Happy new year everyone. Well, tomorrow anyway. Today is new-IRA-year's eve. Today's the official close of the 2006 IRA year. Not that you care, right? You made your 2006 IRA contribution about a year ago, right? Excellent.

No, what's significant here is that tomorrow is the first day you can make your 2007 IRA contributions and not have to worry about any bookkeeping snafus causing them to be credited to the wrong year. Call me paranoid if you will. I've been around long enough to see stranger things than this happen and to know it will take way too much time and energy to work through the bureaucracy to take a chance on it.

Of course if you do have a 401(k) at work then you can't fund your IRA, right?

Not so! Amazing as it might seem to you (and me), lots of people don't know you can contribute both your IRA and your 401(k) in the same years.

Let's check the contribution limits for tax year 2007:

• The individual contribution limit for your 401(k) is $15,500.
• If you're 50 or older you can contribute an extra $5,000 to your 401(k)
• The individual contribution limit for your IRA is $4,000.
• If you're 50 or older you can contribute an extra $1,000 to your IRA
• Your non-working spouse can also fund an IRA. The same limit rules apply, as long as:
  • Your income doesn't exceed certain limits
  • You and your spouse file your taxes jointly
  • The working spouse's employer does not have a retirement plan (and whose does anymore?)

My advice: Do everything you can to max these out. Contribute all the way up to the limits and take full advantage of any employer matching offered. Feed them well when they're young and your IRA and your 401(k) will serve you well in your golden years

If you'd like to learn more about IRA limits and all the rules that go with them - and there are a bunch of them - check out IRS Publication 590.

Fair warning: Pub-590 is a sure cure for insomnia.

Happy new-IRA-year.