By Sarah Brenner, JD
Director of Retirement Education

Good news for retirement savers! There is more time to make your 2020 IRA contribution.

On March 17, 2020, the IRS extended the 2020 federal income tax-filing deadline to May 17, 2021. The extension also extends the deadline until May 17 to make a 2020 prior year contribution to a traditional or Roth IRA. If you have an extension to file your taxes beyond May 17, your IRA contribution deadline is not extended. You must make your IRA contribution by May 17. If you live in Oklahoma, Louisiana, or Texas, the federal tax filing deadline had already been extended to June 15. As such, the IRA contribution deadline in those states is also June 15.

If you are a sole proprietor, the due date for making a 2020 employer contribution to either a SEP or SIMPLE IRA is different. That deadline is the federal tax-filing deadline, plus any extension you might have. If you have an extension to October 15, 2021, you can make your SEP or SIMPLE contribution until that date. If you don’t have an extension, your deadline would be May 17, 2021 (unless you live in one of the states mentioned above).

Example: Jose is a sole proprietor. His business did well in 2020 and he would like to make both a SEP IRA and a Roth IRA contribution for 2020. He has an extension to file his federal income taxes until October 15, 2021. He must make his 2020 Roth IRA contribution by May 17, 2021. However, he has until October 15, 2021 to make his SEP contribution.

An IRA contribution will be considered “timely” as long as it is postmarked by May 17. This is true even if the contribution gets “held up in the mail” and does not arrive to the IRA custodian until weeks later.

Be careful! Any contribution made for the prior year should be clearly marked as such to avoid any confusion. If it not marked for the prior year, the custodian may report it as being for the current year.

The tax-filing deadline is a hard deadline for IRA contributions. If missed, there is no relief available, and the IRA custodian will report the contribution for the current year.