Roth/IRA deadline alert
U.S. taxpayers have until Wednesday, April 15 to make a 2025 IRA contribution — and higher earners can still use a backdoor Roth if they’re ineligible for direct contributions (finance.yahoo.com) (polkcpa.com). Watch income rules carefully: Fidelity warns about MAGI checks, Motley Fool notes married couples with MAGI above $246,000 cannot make direct Roth contributions (with a partial phase‑out from $236,000–$246,000), and Kiplinger warns conversions can create unexpectedly high marginal tax bills (thestreet.com) (fool.com) (kiplinger.com).
A lot of Americans think retirement-account season ended on December 31, but the Internal Revenue Service still lets you make a 2025 traditional Individual Retirement Account or Roth Individual Retirement Account contribution until Wednesday, April 15, 2026. The 2025 limit is $7,000, or $8,000 if you were age 50 or older by the end of 2025. (irs.gov) That deadline matters because an Individual Retirement Account is one of the few tax moves you can still make after the calendar year ends and still count for last year. Fidelity says the 2025 contribution deadline for Roth and traditional Individual Retirement Accounts is April 15, 2026. (fidelity.com) The first fork in the road is simple: a traditional Individual Retirement Account can give you a tax deduction now, while a Roth Individual Retirement Account gives you tax-free withdrawals later if you follow the rules. The Internal Revenue Service says Publication 590-A covers both contribution rules and deduction rules because they are not the same thing. (irs.gov) The catch is income. For 2025, Fidelity says single filers can make a full Roth Individual Retirement Account contribution only if modified adjusted gross income is under $150,000, and married couples filing jointly can make a full contribution only if modified adjusted gross income is under $236,000. (fidelity.com) That phaseout gets tight fast. Fidelity says single filers get only a partial Roth contribution from $150,000 to $165,000 of modified adjusted gross income, and married couples filing jointly get only a partial contribution from $236,000 to $246,000, with direct Roth contributions shut off at $165,000 for singles and $246,000 for couples. (fidelity.com) This is where people trip. Fidelity’s warning is that many savers guess at modified adjusted gross income before bonuses, capital gains, freelance income, or year-end distributions are fully counted, and that can turn a legal Roth contribution into an excess contribution that has to be fixed. (msn.com) Higher earners often use what is called a backdoor Roth, which usually means making a nondeductible contribution to a traditional Individual Retirement Account and then converting that money into a Roth Individual Retirement Account. The Internal Revenue Service allows contributions to traditional Individual Retirement Accounts regardless of income, even when Roth contribution limits block a direct Roth deposit. (irs.gov) But “allowed” does not mean “tax-free.” Kiplinger warns that a Roth conversion adds taxable income in the year of the conversion, and that extra income can interact with other tax rules hard enough to push the real marginal rate far above the bracket you thought you were in. (kiplinger.com) That surprise usually comes from money already sitting in pre-tax traditional Individual Retirement Accounts. Under the pro rata rule, the Internal Revenue Service does not let you point to just the after-tax dollars for conversion if your other traditional Individual Retirement Account balances contain untaxed money too, so part of the conversion can become taxable. (irs.gov) The practical move before April 15 is boring but important: check your 2025 modified adjusted gross income, confirm whether your traditional Individual Retirement Account contribution is deductible, and label any April contribution for tax year 2025 so the custodian does not book it for 2026. If you are planning a backdoor Roth, the tax return paperwork matters too, because nondeductible Individual Retirement Account contributions are tracked on Internal Revenue Service Form 8606. (irs.gov)
