Boost Your Retirement Account With Your Tax Refund
Are you a little behind on your retirement funds and need to play catch up? You can have the IRS directly deposit your refund into your retirement account. However, there are a few things that you will need to be extra careful with to be sure your refund is deposited correctly. For example;
* Verify the account deposit. Some banks will reject direct deposits to anything other than a savings account. You must verify that your financial institution will accept direct deposits into an IRA.
* Correct account number. The IRS assumes that correct financial information is entered your tax return. It is your responsibility as the taxpayer to check and re-check the account numbers you are using for your refund deposit. If you accidentally transpose the numbers of your account and those numbers belong to another customer, this mistake may take weeks or months to rectify.
* Manual corrections. If the IRS gets your tax return and finds that the routing numbers have been manually corrected, your direct deposit request has a higher chance of being rejected. You may get your refund by a check in the mail.
* Refund corrections. At times, the IRS makes corrections to a taxpayer’s math or will make other necessary adjustments that can affect the refund amount. It is possible that in some cases, these adjustments may result in a direct deposit that exceeds the allowable IRA contribution amount. If this were to happen, you could be stuck with a penalty for excess contributions.
Using your tax refund is a good way to catch up or boost your retirement account. Just remember to double check your return for errors as well as your financial institution about the rules for IRA direct deposits.