2019 IRA contribution deadline is July 15, 2020. *

We now have until July 15 to contribute to our IRAs: The IRS has extended the 2019 IRA contribution deadline from April 15 to July 15, 2020. *

The extension. In line with Treasury Secretary Mnuchin’s universal extension of the individual federal income tax filing and payment deadline to July 15, the IRS has clarified that taxpayers have time until that same date to make 2019 contributions to their IRAs. (Normally, even if an IRA owner files for an extension of time to file a tax return, no extension for making a retroactive IRA contribution follows.)

Specifically, the IRS has posted the following on its website:

            Individual Retirement Accounts (IRAs) and workplace-based retirement plans 

            Q17. Does this relief provide me more time to contribute money to my IRA for 2019?

             A17. Yes. Contributions can be made to your IRA, for a particular year, at any time          during the year or by the due date for filing your return for that year. Because the due            date for filing Federal income tax returns has been   postponed to July 15, the deadline     for making contributions to your IRA for 2019 is also extended to July 15, 2020.

Does the extension also apply to Roth IRAs? 

Although the IRS does not expressly clarify the issue, recognized experts categorically state that the extension applies both to traditional (sometimes also called an original, ordinary or regular) IRAs and to Roth IRA’s. 

That the IRS’s use of the term IRA applies to both traditional and to Roth IRA’s is very much bolstered by the fact that, in all of its comprehensive publications about IRAs, the IRS uses the term IRA generically to refer to both types of IRA’s, Roth IRA’s and traditional IRA’s: 

“In this publication, the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA.” A traditional IRA is any IRA that isn’t a Roth IRA or a SIMPLE IRA.”  

Good News. The extensions are extremely helpful for many reasons:

• taxpayers and their financial planners and tax advisers and preparers do not have to scramble, during turbulent social and economic times, to prepare and to file tax returns and payments;
• IRA owners will have more time to recover economically and to maximize their retroactive contributions, thereby enjoying the associated immediate and long term savings and tax benefits;
• nationwide shutdowns and stay-at-home rules have made it extremely difficult for persons and their advisers (who are often working from home with skeletal crews in their offices) to meet looming deadlines. 

Aim to make IRA contributions for 2019 if you can

We should all take advantage of this enhanced opportunity: Contributing to an IRA can help us shore up our retirement savings and to build a more secure future. While we should make sure to have emergency savings during these turbulent economic times, IRA contributions should also be a top financial priority. 

One administrative issue

Those who will be making 2019 IRA or Roth IRA contributions after April 15 (but by July 15), must make absolutely certain that the contribution is earmarked for 2019. Some financial institutions may have systems in place to code any IRA contribution made after April 15, 2020, as a 2020 IRA contribution. Watch out for this anomaly: Make sure you mark your checks as 2019 IRA contributions. This will clarify your intent: If one does not specify that a contribution is for a previous year, the financial institution is obliged to apply it towards the current year. Clearly marking your checks and deposit slips will avoid unintended poor results. 

SOURCES:

• Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)
• Why You Should Have a Roth IRA During Turbulent Times: Contribution deadline for 2019 is extended to July 15 due to the coronavirus, by Kimberly Lankford, AARP, (April 2, 2020);
• If you didn’t save as much for retirement as you wanted last year, you now have 3 extra months, by Tanza Loudenback, Business Insider, (March 24, 2020);
• Does the Extended Tax Filing Deadline Change The Deadline for 2019 IRA Contributions? – Retirement savers are in for some good news, by Christy Bieber, The Motley Fool,  (Mar 30, 2020);
• Those IRS coronavirus-extended deadlines apply to more than just taxes, by Liz Weston, (March 26, 2020)

To read more about our IRA, click here. Read this article, to see if the Roth IRA is for you.

     *The above discourse is provided for general informational purposes. You are encouraged to consult expert tax, estate and financial advisors and planners, (1) with respect to any questions or issues and (2) to determine how these new laws (and resulting regulations) may affect your personal situation and to consider setting appropriate plans and strategies in consultation with such expert advisors and planners. You are encouraged to study these developments, as they continue to occur.

        ** We provide links to these articles solely in order to provide information (and not professional, fiduciary or other manner of advice) for our readers and members; the authors’ opinions remain theirs exclusively. All of our readers and members are vigorously encouraged to set appropriate personal plans and strategies in consultation with their expert tax adviser(s) and financial adviser(s).

This article was written by Eugene Luciw, feel free to email him to say hello.