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tions simply by extending the filing date for your income tax return.
• There is no minimum IRA contribution requirement; the maximum contribution is $2,000 per year. You can skip a contribution for any year if you wish, but you cannot make up missed contributions in future years.
• Pay the trustee’s fee separately and not out of your IRA funds. You can then take the fee as a miscellaneous itemized tax deduction and leave more money to grow tax-free in your retirement account.
• You can’t contribute to your IRA after you reach age 70V2. But if you have a non-working spouse under 7OV2 you can make a contribution of up to $2,000 to his or her IRA.
• Alimony payments are considered earned income for purposes of determining allowable IRA contributions.
• Advisors sometimes suggest that you borrow money to make an IRA contribution if you don’t have the cash. Before doing so, compare the yield in your IRA and the borrowing rate. Also, give thought to whether you’ll have funds later in the year to repay the loan. If you won’t have, don’t borrow.
• Using IRAs in divorce property settlement situations may be beneficial to both parties. In lieu of a larger property settlement, a husband might agree to pay an extra annual $2,000 in alimony which is tax deductible by him. The wife then puts the $2,000 into an IRA for herself, and she is not taxed on the money either until retirement. Q. Earl Yancey, CPA, is a Viewtown resident who maintains his accounting practice in Warrenton.
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