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IRA Rules: What's the Tax Deadline for Retirement Plan Contributions?

The deadline for setting up a retirement plan and putting money into it for a specific tax year is not the same for all plans. Although some common plans must be funded by April 15, other plans allow you a bit more time. Make sure you know the deadline for your type of retirement plan.

Traditional and Roth IRAs
You can make a contribution to a traditional individual retirement arrangement, or IRA, anytime up to and including the due date for your tax return. That means you have until April 15, 2014, to put money in your IRA and still count it as a contribution for 2013. This IRA rule holds true whether your contributions are deductible or nondeductible.

For Roth IRAs, the deadline is also April 15, 2014, for 2013 contributions.

If you file a tax extension, you don't get any extra time to make your traditional or Roth IRA contribution.

You can set up a simplified employee plan, or SEP, and make matching and nonelective contributions until the deadline of your business income tax return, including extensions. This is true for self-employed SEPs and employee SEPs.

You must set up a savings incentive match plan for employees, or SIMPLE IRA, by Oct. 1 of the year to which a contribution applies. For example, to make a contribution for 2013, you must have set up the plan set up by Oct. 1 of that year.

However, you have until your business income tax return due date, including extensions, to fund a SIMPLE IRA.

401(k) plans and 403(b) plans
A 401(k) or 403(b) plan must be set up by Dec. 31 of the year for which you make a contribution. This is also true for one-participant 401(k) plans used for self-employed individuals.

The employer has until the business income tax return due date, including extensions, to make employer contributions.

Two reasons you may need more time
It's not always easy or possible to make retirement plan contributions by April 15. For one thing, you may still be trying to get the money together for the contribution.

Another problem may be that you don't know exactly how much you qualify to contribute until you actually complete your return. For example, contributions to a Roth IRA are limited at fairly modest income levels. Until you complete your return, you don't know how much, if any, you can contribute.

Sooner is still better
You may have good reason for waiting until the last minute to make your retirement plan contribution. However, next time you may want to make contributions earlier.

Your best retirement planning tool is time. To get the maximum benefit of compound investment returns, consider making a habit of funding your retirement plan as soon as possible, instead of waiting until the last possible day.

Take advantage of this little-known tax "loophole"
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

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Sally Herigstad

Sally is a new Fool contributor for 2014, but a long-time personal finance writer, columnist, and certified public accountant. Sally wrote "Help! I Can't Pay My Bills" for St. Martin's Griffin.

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