Timing of Roth contributions - can I send in $2,000 on Jan 1st, 2000 (

[Guest Tamark]

I am new to the Roth IRA's, so please forgive me for my ignorance. My question is about when you can make contributions to the IRA. Specifically can you make a contribution in the same calendar year (even back-to-back days) as long as a different tax year is indicated on the contribution.

For example:

Can I send in $2,000 on Jan 1st, 2000 for the 1999 tax year and send in $2,000 on Jan 2nd for the 2000 tax year.

Thanks for your time!

[John Olsen]

Yes, you can. I recommend writing two checks, with a notation on each check as to the year for which the contribution is intended.

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John L. Olsen, CLU, ChFC

Olsen Financial Group

St. Louis, MO

[John G]

As John said, YES.

The reason you send two checks is to make sure the custodian correctly designates two different years. So mark the year on each check, then confirm that they did it correctly when your next statement comes. In the tax rush season, this sometimes gets screwed up.

Welcome to the world of investing. The toughest step is sometimes just getting started. A January deposit gives you tax sheltered growth for a longer period and is a smart way to go. Good luck.

[John G]

For other first time IRA folks: you also can build up an IRA by making automatic monthly contributions. Virtually all mutual funds allow this option.

In other words, you don't have to wait until you have $2,000 to get start. And, there is nothing magic about $2,000 either... you can open an IRA with $1,324 or any other amount as long as you meet the minimum set by your custodian (which vary substantially from custodian to custodian and may be lower for certain options such as the monthly deposit). There are some mutual funds that will let you get started with as little as $250 or $500.