Smooth Sailing IRA Contributions

Most of us know that IRA contributions can be made retroactive to the previous tax year. What most of us don’t know is that if the contribution check is not properly labeled, the receiving firm will, by default, apply it to the tax year in which it is received (i.e., 2014).

When making a contribution to a Roth or IRA account, be sure to identify the year for which it is being made. Write “2013 contribution” clearly in the memo section of the check. If you include paperwork with the check make sure the correct tax year is indicated on the contribution form. Follow up by reviewing the next account statement to verify the contribution was applied to the right tax year. This will avoid potential problems with the IRS down the road.