With the income tax-filing deadline approaching, there’s still time to contribute to an IRA for 2008

Does retirement conjure visions of relaxation on white sand beaches? Or, are you dreading the possibility of downsizing and living on a reduced income during retirement? Your retirement, whether in five years or 40 years, depends largely on where you are sitting today.

With the April 15 income tax-filing deadline looming, now is a good time to look closer at your personal financial situation. This could include saving for your retirement through IRA contributions. An IRA is a vehicle used to accumulate funds for retirement and provide tax-deferred growth. To qualify for an IRA contribution, you or your spouse must receive self-employment income or W-2 wages. Individuals have until April 15th, 2009 to make IRA contributions for the 2008 tax year. Depending on the IRA you choose, you could be eligible for tax-deductible contributions or future income tax-free withdrawals. Certain individuals may also qualify for an income tax credit based on their IRA contributions.

A Traditional IRA may provide an immediate income tax deduction. The amount you can deduct depends on your participation in an employer-sponsored retirement plan and your modified adjusted gross income. Individuals cannot make a contribution to a Traditional IRA for any tax year they were age 70½ or older.

A Roth IRA may allow you to avoid taxable income during your retirement years. “With a Roth IRA, you make after-tax contributions and have the potential for income tax-free withdrawals,” [insert your last name] says. “This product can be especially beneficial for you if you expect to be in a higher income tax bracket when you retire.”

The basic IRA contribution limit is $5,000 for 2008 and 2009. An additional catch-up contribution of $1,000 is available if you turned age 50 or older by Dec. 31, 2008.

Because an IRA is intended for retirement, you may incur a 10 percent premature distribution penalty if you withdraw money before age 59½ (certain exceptions may apply.) Therefore, it’s important to check with your tax advisor before withdrawing funds from your IRA.

Make the most of the 2008 tax year and begin planning for your retirement. Contact your financial services professional or me at 579-3754 to review your financial situation and discuss options that best meet your personal needs.