Retirement & Financial Planning Report

Now that it’s 2012, you can contribute to an IRA for this year. The earlier you make this contribution, the sooner you’ll begin to earn tax-deferred investment income.

At the same time, you can contribute to an IRA for 2011 until April 17, 2011. Both 2011 and 2012 IRAs have the same contribution limits: $5,000 per year, or $6,000 if you’re 50 or older. All workers and their spouses can contribute up to those limits, so a couple can contribute as much as $12,000 per year, once they reach age 50.

Those limits apply to both Roth IRAs and traditional IRAs.

* A hypothetical Jennifer Baker, age 40, can contribute up to $5,000 to a traditional IRA for each year. Her contributions might be tax-deductible, depending on her income and whether she is covered by a retirement plan at work.

* Alternatively, Jennifer can contribute up to $5,000 to a Roth IRA for each year. She might not be able to make those contributions, though, if her income is too high.

* As yet another option, Jennifer can split her contributions any way she chooses. She might put $2,000 per year into a traditional IRA, for example, and $3,000 per year into a Roth IRA.

* The relevant income limits for 2011 and 2012 can be found at