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I would like to contribute $2000 to my Roth IRA and designate the contribution for the 2010 tax year. I would also like to know just how it works and how to do it.

I know that designating this for the 2010 tax year will allow me to contribute another $5000 this year (on the 2011 tax year). Is that the only advantage of designating it for 2010?

More specifically: I will be moving up to a higher tax bracket for the 2011 tax year. Does designating the contribution for the 2010 tax year save me any tax money?

How do I designate this contribution for the 2010 tax year? Do I need to account for this on my 1040 form (or an attached form/schedule) for my 2010 or 2011 tax return?

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Contributions are post-tax, so there's no direct tax benefit to choosing a year. I just made a 2010 contribution today, and the institution's form explicitly asks me if I want it on 2010 or 2011.

The primary advantage of backdating like this is being able to contribute 5k more over your lifetime than otherwise possible, under the timing constraints. While there may be a year in the future which you don't contribute the max, contributing now lets you build up earnings tax free. For '10 vs '11, you're probably holding cash so it's not a big deal, but over five years is a long time to hold cash or invest with tax penalty.

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The deposit slip at the institution that keeps your Roth IRA should have a place where you can designate the tax year the contribution should apply to.

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You will normally have somewhere to designate which tax year you are contributing for when you make your contribution (either online or at the bank). This designation is only required from Jan 1 - Apr 15 of each year, as any contributions before / after those dates will necessarily be for the calendar year that you contribute.

You must make sure that your tax forms (1040 and anything else) show your total contribution for the tax year. If you've put $1000 into your Roth IRA during the calendar year for 2010, and then you put in $2000 in March 2011 (but designated for 2010), you need to show the IRS that you put $3000 into your Roth IRA.

As stated in another answer, the advantage is increasing the overall contribution limit in your lifetime. If you open a brand new Roth IRA in March 2011, you can contribute $5000 for 2010 and another $5000 for 2011. If you open the same account in May 2011, you are limited to only $5000 for 2011.

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