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Question: Am I too late to have an IRA?

Martha

Answer:

Dear Martha,

I'm assuming that you mean, is it too late to fund your IRA for 2002. Good news -- you have until April 15th.

But a word of caution. If you're running late and you file for an extension, that extension does NOT cover your IRA. You must fund it by April 15th.

Keep in mind that you can contribute up to $3,000 a year to either a traditional or a Roth IRA. If you're 50 or older, you can contribute another $500, known as a "catch-up" contribution.

Anyone with earned income can contribute to the traditional IRA.

However, there are income limits on the Roth IRA. If you're a single taxpayer with an adjusted gross income (AGI) of more than $110,000, you are not eligible.

If you are single and earned between $95,000 and $110,000, you can contribute a reduced amount. If you are married, your eligibility phases out between $150,000 and $160,000.

$TIP: You can open an IRA here at BUYandHOLD. It only takes a few minutes. Just click on Open an Account. When you send in your check, be sure that you write on it: "IRA 2002 contribution." Otherwise, it might be taken to be a contribution for 2003.

Another bit of advice -- if you have sufficient money, you'd be smart to fund your 2003 IRA as soon as possible. Although you have until April 15, 2004 to do so, the sooner you invest, the more time your money has to grow. Again, mark your check; in this case it should read: "IRA 3003 contribution."

Spousal IRAs

If you have a stay-at-home spouse or a spouse who is not covered by an employer plan, you can make a deductible contribution of up to $3,000 (plus $500 if your spouse is age 50 or older) to a spousal IRA.

More Information

To help you decide whether you should have a traditional or a Roth IRA, click HERE to read a previous column on the topic.

Quite a few other BuyandHolders have written in asking about their IRAs. You might want to read some of the other columns I have written on this topic. Simply click on any of the links below.

You'll also find all the official information about IRAs at: www.irs.gov.

Good luck!

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