Within How Many Days Must a Traditional IRA Be Completed?

A Traditional IRA provides tax advantages for retirement savings, but strict deadlines apply to contributions, rollovers, and withdrawals. Missing these deadlines can lead to penalties or lost tax benefits, making it crucial to stay informed about key timeframes.

Contribution Deadline

The deadline to contribute to a Traditional IRA for a given tax year is April 15 of the following year, aligning with the federal tax filing deadline. Contributions for 2024, for example, can be made until April 15, 2025. Tax filing extensions do not extend this deadline.

For 2024, the maximum contribution is $7,000 for individuals under 50 and $8,000 for those 50 or older, including a $1,000 catch-up contribution. These limits apply across all Traditional and Roth IRAs combined. Contributions must be made in cash—checks or electronic transfers are acceptable, but in-kind asset transfers are not.

The tax deductibility of contributions depends on modified adjusted gross income (MAGI) and participation in an employer-sponsored retirement plan. In 2024, single filers with a MAGI of $77,000 or less can deduct the full contribution, with partial deductions available up to $87,000. For married couples filing jointly, full deductibility applies with a MAGI of $123,000 or less, phasing out at $143,000. Those not covered by a workplace plan can deduct contributions regardless of income.

60-Day Rollover Limit

When transferring funds between Traditional IRAs or from an employer-sponsored plan, the IRS allows 60 days to complete the rollover without tax consequences. The full amount must be deposited into another eligible retirement account within this period to maintain tax-deferred status. Missing the deadline results in the distribution being taxed as income, with an additional 10% penalty if the account holder is under 59½.

Only one IRA-to-IRA rollover is allowed per 12-month period, regardless of the number of accounts owned. This rule, established under IRS Revenue Procedure 2016-47, prevents individuals from using multiple rollovers as short-term, interest-free loans. However, direct transfers between financial institutions are not subject to this limitation.

If the deadline is missed due to circumstances beyond the account holder’s control, the IRS may grant a waiver. Automatic waivers apply in cases of financial institution errors, while other situations require a private letter ruling, which involves fees and no guarantee of approval.

Required Minimum Distribution Deadline

Traditional IRAs require account holders to begin taking Required Minimum Distributions (RMDs) starting at age 73. The first RMD must be taken by April 1 of the year after turning 73, with subsequent withdrawals due by December 31 each year. Delaying the first withdrawal until April results in two distributions in the same tax year, potentially increasing taxable income.

The RMD amount is calculated using the IRS Uniform Lifetime Table. The prior year’s December 31 account balance is divided by a life expectancy factor. For example, a 73-year-old with a $500,000 IRA balance would use a factor of 26.5, requiring a withdrawal of approximately $18,868.

Failing to take the full RMD results in a 25% penalty on the shortfall. If corrected within two years, this penalty may be reduced to 10%. Unlike missed contributions or rollovers, a missed RMD cannot be made up in a later year.

Recharacterization Timeframe

Recharacterization allows individuals to change an IRA contribution from one type to another, such as from a Traditional IRA to a Roth IRA or vice versa. This can be useful if income changes affect tax liability or deduction eligibility.

The deadline for recharacterization is October 15 of the year following the original contribution, provided a tax extension was filed. The transfer must be completed as a direct move between financial institutions or within the same custodian. The amount transferred must include any earnings or losses. For example, if a $6,000 contribution grows to $6,500 before recharacterization, the full $6,500 must be moved. If the balance declines to $5,500, only that amount transfers.

Penalties for Missing Deadlines

Missing Traditional IRA deadlines can result in financial penalties.

Failing to contribute by April 15 means losing that year’s tax-advantaged savings opportunity. Unlike employer-sponsored plans, there is no option to make retroactive contributions.

Missing the 60-day rollover window results in the distribution being taxed as ordinary income. If the account holder is under 59½, an additional 10% early withdrawal penalty applies unless an exception, such as disability or medical expenses, is met. The IRS may waive penalties for reasons beyond the taxpayer’s control, but approval is not guaranteed.

Failing to take an RMD carries one of the most severe penalties in retirement planning. The IRS imposes a 25% excise tax on the shortfall, reduced to 10% if corrected within two years. Since missed RMDs cannot be deferred or made up in later years, the penalty represents a permanent loss of retirement savings.