Entrust Learning Center > Keyword: contribution limit > IRA Contribution FAQs

IRA Contribution FAQs

Contribution limits change from year to year and it's important to keep track of the rules whether you have an IRA or are looking to open one. We've provided a simple FAQ to help you understand and manage annual contributions to your IRA.

IRA & 401(k) Insights

1. What is an IRA contribution?
   An IRA contribution is the deposit of personal funds into your IRA. You can make contributions in the form of a check, wire, or ACH (direct deposit). The IRS limits the dollar amount that you can contribute to your IRA each year, and this amount varies based on the type of plan you have. Take a look at our contribution limit worksheet to find out your limit based upon the type of plan you hold.
2. When are my contributions due?
   Contributions must be postmarked on or before April 15 to count towards the previous year's taxes. However, this year contributions must be postmarked on or before April 18, 2011 due to Washington D.C.’s observance of Emancipation Day.
3. Can I file for an extension?
   Tax-filing extensions do not apply to your IRA, which means that your contributions must be deposited on or before April 18th, 2011.
4. How can I make a contribution to my plan?
   If The Entrust Group administers your plan, you can either walk into your local Entrust office and request a deposit coupon or simply download one from the website.
5. Now that I’ve made my contribution, how do I report it?
   The Entrust Group (along with your other custodians if you have more than one) submits form 5498 to the IRS along with a copy to you, for your records. This form indicates the total annual contribution to your IRA(s) administered by The Entrust Group. At the same time, you will be asked to enter the total contribution amount on your personal tax returns. The IRS then matches your contribution amount with form 5498.
   
   In some cases, the amount you contribute to your IRA can be deducted on your federal income tax return. If you made a contribution to your Roth IRA, there are no forms to report. However, if you made a nondeductible contribution your custodian will use IRS Form 8606 for the nondeductible portion of your contribution
6. What if I contribute more than is permitted by the IRS?
   If you contribute more into your IRA than the IRS allows, you could get taxed 6% on the excess contribution amount. Be sure to double-check your contribution limit with the amount you contributed before filing your taxes. If you have over-contributed, you have until you file your income tax return to withdraw the excess contribution before getting taxed the additional 6%.
   

    

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