Make your 2010 IRA contribution as late as April 18, 2011:
You can contribute up to $5,000 (or $6,000 if you are 50 or older) until the time you file your income tax return, but no later than April 18, 2011. If you participate in a retirement plan at work, the IRA deduction phases out if you are married and your joint AGI is $89,000 or more, or if you are single and your adjusted gross income is $56,000 or more. Filing an extension will not buy you additional time. Non-deductible pay-ins to IRAs and Roth IRAs are also due by April 18, 2011.
Make a deductible contribution to a spousal IRA:
If you do not participate in a workplace-based retirement plan but your spouse does, you can deduct some or all of your IRA contributions on your 2010 income tax return as long as your adjusted gross income does not exceed $177,000.
Make a contribution to a Roth IRA:
Contributions to Roth IRAs are not tax deductible, but the earnings on them may be withdrawn totally income tax-free in the future as long as the distributions are qualified. A Roth IRA distribution is qualified if you’ve had the account for at least five years, the distribution is made after you’ve reached age 59½, you become totally and permanently disabled, in the event of your death, or for first-time homebuyer expenses. Contribution limits are the same as traditional IRAs, except the maximum contribution for both Roth and traditional IRAs is still limited to $5,000 or $6,000 for persons age 50 or older.
To make a full Roth IRA contribution for 2010, your AGI cannot exceed $177,000 if you are married or $120,000 if you are single. You are subject to the same limitations for a non-working spouse. Subject to some exceptions, I usually prefer Roth IRAs to traditional IRAs or even traditional 401(k)s.
Look into Roth IRA conversions:
The rules for contributions to Roth IRAs are different from the rules for Roth IRA conversions. Prior to January 1, 2010, you could only convert a traditional IRA to a Roth IRA if your AGI was $100,000 or less (before the conversion). However, this dollar cap is now removed starting January 1, 2010 and there is no limit to your earnings in order to qualify for a Roth IRA conversion. Please remember that a conversion to a Roth IRA may place you in a higher tax bracket than you are in now and have other adverse consequences, such as subjecting more of your Social Security to be taxable due to the increase in your AGI. Please also note that a Roth IRA conversion does not have to be all or nothing. You can elect to do a partial Roth IRA conversion and you can convert any dollar amount you decide is best for your situation. Our most common set of recommendations after “running the numbers” is usually a series of Roth IRA conversions over a number of years. Please remember that a Roth IRA conversion may not be appropriate for all investors.