How do you know if you are contributing IRAs funds for previous tax year or current tax year? Good morning everyone and welcome back to Finance Friday. Tax Deadline is coming up and Im willing to bet that some of you still haven’t contributed to your retirement accounts. I received a great question that I assume others may have. This is from A.M.H.
“I’ve been told that I need to contribute to my IRA annually for tax advantages. I thought I contributed the max last year, but when I checked my statement, it read that half of my contribution went towards 2024 and half towards 2025. How can I make sure that my contribution goes towards the tax year that I want?”
Thank you A.M.H., this is a great question. I think IRAs have great advantages if used properly. However, I find it cumbersome that we have to remember different rules for the different IRAs. In a perfect world, if you contributed the max in 2025, it would be for the 2025 tax year. However, that’s not how it works. You have until April 15th of the following year to be able to contribute to your IRAs.
First, confirm with your accountant the amount that you can contribute. They’ll know how much you can contribute and if there are circumstances present that would prevent you from contributing. Next, if your advisor helps you make the contribution, send them an email with the amount that you want to contribute and the Tax Year that you want it for. Lastly, make sure that you check your custodian statement (Schwab, Fidelity, etc.) the next month, to make sure that they have it correct on their end. It should be correct and your adviser should be checking but just in case, it doesn’t hurt to do a double or triple check.
That’s all for today, please send me your questions to hector@hrcfin.com. Don’t forget to follow HRC Financial on Facebook and LinkedIn for more Finance Friday discussions. Have a wonderful weekend and go Coogs and Horns in the Sweet 16!