You can contribute to an IRA for 2005, including a Roth IRA, up until April 17, 2006. Generally, the deadline is April 15 but that date falls on a Saturday this year. For 2005, the maximum you can contribute is $4,000 (up from $3,000 in 2004), plus another $500 if you were at least 50 years old last year.
Often a Roth IRA will be a better choice. With a traditional IRA, you might not get an upfront deduction. Full deductions are available only if your income was under $50,000 in 2005, or under $70,000 on a joint return. What’s more, all of your withdrawals will be fully taxed. In effect, you’ll be sharing any investment success with the IRS.
With a Roth IRA, there is never an upfront deduction. All withdrawals are tax-free, five years after you open the account, as long as you’re at least 59-1/2 years old. To make a full Roth IRA contribution for 2005, your income can be as much as $95,000, if you’re a single filer, or up to $150,000 on a joint return.
