What is the last day to contribute to an IRA for 2020?
Taxpayers now have until May 17, 2021, to contribute to their Individual Retirement Accounts (IRAs), Health Savings Accounts (HSAs), and Coverdell Education Savings Accounts (ESAs), according to a statement by the IRS on Monday, March 29th. Any taxes due on 2020 distributions from IRAs or work-based retirement plans like 401(k)s are also due May 17th.
For those self-employed persons who are sole proprietors, the Solo 401(k) and SEP IRA contribution deadlines are also extended to May 17, 2021, for 2020 contributions.
What does this mean exactly?
It means that you have more time to make contributions to your IRAs, HSAs, and ESAs accounts for 2020. The regular deadline is always April 15th but was extended by the IRS along with other pandemic relief.
The period beginning on April 15, 2021, and ending on May 17, 2021, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to file the Federal income tax returns or to pay the Federal income taxes postponed by this notice. All penalties begin to accrue on May 18, 2021.
This also postpones the time for reporting and payment of the 10-percent additional tax on amounts includible in gross income from 2020 distributions from IRAs or 401(k)s.
When is the last day I can contribute to an IRA?
You now have until the May 17, 2021 tax deadline to contribute to an IRA, either Roth or Traditional, for the 2020 tax year. The maximum contribution amount for either type of IRA is $6,000, or $7,000 if you are age 50 or older.
Does the extension apply to Solo 401ks and SEP IRAs?
This extension also applies to Solo 401(k) and SEP IRA owners who are sole proprietors. It does not apply to Solo 401(k)s and SEP IRAs who are s-corps, LLC partnerships, or c-corps. However, these Solo(k) and SEP IRA owners can extend their 2020 contribution if they have filed an extension to their company return (the adopting employer of the plan). This requires the filing of an extension of the company tax return. For Solo(k) owners, please refer to 2020 Solo 401(k) Contribution Deadlines: Rules, Steps, and Strategies.