For Americans who may regret not saving enough this past year toward their retirement, a recent announcement might bring a bit of good news.
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The Trump administration announced on Friday that it is moving the tax deadline from April 15 to July 15, presumably in light of the effects the coronavirus outbreak is having on the U.S. economy. The IRS had previously deferred payments for many Americans and businesses to the same date in July.
However, now that Americans have more months to file without penalty, they also have longer to contribute to their IRA retirement accounts for 2019, Ed Slott, founder of IRAhelp.com, told FOX Business.
The administration did not specifically address IRA contributions on Friday. However, according to the Internal Revenue Code, contributions are considered to be made during a given taxable year so long as they are made by the filing deadline.
“There’s never been a date in the tax code, it’s always been tied to the filing deadline,” Slott said. “[By extending the tax deadline], they automatically extended the deadline to make an IRA contribution last year.”
This rule does not apply to 401(k) accounts.
As always, there are limits as to how much people are allowed to stash away in retirement accounts.
The IRA contribution limit for both 2019 and 2020 for those under the age of 50 is $6,000; it is $7,000 for those age 50 and over.
To avoid any confusion, however, Slott advises taxpayers to make their contributions by April 15, if possible. For a Roth IRA in particular, given the recent downturn in the market, it could be beneficial to get the cash in as soon as possible so that the money can grow, tax-free, when the market does eventually rebound.
Slott also said people should earmark their checks with the year 2019 for further clarity.
As previously reported by FOX Business, millions of taxpayers have already filed their returns for the current season. According to data from the IRS, as of March 6 the agency had received nearly 68 million returns. The average tax refund was $3,012 – which is about on par with the same period the year prior. However, when compared with last year, the agency had doled out about 1.4 percent fewer refunds.