A gentle reminder about the Roth IRA deadline...

[Grigory]

You can still make your 2015 (not 2016) contribution! :) The deadline is April 18th. Don't ask why - our tax code is funny like that, but it works to your advantage. You still have 1 week left to open an online brokerage account (if you don't have one yet) and make the transfer. Remember, the max amount is $5,500. (Unless you're close to the traditional retirement age, in which case it's $6,500, I believe.)

Just make sure to check the "2015" box when you wire the money. Once that's done, you can transfer your 2016 contribution as well, and huzzah! - you've got $11,000 in your retirement account that Uncle Sam can't touch. :) Do it now - your future self will thank you. 

[Captain Cactus]

Thanks for the reminder!

[Nessaj]

Hello all,

Been a 'lurker'/reader for a little while now, love the principals of living frugally and within ones own means, and now venturing forth into investing this overflow of cash that I finally have. I could use some clarification understanding contributing to the Roth IRA. I am sure the information is on this forum somewhere, so if someone wants to point me to the correct direction I would greatly appreciate it, but for now I'll list my questions below.

Some background:
-- Married, filing jointly. No kids, no real estate. Both contributing retirement to employer sponsored plans currently. No other investment pools.
-- I make $122,650 based off of line 1 of my W-2 from my employer, and I have no other 'side hustle' or other source of income other than my primary job.
-- Wife makes $58,350 based off her line 1 of her W-2 form from her employer, no side hustle.
-- Together that makes $181,000, just barely below the $183,000 contribution limit where you would start to contribute a reduced amount.

Question 1: Is using line 1 of our W-2 an accurate way to calculate our MAGI based on our current situation? If not, what should we use and/or what else should we consider? Using Line 5 would bump us to $192,500, basically at the limit where we cannot contribute.

Question 2: I understand we both need individual accounts to contribute. If we file jointly does this mean each of us gets to contribute $5,500 to our accounts? As you can see, if i filed as single, I would be in the 'reduced amount' range, but because we file jointly I am able to contribute the full amount. Is that correct?

Question 3: I am looking into opening an account with Vanguard for both of us based on the great things I have been reading on this forum and blog about the company. Is there anything to know in particular about opening a Roth IRA with them? Any recommended funds?

If I understand everything correctly, I plan to contribute $11,000 ($5,500 for 2015 and 2016) into each of our accounts, for a total of $22,000 heading to Roth IRA's. For some reason I am getting gun-shy about this, and complicating things in my head. I am trying to use the advice echoed here and elsewhere that investing doesn't have to be complicated.

I greatly appreciate any and all help, and feel free to send me links, readings, or other information to increase my knowledge of this. Oh, and if I need a good face-punch, don't hesitate to dish it. Thanks everyone!

[Nessaj]

Anyone have any insight on this? I think my understanding is correct, so I am likely just going to pull the trigger here.

Another question came to mind too...what happens if you put in the maximum amount for 2016 ($5,500), but then earn above the limit for maximum contribution in 2016? Do you have to pay penalties, or do you have to take the money out to match what your contribution is supposed to be? What about the gains on that money?

Thanks everyone for your help in understanding these principals.