Congratulations on your decision to retire this year! I’m sure you have worked hard and deserve to enjoy this new chapter in your life. I’m so glad you asked this question, because whether you decide to travel, relax, or consult on...
Although the calendar says 2011 already, you can still make a 2010 IRA contribution. In fact, you can make a contribution until April 15, 2011. Furthermore, some taxpayers are eligible to deduct their IRA contributions, thereby lowering their taxes for a year long since over. Crazy? Not in the wonderful world of arcane tax rules. Here’s an overview of how IRAs affect your taxes and vice-versa.
That’s one heck of a tongue twister, isn’t it? As difficult as it may be to say three times fast, it’s actually much easier to think of a Roth IRA re-characterization as a “do over.” A re-characterization lets you undo a conversion you made earlier in the year.
With the end of the year approaching, you’ve probably been trying to think of ways to reduce your tax burden before it’s too late. One fantastic way to reduce your burden is to increase your contributions to retirement accounts.