NEW YORK (MainStreet) — If you are planning to contribute to a traditional or Roth IRA, a Coverdell Education Savings Account, a Section 529 College Savings Plan, a Health Savings Account, or an ABLE Account for tax year 2015, do it today. 

Thanks to tax-free compounding, by making your contributions as early as possible at the beginning of each year, instead of waiting until the deadline, you will have substantially more funds in the accounts by the time you are ready to retire, or when you need the money to pay for education, medical or disability expenses.

What if you make a 2015 contribution to a Roth IRA today and later find out that you are not eligible to contribute to a Roth account, or, for whatever reason, decide you would rather have the funds in a traditional IRA? Don’t worry - you have until the due date of your 2015 Form 1040, including extensions - as late as October 15, 2016 - to "recharacterize" the contribution.


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You have until April 15, 2015 to contribute to a traditional or Roth IRA for tax year 2014. Everyone with “earned income” - W-2 wages, net earnings from self-employment, or alimony - can contribute to a traditional IRA. The ability to contribute to a Roth IRA is limited based on the level of your Adjusted Gross Income. Depending on your situation a contribution to a traditional IRA may be tax deductible. If you want to make an IRA contribution for 2014, and have not already done so, don’t wait. Do it today as well.

For both 2014 and 2015, the maximum IRA contribution is the lesser of $5,500 or earned income. An additional “catch-up” contribution of $1,000, making the maximum $6,500, is allowed if you are, or will be, age 50 at the end of the year for which the contribution is made. A full contribution can be made to the account of a non-working spouse as long as the working spouse has sufficient earned income.

When making a contribution to any tax-deferred account be sure to clearly identify the year for which it is being made on the memo section of your check and on any payment voucher or coupon that accompanies the check. Follow up by checking the next statement for the account to verify the contribution was applied to the correct year.

—Written by Robert D. Flach for MainStreet