributions, try to make the maximum
contribution as early as you can in a year. More of your money should have an
opportunity for tax-deferred growth, not less. While you can delay making your
2013 IRA contribution until April 15, 2014, there is no advantage in waiting –
you will stunt the compounding potential of those assets, and time is your
friend here.2

Do you own multiple IRAs? If you do, remember that your
total IRA contributions for 2013 cannot exceed the relevant $5,500/$6,500
contribution limit.3
Your IRA contribution may be tax-deductible.
Are you a single filer or a head of household? If you contribute to both a
workplace retirement plan and a traditional IRA in 2013, you will be able to
deduct the full amount of your IRA contribution if your modified adjusted gross
income is $59,000 or less. A partial deduction is available to such filers with
MAGI between $59,001-69,000.4
The 2013 phase-outs are higher for married couples filing jointly. If the spouse making
the IRA contribution also participates in a workplace retirement plan, the
traditional IRA contribution is fully deductible if the couple’s MAGI is
$95,000 or less. A partial deduction is available if the couple’s MAGI is between
If the spouse making a 2013 IRA contribution doesn’t
participate in a workplace retirement plan but the other spouse does, the IRA
contribution may be wholly deducted if the couple’s MAGI is $178,000 or less. A
partial deduction can be had if the couple’s MAGI is between $178,001-188,000.
(The formula for calculating reduced IRA contribution amounts is found IRS
Publication 590.)5

You cannot contribute to a traditional IRA in the year in which you turn 70½ or in
subsequent years. You can contribute to a Roth IRA at any age, assuming your
income permits it.1
What are the income caps on Roth IRA contributions this year?
Single filers and heads of household can make a full Roth IRA contribution for
2013 if their MAGI is less than $112,000; the phase-out range is from $112,000-127,000.
For joint filers, the MAGI phase-out occurs at $178,000-188,000 in 2013;
couples with MAGI of less than $178,000 can make a full contribution. (To
figure reduced contribution amounts, see Publication 590.) Those who can’t
contribute to a Roth IRA due to income limits do have the option of converting
a traditional IRA to a Roth.7

As a reminder, Roth IRA contributions aren’t tax-deductible – that is the price you
pay today for the possibility of tax-free IRA withdrawals tomorrow.8
Can you put money in an IRA even if you don’t work?
There is a provision for that. Generally speaking, you need to have taxable earned
income to make a Roth or traditional IRA contribution. The IRS defines taxable
earned income as…
*Wages, salaries and tips.

*Union strike benefits.

*Long-term disability benefits received before minimum retirement age.

*Net earnings resulting from self-employment.
Also, you can’t put more in your IRA(s) than you earn in a given year. (For example,
if you are 25 and your taxable earned income for 2013 amounts to $2,592, your
IRA contributions for this year can’t exceed $2,592.)9

However, a spousal IRA can be created to let a working spouse contribute to a nonworking
spouse’s retirement savings. That working spouse can make up to the maximum IRA
contribution on behalf of the stay-at-home spouse (which does not affect the
working spouse’s ability to contribute to his or her own IRA).

Married couples who file jointly can do this. The IRS rule is that you can contribute
the maximum into this IRA for each spouse as long as the working spouse has
income equal to both contributions. So if both spouses will be older than 50 at
the end of 2013, the working spouse would have to earn taxable income of
$13,000 or more to make two maximum IRA contributions ($12,000 if only one
spouse is age 50 or older at the end of 2013, $11,000 if both spouses will be younger
than 50 at the end of the year).6,9


So, to
sum up … make your 2013 IRA contribution as soon as you can, the larger the

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