The year is almost over, but it’s not too late to contribute to an IRA. You have until Monday April 15, 2013 to contribute to a 2012 Traditional or Roth IRA.
The maximum amount you can contribute to an IRA for 2012 is $5,000.
If you are age 50 or over, you can contribute an additional $1,000 in catch-up contributions. That brings the total to $6,000.
If your income disqualifies you from contributing directly to a Roth IRA, you can still contribute to it via the back door. Read my post on converting to a Roth IRA. I’ve used this method for the past three years with zero tax liability.
Frequently Asked IRA Questions
Do I have to contribute the full amount to an IRA?
No, you can contribute anything you can afford up to the maximum contribution.
Do I have to contribute monthly to an IRA?
It really depends on who services your account. Generally, the answer is no. You can contribute in a lump-sum, monthly, quarterly, or whatever schedule suits you.
What is the monthly contribution amount for an IRA?
For 2012: If you are under age 50 and want to maximize your contribution, the monthly amount is $416.66. If you are age 50 or over and want to max out your IRA, the monthly amount is $500.
Is it better to contribute to an IRA as a lump-sum yearly or in monthly installments?
Vanguard says lump-sum investing will outperform dollar-cost averaging and is more advantageous for investors. Follow my monthly vs. yearly contribution experiment for more information.
How much do I have to contribute to an IRA?
You should strive to max out your IRA every year. However, you can put as little as your account custodian will allow or whatever you can afford.
Do you have any other questions you’d like to see added to this list? Leave a comment and I’ll make sure you get your question answered.