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Janus
April 15 may be the primary time when you think about taxes, but it's
also a time to think about your last chance to make a 2007 contribution to
your Individual Retirement Account.
"There's never a bad time to invest in your IRA," says
Constance J. Herrstrom, CFP®, president
of Premier Financial Planning, Inc. in Princeton, N.J., "but now is a
particularly good time. For most people, 2007 contributions can be made
through April 15 of this year; you might even be eligible for a last-minute
tax deduction."
It's also not too early to get started on your 2008 IRA contributions,
she stresses, especially if you're expecting a tax refund, which you could
put toward your 2008 limit. "Or, if you haven't yet contributed the
maximum amount for 2007, you can take full advantage of your IRA by making
contributions for both tax years," says Herrstrom.
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| An extra $100 over 30 years could potentially add
thousands more dollars to your retirement tank: |
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| Hypothetical example only, does not
represent any particular investment. Assumes 8% annualized growth
rate (0.6434% monthly rate), contributions made at the beginning of
each month, reinvestment of all income and retirement in 30 years.
It does not account for taxes. |
IRAs: Two Choices
There are two types of IRAs, each with its own features and potential
benefits.
Eligible workers under age 70½ may contribute to a traditional IRA,
where funds grow tax-deferred without penalty or tax consequences until you
start taking distributions. (If you and your spouse are eligible, you could
also contribute to a Spousal IRA for a non-working spouse.) Whether you can
deduct some or all of your contributions depends on your adjusted gross
income and whether or not you participate in an employer-sponsored
retirement plan, such as a 401(k).
Contributions to a Roth IRA are not deductible, but funds can be
withdrawn tax-free after a five-year holding period and you reach age 59½
or one of several other criteria. For tax year 2007, eligibility for
contributing to a Roth IRA phases out if your adjusted gross income is
between $99,000-$114,000 (if you're single) or between $156,000-$166,000 (if
you're married and file jointly). For tax year 2008, these phaseout amounts
rise to $101,000-$116,000 (single) and $159,000-$169,000 (married and filing
jointly).
For both traditional and Roth IRAs, if you're eligible, you can
contribute up to $4,000 ($5,000 if you're age 50 or over) for tax year 2007.
For tax year 2008, the contribution limit rises to $5,000 ($6,000 if you're
50 or over).
For more information on IRA contribution limits and other details,
download IRS Publication 590 at irs.gov.
To learn more about Janus
or other mutual fund companies, visit Fund
Companies. For particular fund information, visit Fund
Selector.
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