NEW YORK (MainStreet) — If you plan to contribute to a traditional or ROTH IRA, a Coverdell Education Savings Account, a Section 529 College Savings Plan, an Archer Medical Savings Account, a Health Savings Account, or any other “tax-deferred” account for 2011, don't put it off.
For these accounts, make the contribution as early in the year as you can. By doing so you will have substantially more in the account by the time you are ready to retire, or when you need the money to pay for education or medical bills, than if you wait till the last minute to deposit the money.
If you make a ROTH contribution today and later discover that you are not eligible for a ROTH for 2011, or, for whatever reason, decide you would rather have the funds in a traditional IRA, you have until the due date of your 2011 tax return (as late as Oct. 15, 2012 if you file for an extension) to "recharacterize" your contribution.
When making your contribution, be sure to identify the year for which it is being made. For example, when making a deposit to an IRA account in 2011 for tax year 2011 write “2011 IRA contribution” clearly in the memo section of the check. If the deposit is for tax year 2010 write “2010 IRA contribution”. If you enclose a payment voucher or coupon provided by the trustee, be sure the correct year is marked. Follow up by checking the next statement for the account to verify the contribution was applied to the correct year.