hi,
my son, 20, has started a roth ira with schwab. he earned most of the money that he has in savings in 2021. can any of his earned income from 2021 be now invested (in september of 2022) in a roth? or did he miss the deadline? thanks for help!
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The prior year deadline is always Tax Day April 15 of the next year. He missed.
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thanks for confirming!
Make sure he realizes that because money is fungible, he can invest the actual dollars earned last year into a Roth right now, but only if he will meet the income requirements for 2022. If he worked this summer, but used that money to pay tuition this semester, for example, he could contribute some of his savings to a Roth. Same story if he works part-time during the school year, but uses the money from that job to pay rent.
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If he married someone with 2022 income he can do a Spousal Roth IRA for that amount of income even if he didn’t work in 2022!
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Also tell him to save the Form 5498 each year, showing any IRA/Roth contributions, rollovers, etc. That information might be needed in the future, when withdrawals are done, depending on the state’s tax rules. Schwab probably has them available for download around the time taxes are done.
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