Still Time to contribute to an IRA or Roth IRA for 2012…If You Qualify

Can You Make an IRA Contribution?

As long as you have income, you can contribute to an IRA; even if you are participating in an employer retirement plan. The only question is whether or not your IRA contribution is deductible from your taxes.

Even if your contribution is not deductible, the money in the IRA will still grow tax free until you take it out (after age 59½) at which point you only pay tax on the gains. If your spouse is not working, you can contribute to an IRA on their behalf as well, provided you have earned income.

Check with your accountant on the deductibility of an IRA contribution for your situation.

Can You Make a Roth IRA Contribution?

A better alternative is a Roth IRA, where you contribute after tax money and the money grows tax free for the rest of your life. The Roth IRA does have income limits. The limits are as follows:

Tax Filing Status	Income MAGI
Single	$110,001-$125,000
Married- Filing Jointly	$173,001-$183,000

If your MAGI (Modified Adjusted Gross Income) is above the limits, you can’t contribute to a Roth IRA. If you are eligible, then the Roth IRA is a better alternative (provided that tax rates don’t decrease substantially).

Unlike a Traditional IRA, regardless of your age, as long as you have income and your income does not exceed the limits above, you can make a 2012 Roth IRA contriubtion.

2012 Contribution Deadline

The deadline to make your 2012 contribution to your IRA or Roth IRA is April 15, 2013! The contribution limits for 2012 is $5,000 -- $6,000 if you are over age 50.

Please note that you had to have your IRA or Roth IRA account opened prior to December 31, 2012 in order to make a 2012 contribution.

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

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