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ONE WEEK TO FUND AN IRA

April 08, 2008

The 2008 filing season ends a week from today. That means you have eight days, counting today, to fund an individual retirement account for 2007. if you haven't already done so.

There are several kinds of retirement IRAs: The traditional deductible IRA, the traditional non-deductible IRA, and the Roth IRA. While they differ in important details, they share common contribution limits and deadlines and the ability to shelter earnings that would otherwise be tax exempt.

You have through April 15 to fund a 2007 IRA. IRA contributions are limited to the lesser of your compensation income or $4,000 ($5,000 if you were at least 50 years old by December 31, 2007). If only one spouse has compensation income, the other spouse can use that income to meet these limits. If husband has $50,000 in 2007 wages and wife has $0, for example, both spouses can make a full IRA contribution.

But what kind of IRA? More on that tomorrow.

Link: Publication 590 (2007), Individual Retirement Arrangements (IRAs)

This is another installment of our daily series of 2008 filing season tips - a tip a day thorugh April 15.

Tags: IRA.

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