A Big Birthday? [IRA Catch-up Contributions]

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beachmom
Posts: 59
Joined: Thu Feb 14, 2013 4:38 am

A Big Birthday? [IRA Catch-up Contributions]

Post by beachmom »

Hi,
So I wanted to fund my Roth IRA for this year and Vanguard tells me my allowed contribution is $6500.00. I suspect this is because I am 49. Can I contribute $6500 in my 50th birthday year and should I wait until my actual birthday for the final $1000 just to be safe.

Beachmom
2retire
Posts: 400
Joined: Wed Jun 13, 2012 9:00 am

Re: A Big Birthday?

Post by 2retire »

No, you don't have to wait. You can also start funding your 401(k) the extra 6,000 too this year.

Edit: Some on this forum recommend that you don't actually fully fund your Roth until you have at least earned enough qualified income for the year, just in case.
Last edited by 2retire on Thu Jan 01, 2015 11:14 am, edited 1 time in total.
livesoft
Posts: 86075
Joined: Thu Mar 01, 2007 7:00 pm

Re: A Big Birthday?

Post by livesoft »

You can contribute in the year you turn 50 even if it is Dec 31st. This goes for 401(k) / 403(b) / Roth catch-up, but not HSA catch-up since HSA catch-up is age 55.
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Laura
Posts: 7975
Joined: Mon Feb 19, 2007 6:40 pm

Re: A Big Birthday? [IRA Catch-up Contributions]

Post by Laura »

Jump right in and enjoy a benefit of aging starting on Jan 1 of the year you turn 50. No need to wait for your birthday.

Laura
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MarkNYC
Posts: 2999
Joined: Mon May 05, 2008 7:58 pm

Re: A Big Birthday? [IRA Catch-up Contributions]

Post by MarkNYC »

As mentioned, the catch-up contribution can be made any time during the calendar year in which the individual turns age 50. Similarly, the 10% penalty for early distributions from qualified plans does not apply if the distribution takes place after the employee separates from service, and the separation from service takes place any time during (or after) the year that the employee attains age 55. These "calendar year" rules should not be confused with the general rule for the 10% early distribution penalty, which applies if the distribution takes place any time before the actual day during the year that the individual reaches age 59 1/2. Not sure there is any good reason for the inconsistency in these age-related rules.
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