19 Dec Should I save my year-end bonus in an IRA?

Q. I’m expecting to get a bonus from work, but it won’t be paid to me until January. So I’m guessing it will count towards my 2020 income. Can I use it to fund an IRA for 2019?
— Working hard

A. We love that you’re trying to save your bonus.

Yes, you can use the bonus to contribute to your 2019 IRA.

You have until April 15, 2020 to make the contribution, said Kenneth Bagner, a certified public accountant with Sobel and Co. in Livingston.

Before you make the move, make sure you qualify

For the 2019 tax year, if you have no retirement plan, you can contribute the maximum to a traditional IRA and get a tax deduction.

If you do have a retirement plan, you’ll be subject to income limit phase-outs to get the deduction, but you can still make the contribution.

For a Roth IRA, you also have to meet income limitations.

Check out this great chart from the IRS to see all the limitations and eligibility requirements.

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This story was originally published on Dec. 19, 2019.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.